Shipt expansion, Birmingham initiative propel Magic City’s tech sector

Shipt expansion, Birmingham initiative propel Magic City’s tech sector
Shipt's 881-job expansion in Birmingham is also launching a new incentive to hope grow tech jobs in the city. (Michael Tomberlin / Alabama NewsCenter)

Birmingham is abuzz from two major economic development announcements Thursday that will shape the city’s tech economy for generations to come.

Shipt’s decision to expand its Birmingham headquarters by investing $10 million and adding 881 jobs was certainly the big news of the day.

Those jobs will pay $48,300 on average and create a payroll of $1.1 billion over the next 20 years.

“We’re really excited about the over 800 new jobs that are going to be coming to Birmingham,” Shipt CEO Bill Smith said. “These are going to be highly skilled, high-paying jobs in parts of our company such as software engineering, data science, operations, our experience team, our partner success team, marketing and other parts of the business. These are fantastic jobs. I’m really excited to see those come here.”

Shipt’s Birmingham headquarters expansion ‘catalytic’ for Magic City tech sector from Alabama NewsCenter on Vimeo.

The Shipt expansion also led to the creation of a new economic development incentive program for Birmingham. The Putting People First Fund will be used to train, recruit and develop tech talent in the Magic City.

“The whole idea of the fund is very simple, it’s very direct. It is to invest in Shipt’s greatest asset but it is also to invest in our city’s greatest asset and that is our people,” Birmingham Mayor Randall Woodfin said. “We believe that when incentives are steered towards cultivating human potential, Birmingham, our city, can grow. But that also means that companies can thrive and our people can prosper.”

The fund consists of a Talent Investment Program, Talent Acceleration Program and Talent Optimization Program.

By tailoring a human-capital-focused economic development strategy to Shipt, it gives Birmingham a tool that will be attractive to other tech companies, said Josh Carpenter, director of Innovation and Economic Opportunity for the city.

Shipt is adding 881 jobs to its Birmingham headquarters. (file)

“It’s a comprehensive strategy to grow with and alongside a company and let them know that we have an innovative tool to invest here so they can grow,” he said.

Carpenter said a tech company’s major investment is most often its people and economic development incentives are needed to address that need.

“If we can offset some of that cost and co-invest in that talent with the company, that enables them to spread their dollars elsewhere and potentially grow their workforce, hire more workers or turn part-time jobs into full-time jobs,” Carpenter said.

Having such an incentive is bound to catch the eyes of entrepreneurs and other tech companies, Blair King, Economic Development project manager with Alabama Power, said.

“It’s an exciting time to develop those different tools, shift our existing tools that can help apply to this tech ecosystem as we continue to grow new startups and as they continue to grow in Birmingham,” King said.

Smith said Shipt wanted to maintain its headquarters in Birmingham after Target purchased the company for $550 million in December. He said the incentives allow Shipt to do that.

“We’re also excited about developing new talent in Birmingham and the surrounding areas and also about attracting new talent to Birmingham and our state,” he said. “When you have a company like Shipt, it can be a great magnet to bring new talent to the area and we hope to do that.”

Smith hopes that Shipt can be the seismic shift for the tech industry that Mercedes-Benz has been for the automotive industry in Alabama.

“I really think of this as being bigger than just Shipt,” he said. “You know, companies create an ecosystem and there already is a great technology ecosystem here in Birmingham and here in our state, and I connect this as a catalytic event that has the potential to have an impact on our state similar to the impact that the recruitment of Mercedes has done for the state’s automotive industry.”

The state’s new incentives that are tied to job creation also make it more attractive for industries beyond the traditional manufacturing operations.

Alabama Gov. Kay Ivey said the state should tout the success of homegrown startups like Shipt.

“This expansion will not only raise the standard of economic development in Alabama, but it will open the door to the world of the rapid changes in technology going forward,” she said.

Woodfin said Birmingham plans to promote the Putting People First Fund to other companies to grow the tech sector in the city.

“This is a model for us to expand and be the hub for the entire tech space in the Southeast,” he said.

The program will work in conjunction with other initiatives to build on education and worker training.

“We have to develop a more educated workforce that will make Birmingham a more desirable location for future tech companies looking to grow and/or looking to expand,” Woodfin said. “It represents another milestone in moving towards our vision of making Birmingham a destination.”

Shipt officials said they now have about 300 employees on three floors at the John Hand Building in downtown Birmingham. The addition of 881 new jobs will likely create a need for more office space and the intent is to remain downtown, though no specific location has been announced.

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