Top Deals & Hot Markets 2009

Several Southern Markets Enjoy Their Best Year Yet in 2008

By Lee Burlett

As with every year, there were some outstanding economic development performances in the South in 2008. As you know, 2008 was anything but a typical year. Many experts compared last year with the worst economic conditions ever experienced in this country. There are some who would totally disagree with that assessment; like the states and communities that are being honored here in our annual Top Deals & Hot Markets report.

Not only have the following states and markets excelled over their peers in an incredibly difficult year, they performed almost as well as states and markets that we've cited in good years. In fact, for some, 2008 was their best year ever.

We will admit though, that this year's Top Deals & Hot Markets report is void of trends you almost always see in our rankings and that can only be attributed to the dire conditions that are still being felt with this economy. For example, for the first time in 16 years, no markets are being honored from the state of Florida, and only one each in the states of North Carolina and Georgia. Those three states have been economic development superstars over the years. Not this year.

Virginia and its many attractive small, mid and large markets didn't do much better than the aforementioned states either, with only two markets being cited. And one of those (Northern Virginia) had its worst point performance in 16 years, even though it placed third in the mega-market division.  

Of the South's 17 states, only nine have one or more markets being honored this year. That is a little less than normal, but it's the states in the eastern portion of the South that are noticeably absent. By carefully looking over which markets accomplished the most in 2008, you will discover one glaring trend. Arkansas, Louisiana and Texas are the states where more big deals landed in the South than anywhere else in the region. For those who are geographically challenged, Arkansas, Louisiana and Texas are all contiguous and are located in the western portion of the South.  Their economies are also heavily involved in the oil and gas industries. 

State Category

Co-State of the Year: Louisiana, 310 Points
No. 1 in Points per Million Residents

Louisiana has come a long way since the mid-1990s. Back then we remember a couple of years when the biggest job deals were new Wal-Mart stores. Those days are gone, replaced by a Louisiana economy that is as vibrant as any in the South. In fact, over the last three years no state in the South has performed better than Louisiana, as evidenced by 2007 and 2009 "State of the Year" honors and an "Honorable Mention" in 2008.

This year Louisiana is sharing “State of the Year” honors with Tennessee. Louisiana led all Southern states in the all important points per million residents average and its 310 points topped Georgia, Florida, North Carolina, Alabama and Virginia straight up. That's a pretty good year.

Notable Louisiana Deals in 2008

Shaw/Westinghouse Laship-Edison Chouest Federal City

Jobs 2,900 1,000 749

Investment $100 Million $100 Million $110 Million

 

Co-State of the Year: Tennessee, 290 Points
No. 3 in Points per Million Residents

There have been few -- if any -- years in economic development history when a Southern state turned three more important deals than the three Tennessee landed in 2008. But there were other projects to support the billions invested in the Volunteer State by Volkswagen, Hemlock Semiconductor and Wacker Chemie. Whirlpool, Asurion, Wright Medical, DENSO, Averitt Express, Goodyear, Johnson Controls and other notable deals were also struck in Tennessee in 2008.

With Volkswagen and Wacker Chemie, the state of Tennessee has now built a relationship with the Germans that we think will eventually grow as strong as the state's long term relationship it has had with Japan-based corporations such as Nissan, DENSO and Bridgestone. Also, with Hemlock Semiconductor and Wacker, Tennessee is helping the South in the chase for alternative energy solutions. Hemlock and Wacker's projects are both solar energy-related deals.

Notable Tennessee Deals in 2008

Volkswagen Hemlock Semiconductor Wacker Chemie AG

Jobs 2,000 500 500

Investment $1 Billion $1.2 Billion $1 Billion

Honorable Mention: Arkansas, 125 Points
No. 4 in Points per Million Residents

If you recall, we wrote in the introduction of this article that a handful of Southern states and markets had their best years ever in what many called the "economic abyss of 2008." Last year was Arkansas' best since we began this ranking back in 1993 with several big deals leading the way. Some significant foreign-based projects continued to find Arkansas in 2008 and the HP deal made our top 10 for 2008. All in all, 2008 was a great year for Arkansas and, like Tennessee, many of Arkansas' biggest projects are next generation energy investments. But unlike Tennessee's solar energy ventures, Arkansas' deals are wind power-related. 

