Top Ten Stories

High Unemployment and State Budget Deficits

Like every challenging economic period in the South’s history, unemployment has risen as have state budget deficits. Currently, states in the South are carrying budget deficits that total $29.2 billion. Equally distressing is the region's overall unemployment rate, which at the end of the year was 9.34 percent. Comparatively, the West had a budget deficit of $44.8 billion (California's deficit is $33.9 billion) and an average unemployment rate of 9.16 percent; the Midwest's budget deficit is $20.7 billion with an unemployment rate of 8.4 percent and Northeastern states had a budget deficit of $41.8 billion with an unemployment rate of 9.04 percent.

State Budget Deficits in the South

* In Millions ** December 2009

Source: Center on Budget and Policy Priorities and Bureau of Labor Statistics

Boeing Brings Final Assembly of Large Aircraft to South Carolina

One of the South's top economic development stories of the year is most definitely the Boeing Co. bringing final assembly of large aircraft to the South for the first time. Boeing operates all kinds of facilities in just about every state in the South, including large operations in Wichita, St. Louis, Huntsville, Ala., San Antonio and Oklahoma City. But never has Boeing performed final assembly of large aircraft in the South. It will do just that by next year in North Charleston, S.C.

On October 28, 2009, the world's second-largest aircraft manufacturer decided that Washington State would not be the home of a second 787 Dreamliner final assembly line and that North Charleston, S.C. would be. Boeing's North Charleston project is expected to create at least 3,800 jobs and represents an investment of at least $750 million. Those two thresholds would have to be met by 2016 in order for the company to cash in on an estimated $450 million incentive package from state and local governments in South Carolina.

Next Generation Automotive Plants

Some experts have snickered at the three automotive start ups that announced assembly plants in the South in 2009, doubting their futures as eventual players in the U.S. market. But with GM and Chrysler's beat down in 2008 and 2009, there are opportunities for new automakers. Don’t forget that when Korean automakers’ Kia and Hyundai announced their first U.S. plants in West Point, Ga. and Montgomery, Ala., there was doubt then and those two automakers are setting the sales pace here in the U.S.

The three new automakers that announced new plants in the Southern Automotive Corridor (www.SouthernAutoCorridor.com) in 2009 were V-Vehicle in Monroe, La., HK Motors in Baldwin Co., Ala. and GreenTech Automotive in Tunica Co., Miss.

None of the prospective automakers have revealed their models as of yet. V-Vehicle or VVC, has been funded thus far by the venture capital firm Kleiner Perkins Caufield and Byers, or KPCB. The company, whose goal is to produce a high-quality and fuel efficient car for the U.S. market, was founded by Frank Varasano, a former Oracle and Booz Allen Hamilton executive. The vehicle design team is led by Tom Matano, who is best known as the "father of the Miata."

The other two automotive start ups that announced plants in the South include Hybrid Kinetic (HK Motors) and GreenTech Automotive. HK Motors plans to build next generation vehicles as does GreenTech and both are being led by former Chinese automotive executives. The two start ups are also banking on funding to come from the EB-5 visa program, a U.S. government program that grants permanent resident status to foreign investors who invest at least $500,000 in businesses in rural areas of the country.

Major Headquarter Relocations to the South

While 2009 will probably go down as one of the worst deal years in the South's history, one project segment had a fine year in the region. Headquarter operations, especially major headquarter relocations to the region from the West, Midwest and Northeast, had a great year in 2009, its best since 2003. Just a few of the major headquarter projects announced in the South in 2009 included J.P. Morgan Retirement Plan Services (Overland Park, Kan.); NCR and First Data (from Ohio and Denver to Atlanta); Electrolux (Charlotte), Science Applications International Corp. (from San Diego to McLean, Va.); ABB (from Norwalk, Conn. to Cary, N.C.); LegalZoom (from Los Angeles to Austin) and Northrop Grumman (from California to Northern Virginia). To give you an idea of how active headquarter relocations were to the South in 2009, of Atlanta's 59 significant deals in 2009, 24 were new, relocated or expanded headquarter operations.

