Around the South

Summer 2009

For more information on economic development in the South, go to www.SB-D.com, www.SouthernAutoCorridor.com and www.SmallTownSouth.com.

QUIZ:

Name the five U.S. states that lost the most manufacturing jobs from July 2008 to July 2009. 

(Scroll down for answer)

Editorial

Boeing Spreading its Wings

We have been following a fluid story against our deadline for this issue that involves The Boeing Co. moving assembly of its 787 Dreamliner wide-body aircraft to locations outside of Washington State, specifically to North Charleston, S.C. The Chicago-based company, which employs over 65,000 in the Seattle area, spent $1 billion in July to purchase the former Vought North Charleston plant, which is located adjacent to the Charleston International Airport. The facility is now called Boeing Charleston. Vought Aircraft assembled 787 tail sections for Boeing in North Charleston.

In late August, Boeing applied for permits in South Carolina to expand the Charleston facility as a possible site for final assembly of the 787 Dreamliner. A story in The Seattle Times on August 26 revealed that Boeing officials had asked S.C. Department of Commerce Secretary Joe Taylor for help in getting all of the necessary permits approved to expand the site and that Boeing officials were "delighted" by the Palmetto State's reaction to its plans.

On the same day that Boeing completed its purchase of the Vought plant, Dennis Murray of Summerville, S.C., a former Vought employee now a Boeing employee, filed a request with the National Labor Relations Board seeking a decertification election that could disband the local Machinists union in Charleston. Murray said he filed the petition for the decertification vote because he felt as though the union was poorly representing the employees. Murray said he was not approached by Boeing to decertify the local union. It would be illegal for Boeing officials to do so. On September 10, Boeing workers in North Charleston voted to decertify the Machinists union by a vote of 199 to 68.

Meanwhile, in Washington State, Boeing officials have been seeking a no-strike agreement with the Machinists union there. Last year the union went on strike for a fourth time since 1989, this time for two months, a move that further delayed delivery of the 787 Dreamliner. Boeing is two years behind in the delivery of the first Dreamliner, however, the company announced this summer that the first test flight of the wide-body jet will take place by the end of the year. 

Apparently, Charleston is now in competition with Everett, Wash. for a second 787 Dreamliner assembly line. If Charleston wins out, or anywhere else in the U.S., it would be the first time Boeing would operate a commercial aircraft assembly facility outside of the Puget Sound region of Washington State. Furthermore, now that workers in Charleston have decertified the union there, and Boeing chooses Charleston for the second 787 line, the company might operate a union 787 assembly line in Washington and a non-union 787 assembly line in South Carolina. That would give the aviation and aerospace giant a unique angle in comparing the two facilities in quality and cost factors that it is unable to do now. It would also assist the company in future manufacturing operational decisions. A decision on where Boeing will place its second 787 line is expected to be made by year's end.

Mike Randle
mike@sb-d.com

Atlanta Hot Again

Atlanta has turned more large job-generating projects in the last five months than any five-month period that we can remember. In August, First Data Corp. announced it is relocating its headquarters to Atlanta from Denver, creating as many as 1,000 new jobs in the next three years. First Data, a payments processing company, has come back to Atlanta, which served as the Fortune 500 firm's headquarters until eight years ago. The First Data deal is the second major headquarters relocation to Atlanta recently. In June, Ohio-based NCR, another Fortune 500 company, announced it will relocate its headquarters to Atlanta (Duluth, Ga.), moving 1,250 jobs to the state.

San Antonio May be Hotter than Atlanta

In the summer quarter, San Antonio landed several significant job-generating projects, including AT&T, Medtronic and Boeing. Last year The Alamo City again placed in the upper echelon of major markets in our annual SB&D 100 ranking as it has almost every year this decade. There's no question that so far in 2009, Atlanta and San Antonio are the two hottest markets in the South for major corporate job and investment generating projects. 