Notable Arkansas Deals in 2008

HP Nordex Polymarin

Jobs 1,200 700 830

Investment N/A $100 Million $20 Million

Honorable Mention: South Carolina, 255 Points
No. 2 in Points per Million Residents

What a roller coaster year for South Carolina. Two-Thousand-Eight saw more plant and business closures in The Palmetto State than any year that we can recall. Of course, that was true with a lot of states, including neighboring North Carolina. At the same time though, S.C. landed more big deals in this "100" than in any year since 2002. In other words, South Carolina's high unemployment rate would be much higher had it not performed so well in garnering new and expanded projects in 2008. And since the SB&D 100's methodology gives credit to new and expanded projects only and doesn't punish states or markets for closures, South Carolina had a good enough year to earn an "Honorable Mention." You could say South Carolina had them coming and going in 2008. 

Notable South Carolina Deals in 2008

BMW American Titanium HJ Heinz

Jobs 350 320 350

Investment $750 Million $422 Million $105 Million

Southern States Ranked by Points per Million Residents

State	Total Deals	Points	*PPM
1. Louisiana	38	305	70.9
2. South Carolina	30	245	55.7
3. Tennessee	37	290	47.6
4. Arkansas	15	125	44.6
5. Kansas	15	120	44.4
6. Alabama	27	200	43.5
7. Mississippi	15	120	41.4
8. West Virginia	8	65	36.1
9. Kentucky	20	130	31.0
10. Virginia	31	225	29.2
11. Missouri	23	155	26.2
12. Georgia	26	230	24.2
13. North Carolina	28	210	23.3
14. Texas	70	555	23.1
15. Oklahoma	11	80	22.2
16. Maryland	12	90	16.0
17. Florida	26	175	9.6

*PPM = Points earned from eligible projects per million state residents

Total Points Earned by Southern States in the 2009 SB&D 100

State	Points
Texas	555
Louisiana	305
Tennessee	290
South Carolina	245
Georgia	230
Virginia	225
North Carolina	210
Alabama	200
Florida	175
Missouri	155
Kentucky	130
Arkansas	125
Kansas	120
Mississippi	120
Maryland	90
Oklahoma	80
West Virginia	65

SB&D's State of the Year Winners 1994-2009

2009 Louisiana and Tennessee
2008 Alabama
2007 Louisiana
2006 Alabama and North Carolina
2005 Alabama and North Carolina
2004 Alabama
2003 Alabama
2002 Florida
2001 Virginia
2000 Tennessee
1999 Virginia
1998 North Carolina
1997 Texas
1996 Virginia
1995 Florida
1994 Texas

Mega-Market Category

Mega-Market of the Year: Houston, 205 Points

What an incredible year for the massive Houston region. Its point total of 205 actually topped the point totals of 10 Southern states in the 2009 SB&D 100. The last time that happened was in 1997 when Dallas/Fort Worth outpointed, exactly, ten Southern states. However, D/FW's incredible year back then was accomplished in a growing economy. It is a rare occurrence for one market to top most of the South's states in performance. But to do it in the "abyss" of 2008 is something special for Houston officials to remember for a long time.

Notable Houston Deals in 2008

Hunton Energy/Dow  Freeport LNG    Kansas City Railroad

Jobs 250 75 750

Investment $2.8 Billion $1.2 Billion $100 Million

Honorable Mention: Dallas/Fort Worth, 75 Points

Notable Dallas/Fort Worth Deals in 2008

Research in Motion   Daimler Financial Deloitte

Jobs 1,000 550 N/A

Investment N/A N/A $300 Million

Honorable Mention: Baltimore/D.C./Northern Virginia, 75 Points

Notable Baltimore/D.C./Northern Virginia Deals in 2008

Pragmatics  MedImmune Microsoft

Jobs 737 600 600

Investment $1.5 Million N/A N/A

Major Market Category

Major Market of the Year: New Orleans, 90 Points

New Orleans continues its amazing economic development renewal with its first ever "Major Market of the Year." The Big Easy has flirted with this award since 2007 when it was cited for its first "Honorable Mention." It also earned an "Honorable Mention" last year, so that's three consecutive years of New Orleans placing in the top 3 in the major market division. No city deserves it more than New Orleans after what it went through with Katrina in 2005. 

