Fall 2011

For complete coverage of economic development in the South, go to www.RandleReport.com or www.SB-D.com. For full coverage of the South's automotive industry, go to www.SouthernAutoCorridor.com. For complete coverage of economic development in the rural South, go to www.SmallTownSouth.com.

Editorial

The South's seven new governors: Who's hot and who's not as we embark on another year?

While it is too early to tell which of the seven new governors in the South that came into office in the first quarter of 2011 are truly engaged in economic development, some of their state performances in job generation in their first year can give us an idea. In 2011, new governors took office in Alabama, Florida, Georgia, Oklahoma, South Carolina, Tennessee and West Virginia. 

Who's cold after their first year? That's easy: few significant job generating projects came out of Alabama in 2011, where first-year governor Robert Bentley has had to deal with negative publicity stemming from a new immigration law.

Florida Gov. Rick Scott helped his state make a pretty good comeback in the last few months of 2011, but that was after a five-year bloodletting in Florida. Gov. Scott and his economic development chief Gray Swoope still have a long way to go, yet for the first time in ages we see Florida on the right track. 

Georgia Gov. Nathan Deal saw but a handful of major projects in his first year even though his state is in dire need of some good news. Atlanta ranked last among all U.S. metros in job generation (a net loss of 31,000 jobs) last year and Georgia's rural counties have the second-highest collective unemployment rate of any state in the South at 12.35 percent.

Who's warm? Oklahoma's first-year governor Mary Fallin, who we have known for years, is without question engaged in economic development in that state, which continues to enjoy the lowest unemployment rate in the region. Tennessee is doing some good things, even though their economic development agency has gone through a significant downsizing since Gov. Bill Haslam took office in January 2011. West Virginia (Gov. Earl Ray Tomblin) is also one of those states that has the luxury of a lower than average unemployment rate.

Who's hot? In 2011, only one state stood out among the seven Southern states that have new governors. South Carolina is on a huge roll and that was the case the minute new governor Nikki Haley took office and named Bobby Hitt to lead the South Carolina Department of Commerce. While the projects flew in the Palmetto State in 2011, two that were announced in the fall quarter – Continental Tire and Bridgestone -- will rank high when the 2012 SB&D 100 comes out later this year.

mike@sb-d.com

Texas creates one in every five new jobs in 2011

There has been one constant throughout the three phases of The Great Recession -- housing bust, stimulus recovery and the post-stimulus recovery -- and that has been the success of Texas and its diversified major markets. Various reports this year have shined on The Lone Star State, including being named "Best State for Jobs" by Forbes, "Best State for Business" by CEO Magazine (for the 7th consecutive year) and also this year Site Selection named Texas as having the best state business climate in the U.S. To top it off, a recent report by the Milken Institute shows that one in five new jobs created in the U.S. in 2011 came from Texas, even though the state is home to only about 8.5 percent of the U.S. population. In the recently published Milken report, four of the top five best performing U.S. cities -- San Antonio, El Paso, Austin-Round Rock and Killeen-Temple-Fort Hood -- came from Texas as did nine of the top 25. And it's not just Houston, Austin, Dallas, Fort Worth and San Antonio contributing to Texas' impressive economic development trophy case. El Paso, McAllen, Killeen-Temple-Fort Hood, San Angelo, Lubbock and Corpus Christi, among others, have been cited by some source as having economies that are in jump-start mode in the final phase of The Great Recession's recovery. Even tiny Victoria, Tex. has been featured as it is cited by SB&D in this issue's cover story as a poster child for the massive re-shoring event that's underway in earnest in the American South. As we look back at the post-stimulus recovery -- the final phase of The Great Recession -- there is no question that Texas outperformed all U.S. states during the recession and is outperforming all states in the recovery. 

Four high-flying Texas metros hit decade-high employment levels

Sure, unemployment rates are only slightly lower than 10-year highs in many Texas markets, but that doesn't mean they aren't on their way down and fast. In December, Houston, Austin, El Paso and McAllen were four of five U.S. metros that equaled if not surpassed their highest employment levels in a decade. Houston, with 2.628 million nonfarm jobs, was the largest U.S. metro to equal its highest job level over the last 10 years. The other metro to equal or surpass its largest employment level was Pittsburgh. Those in the South that are almost to their top job levels include San Antonio, Washington, D.C. and Oklahoma City.

New Orleans most improved city for business in Wall Street Journal report

The Wall Street Journal's recently published MarketWatch Best City for Business report saw New Orleans jump from 77th out of 102 U.S. metros last year to 33rd this year. The jump represented the greatest improvement of any U.S. metropolitan area. MarketWatch surveyed all U.S. cities with populations of 500,000 or more -- 102 in all -- examining 15 criteria. Washington, D.C. was the Best City for Business followed by Boston, Des Moines, Minneapolis and Omaha. Making the top 10 in the South were Oklahoma City (6th), Austin (8th) and San Antonio (10th). Richmond, Dallas, Houston, Durham, Nashville, Raleigh and Tulsa all made it into the top 25.