South's Sweeps Top 10 in CNBC's Cost of Living Index

CNBC's top 10 states with the lowest cost of living were all Southern states, according to the cable news channel. Arkansas, Oklahoma, Tennessee, Georgia, Kansas, Missouri, Texas, Alabama, Kentucky and Mississippi are the 10 U.S. states with the lowest cost of living according to the CNBC study. According to the study, California, New Jersey, New York, Hawaii and Alaska had the highest cost of living.

Where are the Jobs?

Twenty-two of the nation's top 50 most populated metro areas for job postings per capita are located in the South, according to a study published this summer by indeed.com. Topping the list for job postings was Washington, D.C., which was followed in second-place by Baltimore. In another study done on job creation in the summer quarter, this one by Jay Garner and his Atlanta-based company, Garner Economics LLC, there were 13 metro markets in the South that saw year-over-year job growth of three months or more between January and June of this year (see chart). Additionally, according to the study, 37 of the South's 155 metropolitan areas and 82 of the nation's 377 metros saw at least one month of year-over-year job growth in the first six months of 2009.

Metro	*Number of months with Job Growth
Baton Rouge, La. Jacksonville, N.C. Jonesboro, Ark. Killeen-Temple-Fort Hood, Tex. Odessa, Tex. Midland, Tex. Morgantown, W.V. Tyler, Tex. Austin-Round Rock, Tex. Houma-Thibodeaux, La. Laredo, Tex. McAllen-Edinburg-Mission, Tex. Hinesville-Fort Stewart, Ga.	6 6 6 6 6 5 5 5 4 4 4 4 3

* January-June 2009. Source: Garner Economics

Downtown Redevelopment Gets Boost in Danville, Va.

In the summer quarter, City of Danville officials announced that a company headed by Gibbs International of Spartanburg, S.C. has purchased the former Dan River No. 8 Mill building, commonly called the White Mill, to develop the facility into a high technology center that will help transform downtown Danville, while preserving a significant historical structure. Developers of the project have committed to bring $400 million in capital investment and 400 jobs with an annual payroll of $16 million when the development is complete.

New Orleans Fastest Growing City

The city of New Orleans grew faster than any U.S. city between July 2007 and July 2008 according to a recent report published by the Census Bureau. New Orleans' population grew 8.2 percent and as of July 1, 2008 was at 311,853, or just over 100,000 more residents than in 2006 following Hurricane Katrina. Prior to Hurricane Katrina, New Orleans' population was approximately 480,000.
Of the top 10 fastest growing U.S. cities, seven are in the South including Round Rock, Tex., McKinney, Tex., Killeen, Tex., Fort Worth, Tex., Raleigh, N.C. and Cary, N.C.

Kansas Launches Rural Broadband Initiative

The Kansas Department of Commerce has launched Connect Kansas, a new initiative designed to increase broadband Internet access throughout rural areas of the state. The initiative, which will be funded primarily by the federal American Recovery and Reinvestment Act, comprises two key components: mapping Kansas' current broadband capacity and providing federal grants and loans to qualified organizations involved in expanding broadband to rural areas. For more information on rural economic development in the South go to www.SmallTownSouth.com.

Kansas Enacts Business-Friendly Legislation

Kansas lawmakers have passed a bill that enables companies that create 100 new jobs or more within five years to retain 95 percent of state payroll withholding taxes for seven to 10 years. The number of years that withholding can be retained depends on the amount by which the wages paid exceed the average wage in the county where the project is located.  

Alabama Governor Riley Assumes Chairmanship of Southern Governors' Association

On August 24, Alabama Gov. Bob Riley became chairman of the Southern Governors' Association, announcing a new effort to combine the resources and influence of Southern states to promote and protect mutual economic interests. Gov. Riley takes over for 2008-2009 SGA Chairman and Virginia Gov. Tim Kaine.

As his chairman's initiative, an effort Southern governors will focus on for the next year, Gov. Riley chose "Securing Southern Economic Success." This initiative will include:

* Collaborating on economic development efforts to benefit the region and "selling the American South" to the rest of the world.
* Engaging Southern governors in ongoing discussions about federal policies that could negatively affect the South.