Notable New Orleans Deals in 2008

Federal City  Monsanto Southern Recycle

Jobs 748 355 230

Investment $110 Million $398 Million $40 Million

Honorable Mention: Charlotte, 65 Points

Notable Charlotte Deals in 2008

IBM Lender Time Warner Tessera Technologies

Jobs 600 200 200

Investment $2.4 Million $3.7 Million $30 Million

Honorable Mention: Birmingham, 55 Points

Notable Birmingham Deals in 2008

Kamtek Home Depot Brookwood Pharma

Jobs 400 400 300

Investment $300 Million $33.1 Million $36 Million

Honorable Mention: San Antonio, 50 Points

Notable San Antonio Deals in 2008

Union Pacific Tindall Corp KLN Steel

Jobs N/A 250 500

Investment $120 Million $25 Million $25 Million

Mid-Market Category

Mid-Market of the Year: Baton Rouge, 70 Points

Here is another Louisiana market that has come on strong over the last few years. Baton Rouge won its first "Mid-Market of the Year" in 2007 and was cited for an "Honorable Mention" last year. In 2008, Baton Rouge landed a nice mix of deals including a Fortune 1000 headquarters relocation in Albemarle. Baton Rouge winning "Mid-Market of the Year" for 2009 means a sweep for Louisiana in three different categories.

Notable Baton Rouge Deals in 2008

Albemarle  Exxon Mobil  Westlake Chemical

Jobs 600 237 648

Investment N/A $500 Million $300 Million

Honorable Mention: Columbia, S.C., 55 Points

Notable Columbia Deals in 2008

Shaw Industries Target  Home Depot

Jobs 350 N/A 300

Investment $60 Million $73 Million $25 Million

Honorable Mention: McAllen, Tex., 50 Points

Notable McAllen Deals in 2008

GE Engines Infinity Insurance  Santana Textiles

Jobs 250 250 800

Investment $8 Million $10 Million $170 Million

Honorable Mention: Little Rock, Ark., 45 Points

Notable Metro Little Rock Deals in 2008

Southwestern Energy Man Industries  HP

Jobs 450 250 1,200

Investment $25 Million $100 Million N/A

Honorable Mention: Corpus Christi, Tex., 45 Points

Notable Corpus Christi Deals in 2008

Bay Shore Technologies Citgo  Flint Hill

Jobs 295 N/A 10

Investment $10 Million $300 Million $250 Million

Small Market Category

Small Market of the Year: LaGrange, Ga., 75 Points

Well, the economic transformation of West Georgia continues thanks to the Kia assembly plant that is expected to open later this year. Seventy-five points coming from a market as small as LaGrange is truly a testament to the economic strength of the automotive industry. Even through its troubles over the last 18 months or so, automotive remains incredibly strong in many parts of the South.

Notable LaGrange Deals in 2008

Hyundai Powertech  Glovis Sejong Industrial

Jobs 355 600 250

Investment $150 Million $60 Million $27.8 Million

Honorable Mention: Florence, S.C., 45 Points

Notable Florence, S.C. Deals in 2008

H.J. Heinz   QVC Monster Worldwide

Jobs 350 300 350

Investment $105 Million N/A N/A

Honorable Mention: Victoria, Tex., 40 Points

Notable Victoria, Tex. Deals in 2008

Formosa Plastics   Exelon NuCoastal

Jobs 162 N/A 22

Investment $600 Million $4 Billion $125 Million

Honorable Mention: Jonesboro, Ark., 40 Points

Notable Jonesboro, Ark. Deals in 2008

Nordex   Nice-Pak

Jobs 700 300

Investment $100 Million $40 Million

Honorable Mention: Decatur, Ala., 35 Points

Notable Decatur, Ala. Deals in 2008

ULA Boeing   Hexcel BP America

Jobs 66 25 11

Investment $159.3 Million $180 Million $225 Million

Special Recognition

Editor's note: For the first time in the SB&D 100, we are recognizing markets in the South that have stood out to us, but cannot be singled out due to SB&D 100 market rules. These counties, cities or small towns have earned special recognition because they are either included in a MSA (therefore cannot be singled out), are rural locations (we don't have a rural category any longer) or have landed a project that will eventually transform that location's economy. Here are some special achievements that we found in this year's SB&D 100.

Newport News, Va., (located in the Hampton Roads MSA) 60 Points

As written in the introduction, Newport News was one of those markets that experienced its best year ever in 2008. In fact, Newport News economic development officials admitted to us that last year was unprecedented in that there were multiple big deals announced in the city in a year when big deals were down in the Commonwealth of Virginia. 

Notable Newport News, Va. Deals in 2008

Canon Virginia    AREVA Newport News Continental AG

Jobs 1,035 540 318

Investment $623.5 Million $363.5 Million $194 Million

Chattanooga, Tenn., 25 Points

Volkswagen is currently building its only U.S. assembly plant near Chattanooga on a site formerly used by the U.S. Army to make ammunition (TNT) during World War II. The fact that Chattanooga and Tennessee officials developed a plan to clean up that site for reuse and the fact that a company like VW is investing what will eventually amount to a couple of billion dollars on the site is a huge success story. We can all learn something about how Chattanooga has transformed itself in the last 25 years. VW is our "Deal of the Year" and the project and Chattanooga deserve "Special Recognition" this year.   

