Economic Development in the World's Fourth Largest Economy
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 Fall 2015


Winter 2012

Top ten stories

Each year in this spot we give you what we believe were the top 10 stories in economic development in the American South over the last year.

Re-shoring jobs from Japan and China

SB&D stumbled upon something in September 2011 that may be bigger than any of the South's great manufacturing waves that have hit the region since World War II. According to the Boston Consulting Group, as many as 3 million jobs may be re-shored from China to the U.S. and Mexico by the end of the decade. The BCG study, along with our own data showing that manufacturing project totals began rising dramatically in the South beginning in 2007 then set a 20-year record of 335 manufacturing deals in 2010 of 200 jobs or more, had us curious. Could this rise in manufacturing projects in the South over the last four years be associated with BCG's report that companies are choosing the South over China for increased capacity? The answer is yes. The re-shoring of jobs from China to the South has begun, we have hard data on it and we didn't even know the source until BCG’s report came out last August. When it is all said and done, this story may be the biggest in the South’s economic development history.

Recovery in full swing

SB&D won't have its official report on the South's economic development performance in calendar year 2011 until next issue. But we can say with confidence that 2011 was another outstanding year for economic development in the South. The only question is did the South do better in 2011 than in 2010? If you recall, our annual SB&D 100 report last year saw the South ring up its best year since 1998 in the total number of large projects. That issue also revealed that in 2010 the South set a 20-year record for manufacturing projects of 200 jobs or more with 335. The reporting of economic development projects is like the canary in the coal mine. In other words, the projects announced in 2010 are just now affecting and lowering the unemployment rate in the South. With another outstanding year in 2011, there is no question the recovery has got some strong legs right now.

The recovery on the Gulf Coast

The April 2010 BP oil spill brought much of the Gulf Coast to its knees. Even today many real estate developers haven't recovered from the effects of the spill and the recession. We know of one Gulf Coast condo developer who has been in business for over 40 years and today his company cannot finish its latest high-rise project because it cannot afford to finish it. That, after BP has given his company millions, is lost revenue. That developer, who has built thousands of condominium units over the years, has lost everything, even his own home. The BP spill capped off a horrible three years for some on the Gulf Coast. But the recovery from the spill and the recession began in earnest in 2011. Tourism-related businesses had their best summer in years last year. For example, Alabama beaches set a record year in attendance at around 5 million visitors in 2011.

The comeback of the Southern Automotive Corridor

Here is another fine comeback associated with the recovery years of 2010 and 2011. No industry sector recovered more than the region's automotive industry in 2011. Activity in the Southern Automotive Corridor has been off the charts the past 18 months. To give you an idea, check out these numbers: In 2009, there were 35 significant automotive-related projects announced in the Southern Automotive Corridor (50 jobs or more). That figure rose to 88 in calendar year 2010. In 2011, there were 184 major automotive industry announcements in the Southern Auto Corridor, or more than five times as many as in 2009. Add to that -- we think this is the first time this has ever happened -- every major automotive and light truck assembly plant in the South was undergoing an expansion in 2010 except for GM's Shreveport plant, which is slated for closure later this year.

Houston drives Texas as the dominating job generating state (again)

In 2011, Houston led all U.S. markets with over 100,000 jobs created. The total was about half of all jobs created in Texas in 2011.Only nine U.S. states added jobs in the last five years. At the top of the list is Texas, with 451,100 jobs added in those five years. How dominating has Texas been in the last five years in job generation? Well, second-place Louisiana added 57,000 jobs. While Texas is driving job growth nationwide, Houston is driving Texas. In 2011, over 100,000 new jobs were created in Houston, or about half of the 204,500 new jobs created in all of Texas in calendar year 2011. Houston is currently the fastest-growing metropolitan area in the country and about two-thirds of Houston's growth is sourced from oil and gas.

Rick Scott's first year as Governor of Florida

To say that Gov. Scott's first year was tumultuous is an understatement. One of Scott's first big decisions after assuming office as Florida's 45th Governor on January 4, 2011, was the rejection of federal money for a high-speed train in central Florida. That decision drew howls throughout the world. In this issue a year ago, we published a cover story titled, "Will Rick Scott save or sink Florida?" Well, it is too early to tell if Scott will save Florida. But we like his style in the economic development arena. Don’t be surprised if Florida makes a huge job-generating comeback in 2011.

Alabama's immigration law

HB-56, Alabama's strict immigration law that passed in September has thrown the state into the international limelight like no issue since the Civil Rights clashes in the 1960s. Some argue that the law's intent is to drive Latinos out of Alabama whether they are illegal immigrants or not. Alabama Sen. Scott Beason and Rep. Micky Hammon, the Republican co-sponsors of HB-56, have said that the intent of the law is to have illegal immigrants "self-deport." Regardless of one's beliefs about the law, it certainly has created lots of bad press for the state of Alabama, while garnering at the same time very little positive news.  

Boeing relocates 1,000 jobs to Oklahoma City

In 2010, in part due to nationwide Defense cuts, Boeing was looking for low-cost, high-productivity locations for its Long Beach-based C-130 and B-1 programs. The jobs represented business support and embedded software engineers – high-quality jobs with high salary levels and high fixed overhead costs. Boeing approached key economic developers in five different states. After a thorough analysis of cost, workforce productivity and incentives, Boeing announced that Oklahoma City would be the new location for these programs. And in January 2012, Boeing announced 800 to 900 additional engineering jobs would move from Wichita, Kan., to Oklahoma City for similar reasons. Boeing has nearly 800 employees located in Oklahoma City, and after the expansions, more than 2,000 will be located there.

Savannah-Charleston port battle

Both Georgia and South Carolina are scrambling to deepen their harbors in Savannah and Charleston to accommodate supersize cargo ships expected on the East Coast once the Panama Canal completes its expansion in 2014. “We are going to eat their lunch,” said one Georgia leader about the competition between Savannah and Charleston’s ports. “If you think I fear a one-way port (Savannah) you are wrong,” S.C. Gov. Nikki Haley said in her state of the state address in February. It is kind of a silly fight. In February, Alberto Aleman Zubieta, the Panama Canal Authority’s CEO, said that the two port rivals shouldn’t spar over funds from the federal government to deepen their harbors. He said that both ports will be needed to handle greater trade volumes that will come after the canal finishes its expansion. 

South Carolina rolling to “rubber capital of the world”

South Carolina is already a large tire-producing state with 80,000 units of daily tire production currently. Those come from existing plants built by Michelin and Bridgestone. The 80,000 daily units rank South Carolina No. 3 among U.S. tire-producing states. Of course, that was before Bridgestone and Continental announced two new tire manufacturing facilities in the state last year. Together the two facilities represent investments of $1.7 billion and over 2,500 jobs. When the two new plants come online, South Carolina will easily reach 120,000 units daily. That figure will make South Carolina the No. 1 state in tire production in the country.

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