"For the last decade or more, the South has set the pace for the rest of the nation in economic growth," Riley said. "There has been more positive growth, more investment, and more progress coming to the Southern states than perhaps any other region. We need to protect what has given us our competitive edge. As governors, we need to take a hard look at what's going on in Washington and see how it could affect our states. I think we'll find, as we always do, that we have more in common than we sometimes realize."

Riley went on to say, "Over the next year, I'll work with my fellow governors to explore our individual economic goals and find ways to collaborate on promoting the South around the world. This is a critical time for our Southern states. It's time for us to work together. It's time to combine our economic development efforts to create a better future for our children and our grandchildren. This year I want us to commit to a collective effort unlike anything we've ever seen before. We can show the world what the American South has to offer -- and we can do it together," Riley said.

The SGA is composed of governors from Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, Missouri, North Carolina, Oklahoma, Puerto Rico, South Carolina, Tennessee, Texas, the U.S. Virgin Islands, Virginia and West Virginia.

J.D. Power Ranks Southern Power Companies

J.D. Power recently published its 2009 Electric Utility Residential Customer Satisfaction Study and CPS Energy, Duke Energy-Carolinas, Progress Energy Carolinas, Alabama Power, Georgia Power and Oklahoma Gas and Electric all scored well in the "large segment" category in the South region. In the "midsize segment," Santee Cooper, Jackson EMC, Gulf Power, Mississippi Power, Kentucky Utilities and Louisville Gas & Electric were at the top of their peer group in the South according to the study.

Editorial

In Good Times and Bad, Right-to-Work States have Lower Unemployment Rates

Support for the Employee Free Choice Act, or Card Check as it is more commonly called, has been unprecedented in its candor. Supporters have actually admitted that the prospective legislation -- which would make it easier for unions to organize in non-union environments, specifically in right-to-work states in the South -- would "level the playing field" between the South and the more unionized economic environments of the Midwest and Northeast.

Never before have we heard economic development officials and politicos from outside of the region admit that for their economies to compete more favorably with the South, their way of doing things must actually be adopted by the South. Why don't we just turn that around and instead of offering up the South forced unionism, make all states in the U.S. "right to work" states, or, adopting labor practices that are clearly winning as the South's are? It is acutely obvious to us that if that happened, the U.S. in general -- including the Midwest and Northeast -- would be so much more competitive in job creation and economic development in general, particularly as the U.S. competes with other developing nations such as China and India.

Basic, yet critical data supports our argument that "right to work" for all U.S. states would make them – therefore the entire country -- more competitive than if we adopted the policies of card check, which are essentially the current policies of non-right-to-work states.

For example, currently, the average unemployment rate for all 28 non-right-to-work states is 9.16 percent. The current average unemployment rate of the 22 right-to-work states, almost all of which are in the South and West, is 8.24 percent, or nearly an entire point lower. Not a single year in this decade (even in the good times) have non-right-to-work states averaged a lower unemployment rate than right-to-work states. The following are average unemployment rates in non-right-to-work states vs. right-to-work states in selected years this decade.

Average Unemployment Rate

	*NRTW states	*RTW states
2009	9.16%	8.24%
2005	4.97%	4.75%
2004	5.30%	4.95%
2003	5.77%	5.35%

*NRTW=Non-right-to-work. RTW=Right-to-work.

Mike Randle
mike@sb-d.com

Rolls-Royce to Begin Construction on Virginia Plant

Two years ago, London-based Rolls-Royce announced a $100 million investment to build an aircraft engine components plant in Prince George County, Va., located south of Richmond. The recession and delays in production of two airliners -- the Airbus A380 and the Boeing 787 -- have kept the company from a construction start on the facility. In September, the company finally broke ground on the first phase of the campus, located in the 1,000-acre Crosspointe Centre development in Prince George. The first phase, which should be completed in late 2010, is a production plant for discs used in civil aircraft.

Want to Start Over? Here are some Location Candidates in the South

Richmond, Winston-Salem, Amarillo, D.C., Beaumont-Port Arthur, Louisville, Waco, Shreveport-Bossier City, Jacksonville and Gulfport-Biloxi were all ranked by BusinessWeek recently as attractive places in the South where struggling Americans can find a fresh start. The magazine ranked 20 markets in the U.S. where jobs are available and real estate is affordable. Of the 20 ranked markets, 10 cities are located in the South, five are located in the West, three in the Northeast and two in the Midwest.