Notable Chattanooga, Tenn. Deals in 2008

Volkswagen of America

Jobs 2,000

Investment $1 Billion

Chambers County, Ala., 30 Points

Chambers County, Alabama is home to less than 40,000 residents. In 2008 alone, approximately 1,000 new jobs were created in rural Chambers County. You would be hard pressed to find more than a handful of rural counties in the South that had a better year than this east Alabama county had in 2008.

Notable Chambers County, Ala. Deals in 2008

AJIN USA    MP Tech DaeDong Hi-Lex

Jobs 450 250 103

Investment $89 Million $30 Million $10.9 Million

Terrebonne Parish, La., 35 Points

Adding to the notables to Louisiana's success in 2008 is Terrebonne Parish (county). Located southwest of New Orleans, Terrebonne's economy is supported by shipyards, the seafood industry and oil and gas.

Notable Terrebonne, La. Deals in 2008

LaShip Edison Chouest Gulf Island Marine

Jobs 1,000 200

Investment $100 Million $29 Million

Top Deals and Deal of the Year

As mentioned in the SB&D 100 feature story, this year's batch of big deals is surprisingly good. There were 14 projects of 1,000 or more jobs announced in 2008, which about equals 2007 when there were 15 deals of 1,000 or more jobs. In 2006 there were 24 announcements of 1,000 or more jobs and in 2005 there were 25.

The best projects of calendar year 2008 were a mixed bag, with automotive, next generation energy and aviation/aerospace leading the way. In naming our annual "Deal of the Year," we do take into account the scope of the project, its potential for growth and spinoff job possibilities. With that, then, there is no question in our minds that Volkswagen's 2,000-job, $1 billion plant being built near Chattanooga is this year's "Deal of the Year."

Top 10 Deals of 2008

Project	Location	Jobs	Investment
1. Volkswagen	Chattanooga, Tenn.	2,000	$1,000
2. Canon Virginia	Newport News, Va.	1,035	$624
3. Hemlock/Dow Corning	Clarksville, Tenn.	500	$1,200
4. Shaw/Westinghouse	Lake Charles, La.	1,500	$100
5. BMW	Spartanburg, S.C.	500	$750
6. Austal USA	Mobile, Ala.	1,000	$254
7. Spirit Aerosystems	Lenoir Co., N.C.	540	$571
8. Spirit Aerosystems	Wichita, Kan.	700	$300
9. HP	Conway, Ark.	1,200	N/A
10. Federal City	New Orleans, La.	749	$110

* Investment in millions
           
Counter Cyclical

Volkswagen's Chattanooga, Tenn. Plant is the “Deal of the Year” in the South.

By Michael C. Randle

Two-thousand-and-eight will go down as one of the U.S.'s worst automotive industry market years of all time. Vehicles sales in the U.S. totaled 16.1 million in 2007, yet dropped to 13.2 million in '08. Sales of cars and light trucks so far in 2009 are at their lowest annualized sales rate since 1981 and some predict that as few as 10 million vehicles will be sold in the U.S. this year. 

While the industry is currently in a cyclical downturn, Volkswagen has gone counter cyclical. That counter cyclical strategy now looks like an incredibly proactive and bold move from Germany's largest automaker. By announcing its new plant in 2008 -- a $1 billion, 2.4 million-square-foot, 2,000-employee facility that is slated to begin production in early 2011 -- VW's timing seems to be perfect.

The same experts that predict 10 million cars and trucks sold in the U.S. this year also predict that by 2011 or 2012, vehicle sales in the U.S. will rise to the 15 million mark again. Predictions of sales rising to 15 million units in the U.S. by 2011 or 2012 were also supported recently by automotive industry experts in China. Over the last several months vehicle sales in China have topped sales in the U.S. for the first time ever. However, that reign is expected to be short-lived if sales reach 15 million again here in the U.S.  

In an article recently published by Bloomberg.com, Volkswagen's Frank Fischer also thinks VW's timing is excellent. Fischer is the Volkswagen Group of America Chattanooga Operations CEO. "This is great timing," Fischer said. "The worst is over in the U.S. car market."

The Volkswagen project in Chattanooga is Southern Business & Development “Deal of the Year” for 2008.