Feds reject Duke-Progress merger. Merger revision coming in March

Federal regulators struck down Charlotte-based Duke Energy's proposed $26 billion merger with Raleigh-based Progress Energy. The two energy giants vowed to file a third merger revision to appease federal monopoly concerns. The earliest possible date for submission of the revised proposal would be in March.

Lexington-Fayette, Ky. receives top medium-sized market ranking

Lexington-Fayette, Ky. ranked No. 1 in the "Fourth Economy Community" (FEC) index ranking among mid-sized U.S. markets with populations of 150,000 to 300,000. Key criteria included investment, talent, place, diversity and sustainability.

Forbes: "Heavy metal is back: The Best Cities for Manufacturing"

Houston led all U.S. markets in the ranking "Best Cities for Manufacturing" released by Forbes in December. Ranking in the top 10 in the South included San Antonio (4th), Virginia Beach (5th), Kansas City (7th) and Oklahoma City (10th). Detroit was 6th.

Louisiana exports rise by 45 percent

Exports from Louisiana jumped 45 percent during the first three quarters of 2011 compared to the same period the previous year. Exports from Louisiana totaled $39.8 billion in the first nine months of 2011, up from $27.4 billion in 2010.

Samsung's $3.6 billion Austin expansion running full speed

Korean chipmaker Samsung Austin Semiconductor reported in December that its $3.6 billion expansion of its Austin facilities is now running at full speed. The expansion project, begun in 2010, set a record by moving from preliminary production to full production in just five months. The new line produces low-power "systems-on-a-chip" for mobile devices. The plant in northeast Austin now houses 2,400 workers, the most ever for Samsung.

Embraer officially opens first North American facility in Melbourne, Fla.

In December, Brazilian jet manufacturer Embraer S.A. officially opened its $41 million jet facility at Florida's Melbourne International Airport. The company broke ground on the facility in December 2008 where it is now assembling its $3.75 million Phenom 100 light jets. In addition to the 90,000-square-foot assembly plant, Embraer has included a customer center that will serve as a showroom and sales center for the Phenom as well as for the company's larger Legacy and Lineage models. At the customer center, aircraft buyers can discuss details of their purchase, from the avionics to seating, as well as take delivery of their purchase. 

Manufacturing on a roll; Oklahoma leads pack

Manufacturing jobs increased by 1.9 percent between October 2010 and October 2011. That doesn't seem like much, but considering all other sectors grew by only 1.1 percent during that time it is a huge statement. Utah, Louisiana, South Carolina and Michigan all saw about five percent gains in their manufacturing employment rolls during the October year-to-year. Oklahoma saw an increase of 8.5 percent, the largest such increase in manufacturing job gains in the country from October 2010 to October 2011.

Manufacturing jobs rebound sharply in S.C.

South Carolina saw 15,000 more jobs from October 2010 to October 2011, dropping that state's unemployment rate to 10.5 percent. Manufacturing accounted for more than three-quarters of the job total, posting a 10,800 gain during the same period. In September and October of 2011, Bridgestone, Continental Tire and Nephron Pharmaceuticals announced plans to create a combined 3,250 jobs in the Palmetto State.

St. Louis Post-Dispatch courts Mercedes after embarrassing Alabama immigration law event

In November, the St. Louis Post-Dispatch courted Alabama's Mercedes-Benz plant after police in Tuscaloosa arrested Detlev Hager, a 46-year-old Mercedes executive traveling on business in the state. Hager didn't have proper identification on him or in his rental car so under Alabama's new immigration law he was arrested. The Post-Dispatch opinion piece read, "Hey, Mercedes, time to move to a more welcoming state" and "Carpetbaggers never have been treated very kindly in the South, though we would have thought exceptions would have been made for those with SUV factories in their carpetbags." The opinion piece also added, "We are the Show-Me State, not the 'Show me your papers" state. Charges were dropped after an associate delivered Hager's passport and German driver's license, the Tuscaloosa News reported. 