Virginia, Texas Top CNBC's Top States for Business Ranking

Virginia was named America's top state for business in CNBC's annual survey, edging out Texas. The cable news channel ranks states on 40 different measures of competitiveness, including cost of doing business, work force, quality of life and business friendliness. Kansas, North Carolina and Georgia were other Southern states that made CNBC's top ten for business in '09. Ranking 49th and 50th were Hawaii and Alaska respectively. 

Tennessee's Rural Loan Fund Earns National Award

The Tennessee Rural Opportunity Fund has won the 2009 Multi-Community Program Award for populations over 100,000. The recognition has come from Bismarck, N.D.-based Business Retention and Expansion International. The rural development fund, considered the first of its kind in the South, is a $10 million revolving loan fund that is a partnership between the Tennessee Bankers Association, the Southeast Community Capital Corp. and the State of Tennessee. For more information on economic development in the rural South go to www.SmallTownSouth.com.

SB&D Visits South Carolina, Alabama, Georgia and Tennessee in Summer Quarter

Southern Business & Development visited four states and several markets in the summer 2009 quarter. Visits were arranged in Columbia, S.C. with business leaders there, including the South Carolina Department of Commerce, the Central South Carolina Alliance and utilities' SCANA and the SC Power Team. One side trip over to Sumter, S.C. resulted in publisher Mike Randle spending some time with Jay Schwedler, CEO and President of the Sumter Development Board. Randle took a short tour of a revitalized downtown Sumter and got a first hand look at the Sumter Opera House and the new Main Street headquarters of Thompson Construction.

SB&D also visited Atlanta and spent time with officials with the Georgia Department of Economic Development and the Metro Atlanta Chamber. Randle discussed the possibility of a new economic development alliance between Southern China and the American South with Hans Gant, Senior Vice President of the Atlanta Chamber and Jorge Fernandez, Vice President of Global Commerce. SB&D also visited with economic development officials in Rome and Dalton, Ga. SB&D also checked on the construction progress of the VW plant in Chattanooga, including a visit to the Chattanooga Area Chamber of Commerce.

SB&D's summer travel itinerary concluded in mid-August with the annual SEDC conference that took place at The Grand Hotel Marriot Resort and Spa in Point Clear, Ala. Over 250 economic development practitioners and trade allies from around the South attended the well-run conference. SB&D helped sponsor the conference.

Samsung Investing $500M to Retool Austin Plant

South Korea-based Samsung revealed in the summer quarter that in October it will begin upgrading its eight-inch semiconductor plant in Austin, Tex. for the production of 12-inch chips there in 2010. About 500 employees at the plant will be laid off by October. However, when the retooled facility opens Samsung expects to bring all of those employees back and add 200 more. 

After Two Awful Years, Activity in the Southern Automotive Corridor is Picking Up

In the summer quarter, Nissan, Toyota and V-Vehicle were original equipment manufacturers to announce new jobs in the Southern Automotive Corridor (www.SouthernAutoCorridor.com). In addition, a slight increase in parts supplier jobs occurred in the South in the summer quarter. Without including the Volkswagen announcement last summer, the job generating announcements were the first significant ones we’ve seen from the automotive sector in the Southern Automotive Corridor since the summer of 2007.

QUIZ ANSWER:

The five states that have lost the most manufacturing jobs since July 2008 are Ohio (-127,000 jobs), California (-123,400), Michigan (-108,900), Illinois (-83,500) and Indiana (-80,800). Of the nation's 13.8 million manufacturing jobs in July 2008, 8.4 million were located in either the South (4.6 million manufacturing jobs) or the Midwest (3.8 million), by far the two-largest manufacturing regions in the U.S. Since July 2008, the South has lost 477,000 manufacturing jobs (-10.4 percent) and the Midwest has lost 596,000 (-15.6 percent).

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