Economy Wakes Up: Big Deals Return in Fall of 2009

There were some notable projects announced in the South in 2009 and most of them came at the end of the year in the fall quarter. The fall 2009 quarter certainly gave economic development practitioners and elected officials in the South hope that the two-year recession was finally over. Boeing and six large automotive projects helped propel the top 10 deals in the fall to a total of 15,000 new jobs. The last time the top 10 deals announced in any quarter in the South created more than 15,000 new jobs was in the fall of 2004.

The First New Computer Chip Manufacturing Plant since 1996 Opens in the South

After breaking ground on a 1.1-million-square-foot computer chip manufacturing plant in Richardson, Tex. in 2004, Texas Instruments finally opened the facility for business in the fall 2009 quarter. The building, which will eventually house 1,000 workers, sat empty for years while TI waited for the right time to launch the facility. The plant is the first chip manufacturing facility to open in the U.S. since 1996 and is the first globally to use 300-millimeter silicon wafers to produce analog chips. TI expects to ship the first batch of chips from the plant by the end of this year.

Louisiana's Economic Resurgence

Say what you will about Louisiana; that it is too political, that there is a culture of corruption in state government and that it will always be a "backwater" Southern state, no one in this business can dismiss its economic and social resurgence over the last six or seven years. It began in former Gov. Kathleen Blanco's first and only term only to be sidetracked by hurricanes Rita and Katrina in 2005. By the time Blanco left office two years ago, some economic momentum was returning to the state. Current Gov. Bobby Jindal has taken that momentum to another level, as the State of Louisiana can now compete with any Southern state for just about any job generating or industry investment project. There's tangible evidence that Louisiana is on a roll. According to the Census Bureau, Louisiana recently experienced its third consecutive year of net gain in population in-migration. Prior to 2007, Louisiana had gone more than two decades without seeing a single year of net population in-migration.

War, Money and the American South

There are no good wars. There are only those wars that are necessary and those that are not. We will not discuss the merits of wars that involve American troops throughout this great nation's history, specifically the two wars that the U.S. is involved in currently and has been for eight long years now. But, whether you agree with these two wars in Iraq or Afghanistan or not, in 2009 they have helped create and retain a massive number of jobs in the South (see this issue’s cover story).

Florida Still in Deep Water, Houston Sinks in 2009

The South's fastest-growing state over the last three decades is struggling in this recession like never before. Almost 150,000 jobs were lost in Miami-Fort Lauderdale, Tampa-St. Pete-Clearwater and Orlando in 2009 after a dismal 2008 and 2007. In 2009, Florida lost over 60,000 jobs in the construction sector alone. We can't remember a recession when Florida was up against the wall like it is now. Real estate, construction, tourism and financial services are the backbone of Florida's economy and those are most likely the four sectors that are still in the worst shape of any in the second quarter of 2010. And Houston, the poster child of a recession-proof large market economy in 2008, blew a gasket in 2009 losing almost 100,000 jobs.

Lame Duck Governors All Over the South

The political and therefore economic development landscape of the South is about to change big-time as the governors of Alabama, Florida, Georgia, Kansas, Oklahoma, South Carolina and Tennessee step down and new leadership takes power in all of those states at the end of the year. We can't recall a time in the South when as many as 10 new governors (three are not subject to term limits, but must win reelection) could be entering the field of economic development at the same time.

The prospective new governors of states in the South could learn a thing or two from new Virginia Gov. Bob McDonnel. We don't know Gov. McDonnel yet, but we like his style. In February, he told a business breakfast group in Richmond that as corporations think about fleeing high-tax states such as California, he hopes to talk to their CEOs about the advantages of Virginia. "I intend to spend a lot of my time calling businesses convincing them to come to Virginia," McDonnel told a group sponsored by the National Federation of Independent Business. "I may be called a corporate raider," he told the group. During McDonnel's campaign (he was elected in November), he cited economic development and job creation as his No. 1 priority.