Sweeney, Randle weigh in on Alabama immigration law 

In an article published on November 30 in the Mobile Press-Register, Mark Sweeney, senior partner at Greenville, S.C.-based McCallum Sweeney Consulting, weighed in on Alabama's tough new immigration law. "Alabama has worked so hard to reinvent itself as a destination for global manufacturing. It's really been a remarkable transformation. Unfortunately, this law really is counter to that effort. There's nothing good about it. I can't see any positives in terms of economic development," Sweeney said in the article. In November, an embarrassing development occurred in Alabama when a Mercedes executive was arrested as a result of the new law. Charges were eventually dropped after the German executive, who was visiting the automaker's assembly plant in Vance, Ala., delivered the proper paperwork to Alabama authorities. A week later, a Japanese man temporarily working at Honda's assembly plant in Lincoln, Ala. was stopped at a roadblock and arrested as a result of the new law. Mike Randle, publisher of SB&D, also was interviewed by another Alabama-based daily newspaper about the tough immigration law. "We get foreign visitors all the time. This is going to happen again, there's no question. If it does, I can't imagine what the impact will be," Randle said in an article published by The Birmingham News in November. 

Forbes' best states for business

Forbes recently published its "Best States for Business" ranking. Virginia (2), North Carolina (4), and Texas (6) were the only Southern states to make the top 10. Georgia and Oklahoma made it into the magazine's top 20.

More Californians migrating to Texas

California has sent more folks to Texas than any other state by a wide margin. In fact, according to Census figures, more than 360,000 people have relocated from California to Texas in the last five years. That number represents the largest state-to-state migration in the U.S., where only 11.6 percent of Americans moved in 2010 and 2011. The figure is the lowest percentage of people moving on record or since the Census Bureau began tracking migration patterns in 1946. 

New megasite being readied in Northeast Florida

The Crawford Diamond Industrial Park is being readied by Nassau Co., Fla. The site features 1,814 acres and sits at the junction of two major railroad lines. Steve Rieck, executive director of the Nassau County Economic Development Board, said that Toyota considered the site for an assembly plant a few years ago before choosing Tupelo, Miss. About $86 million in state road construction is being spent to widen access to the site and other infrastructure is being built adjacent to the dual-rail site.

Another new megasite being developed in the South

The South Alabama Megasite was launched in the fall quarter. The 2,362-acre site is in Bay Minette, Ala., which is located in the far-southern county of Baldwin. Interstate 65 is contiguous to the site and I-10 is located 23 miles away. The Port of Mobile is located just 32 miles from the new megasite.

Caterpillar moving plant to North America from Japan

Caterpillar officials announced in mid-November that the world's largest manufacturer of construction and mining equipment will build a new plant in North America and relocate production from Japan. The plant will be CAT's "global source" for small-track tractors and mini-hydraulic excavators for the America's. The new facility will also export partially assembled mini-excavators to Europe. No location for the plant has been determined as of mid-November, but the Illinois-based company said it will house about 1,000 workers. Caterpillar began a "Southern strategy" about 15 years ago placing plants in the American South in Arkansas, North Carolina, Texas and Georgia, where union activity is much lower than where the company is located in the Midwest.

Virginia town wins "Best Place to Raise Kids"

Blacksburg, Va. was named the "Best Place to Raise Kids" in the U.S. by Bloomberg/BusinessWeek in the fall quarter. Blacksburg, home to Virginia Tech, has 41,383 residents.

West Tennessee adds more jobs than any TVA region in 2011

Economic development in West Tennessee is surging as companies like Electrolux, Mitsubishi Electric, and auto parts suppliers Quaprotek and UGN begin hiring at new plants. Among TVA's regions, West Tennessee saw the most added jobs and the second highest in capital investment in the first 11 months of 2011.

Southern-built, foreign-owned and exported worldwide

The U.S. has lost 2.8 million jobs to China alone over the last 10 years. The vast majority of those jobs are in the manufacturing sector and SB&D estimates that over 1 million manufacturing jobs have been lost in the South to China in those 10 years. But the tide is turning and it is doing so fast. No where else is the return of manufacturing jobs to the South more visible than in the automotive industry, where vehicles built in the Southern Automotive Corridor are now being delivered all over the world at a pace never before seen. Toyota is now exporting San Antonio-built Tundra and Tacoma pickup trucks and exports 100,000 vehicles from its four U.S. plants in Blue Springs, Miss., Georgetown, Ky., San Antonio and Princeton, Ind. to 19 foreign countries. Nissan, which operates plants in Canton, Miss. and Smyrna, Tenn., is preparing to begin exporting its vehicles and may even build some models -- some that are not even sold in North America -- in the Southern Auto Corridor strictly for export. Currently, more than half of the models assembled at the Mercedes-Benz Vance, Ala. plant are exported overseas and BMW is expected to export about 70 percent of the X3, X5 and X6 models made at its Greer, S.C. plant to more than 130 global markets. BMW was recently named "Exporter of the Year" by the National Association of Foreign Trade Zones.

Oklahoma City ranked tops for military retirement

Oklahoma City was named the best place for military members to retire, according to the 2011 Best Places for Military Retirement that was recently published by the United States Automobile Association and Military.com. OKC received the honor due to its ideal economic climate for military retirees to start second careers as well as for the city's low unemployment rate and low cost of living.

Distillers in Kentucky like Jim Beam and Maker's Mark hail Korean pact

Kentucky bourbon makers toasted the Korean trade agreement in a sign of growth in the Asian market. Koreans spend $10 billion on alcohol, including $4 billion for whiskey. Kentucky is the largest producer of bourbon in the world.

Texas tops business climate honors

Site Selection magazine has named Texas as the state with the best business climate for 2012. Following The Lone Star State was Georgia, North Carolina, Virginia and South Carolina.

Billions in resident income lost in Fairfax, Va. as a result of wealth flight

Wealthy residents of Fairfax, Va. are fleeing the Northern Virginia county like few others in the country. In a report published by The Washington Times, over 200,000 families earning an average of $70,000 in household income left Fairfax County in recent years. They took with them $15 billion in tax revenue. In fact, Fairfax saw more families relocate to other jurisdictions in the last five years than what has occurred in Detroit's Wayne County during the same time frame.

Oklahoma City continues to have the lowest unemployment rate among large cities in the South

In October the jobless rate in Oklahoma City was at 5.8 percent, the lowest of any major market in the South. Midland, Tex. earned the lowest unemployment rate of all small markets in the South with 4.5 percent

Atlanta loses more jobs than any U.S. metro; Houston gains most

The U.S. Bureau of Labor Statistics released data in October that showed since August 2010, the Atlanta metro lost more net jobs than any other U.S. metro. Atlanta saw a loss of 30,800 jobs, nearly three times the number of jobs lost in the same period by the second worst performing market, which was Kansas City, Mo./Kan (--12,800). Houston led all U.S. markets with a net increase of 65,600 jobs from August 2010 to August 2011.

Project Soccer blame game: "It appears to me everybody is trying to cover their tail."

That's what North Carolina Commerce Secretary Keith Crisco had to say about the political backlash seen in North Carolina after losing out to South Carolina for a $500 million, 1-million-square-foot, 1,700-job tire plant that will be built by Continental Tire. North Carolina Republican Senate leader Phil Berger blamed Democratic Gov. Bev Perdue for losing out to The Palmetto State for the coveted project. Berger cited ethical concerns that a Democratic state senator and other Democratic donors owned the land in Brunswick County, N.C. where the project would have been sited if won by North Carolina. On the other hand, Gov. Perdue blamed Republicans in North Carolina because they wouldn't sign off on a $45 million cash incentive to the tire maker. Continental officials maintained that the ethical concerns about the proposed site west of Wilmington, N.C. were not an issue, however, the company made it clear that the $45 million cash package was an issue in winning the project. The plant will be built in Sumter, S.C.

Green job growth to exceed overall job growth in Mississippi

Mississippi, which has landed several high-profile clean tech projects of late, will see green job employment grow by 18.5 percent over the next 10 years, which will exceed overall job growth of 12 percent. The projections were made by the Mississippi Department of Employment Security and the first-ever Mississippi Green Jobs Survey that the department has conducted.

Deals at Deadline

Amazon.com announced it will open two distribution centers in the Richmond, Va. area next fall that will house over 1,300 workers. The $135 million project in Chesterfield and Dinwiddie counties is Virginia's largest single economic development deal in terms of jobs generated since 2004. Amazon also confirmed two new distribution centers in Murfreesboro and Lebanon, Tenn. in late December. The Seattle-based online retailer is establishing a massive footprint in the American South as it has announced more projects in the region than any other company in 2011. Hitachi Metals North Carolina announced at deadline it will invest $60 million at its China Grove, N.C. plant. The company, which produces ferrite magnets, will add 65 full-time jobs. Sara Lee is building a $3 million addition to its St. Joseph, Mo. meat processing plant that will increase employment there by 56 new jobs. Sportsman Boats, a manufacturer of saltwater fishing boats, will establish a new facility in Dorchester Co., S.C. The $2 million project will create 30 new jobs. The EverBank relocation project in Jacksonville, Fla. was finally approved in December. The bank will move 1,500 workers from Southside JAX to downtown JAX. Rubbermaid Commercial Products is upgrading its facilities in Winchester, Va. and will open a distribution center in neighboring Frederick Co. The project will create 71 new jobs. Automotive parts supplier TWL Precision announced plans near the end of the year to expand its current operations in Charleston Co., S.C. The deal will create 35 new jobs. Food distributor Pate Dawson Co., announced it will locate a new facility in Iredell Co., N.C. The $8.5 million project will create 49 jobs. Wilbert Plastic Services announced at deadline it will create 150 new jobs in Lebanon, Ky. The company is an auto parts supplier.

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