Spring 2005

Around the South

QUIZ

In this year’s SB&D 100 (published in this edition) the automotive industry led all other industry sectors in the South with 73 deals with 200 jobs and/or $30 million in investment announced in calendar year 2004. Name the second, third and fourth-most active industry sectors for those same deals in the South for calendar year 2004.

(Scroll down for answer)

Venture Capital Task Force formed in the South

The first multi-Southern state venture capital task force was formed and announced in the spring quarter. The Southern Growth Policies Board, a public policy think tank that centers on matters exclusive to the South, announced the creation of VentureSouth. The new task force will help create a network of venture capitalists, entrepreneurs and policy makers to increase the flow of venture capital funds to the region. Virginia Gov. Mark Warner is chairing the initiative. VentureSouth will be managed by the Southern Technology Council, the Southern Growth Policies Board's advisory council on technology issues. The first meeting of the task force will occur in Richmond this October.

Scripps Construction to Begin despite Lawsuits

A week after receiving information from Scripps that it might pull its massive bio project out of South Florida, Palm Beach County Commissioners voted on May 24 to move forward with the building of the Scripps headquarters and campus on the 1,920-acre Mecca Farms sites. The Mecca Farms site choice has been met with lawsuits and protests from environmental groups citing the location as sensitive to the Florida Everglades. Opponents to the project also claim the development will violate state land use regulations. Palm Beach County and the State of Florida have earmarked almost $800 million for the purchase of the site, the construction of the Scripps headquarters and campus and to pay for its operating costs for seven years. You can read more about the South’s bio industry by turning to page ____ in this edition.

Short List for Airbus Project a Southern Affair

Kansas wanted the deal and so did Arizona, California and Washington State. In fact 32 U.S. states spent plenty of time and money courting European aircraft manufacturer Airbus and most of those states were located outside the South. What they were courting is the huge project European aircraft manufacturer Airbus has on the table right now. That project is a $600 million plant with an expected 1,100 jobs. The proposed facility will build refueling tankers for the U.S. military. In May, officials with Airbus cut the site list down to four, all of which are located in the South: Kiln, Miss.; Mobile, Ala.; North Charleston, S.C. and Melbourne, Fla. A decision is expected on the final site by the end of June and may be chosen prior to this edition’s release. Our pick? Look for Mobile to be the winner of Airbus.

Why Wachovia is spending $400 Million in Birmingham

When we first heard about the $400 million data center Wachovia announced in Birmingham in the winter quarter, we thought the figure was a typographical error. After all, the deal was only going to create 30 to 40 jobs. And data centers weren't known to be large, capital intensive projects. But Wachovia's data center is different. The center, which is being built at the Jefferson Metropolitan Park at Lakeshore, apparently will be the "Fort Knox" of data centers in the U.S., with a degree of security and data capacity that's second to none anywhere. The 210,000-square-foot facility is being designed to remain operational during any manmade or natural disaster. A spokesperson for Wachovia said in May that the center will have redundancies for every system that is needed to support the facility, including heating and cooling, power, communications and water systems. Wachovia purchased Birmingham-based Southtrust in the fall quarter of 2004.

Charlotte's Proposed Light Rail Garners $40M

The North Carolina Board of Transportation has allocated a $40 million grant to help jumpstart Charlotte's proposed light rail project. The grant brings the total given out to the light rail system to over $100 million to be spent on real estate, rail cars, site preparation and the building of a vehicle maintenance facility. Light rail service in the Charlotte region will begin from the uptown area to south of the city and expected to be operational sometime in 2006.

Burger King Keeping HQ in South Florida

The headquarters of Burger King Corp. will consolidate to a 250,000-square-foot building in Coral Gables, Fla., as opposed to relocating to Houston. The company, which has offices in Dadeland and near the Miami International Airport, is spending about $70 million on the move. The new headquarters will house around 650 employees. Burger King was founded in Miami in 1954 and had $12 billion in revenues last year.

Fluor Relocating to Dallas/Fort Worth

Fluor Corp., one of the largest international engineering and construction companies, is relocating its corporate headquarters from Southern California to the Dallas-Fort Worth metro area. The company is searching for a 100,000-square-foot office that's close to a variety of services, namely hotels, restaurants and banking centers. Fluor, which employs about 6,000 workers in Texas, plans to relocate about 100 workers from California and add about 70 more in the corporate headquarters move.

Consumer Confidence up the Most in the Central South

For about four years now we've been trying to tell you that states in the central South have performed better economically than their Southern brethren to the east and west. Interestingly enough, states such as Alabama, Mississippi, Tennessee and Kentucky were hurt the least by the killer downturn in 2001, 2002 and parts of 2003. Of those states, Alabama really stood out, expanding their deals turned, one of the few states in the South to do so during the recession. In fact, this is the third consecutive year Alabama has been recognized as "State of the Year" (see Hot Markets feature). So it's only natural to see a federal government report indicating in the spring that consumer confidence in the central South is leading the region, rising from 84 points in March of 2004 to 114.6 points in March of 2005, the highest increase of any Southern region.

Tennessee Passes Jobs Initiative

Tennessee Gov. Phil Bredesen's $20 million jobs initiative is now legislation. The new initiative will expand job training in the state and begin the process of a rural broadband effort. Tennessee is the latest Southern state to target the development of high speed Internet access in its rural regions.

Kentucky Governor Signs Tax Modernization Legislation

In the spring quarter Kentucky Gov. Ernie Fletcher signed legislation that will reform the state’s outdated and unfair tax system. House Bill 272 is designed to reduce tax burden on the poor, provide tuition tax credits for families of Kentucky students at in-state colleges, improves the tax climate for economic development, repeals a corporate license tax that was established in 1906 and offers significant environmental incentives. The new bill also reduces the top state income tax rate from 8.25 percent to 6 percent in 2007. Also part of the bill is an increase in taxes on cigarettes. The current three cents a pack tax had never been increased. The new bill raises cigarette taxes to 30 cents a pack.

Hyundai Officially Opens Alabama Plant

South Korea-based automaker Hyundai officially opened its first U.S. assembly plant on Friday, May 20 in Montgomery, Ala. The $1.1 billion facility employs about 2,000 workers and is building the Sonata model sedan and the Sante Fe SUV. After months of testing, Hyundai shipped its first commercial-ready vehicle to dealers on May 12. About 60 suppliers have chosen sites in Alabama to supply the 2 million-square-foot factory. You can learn more about the Southern Auto Corridor by logging onto www.SouthernAutoCorridor.com.

Missouri Passes Tort Reform

New Missouri Gov. Matt Blunt signed a tort reform bill in the spring quarter that places a cap on punitive damages of $500,000 or five times the actual or economic damages found by a jury, whichever is greater. In addition, the new bill puts a $350,000 cap on pain-and-suffering or non-economic damages and protects rich defendants by restricting their liability unless they are found to be at least 51 percent or more at fault.

10 Million Square Feet of Class-A Office Space Vacant in Atlanta

Since 2000, Atlanta's overall economy has been hammered, humbled, recovered and revered again and today it can best be described as nondescript. Some good deals are coming out of Atlanta, but the glory days of the late 1990s seem like decades ago in one of the South's most dynamic markets. On December 31, 2004, Atlanta had the woeful distinction of being home to 10 million square feet of vacant Class A office space, all of it within the Perimeter. That's not good considering the state expects growth of about 75,000 new jobs this year with about 45,000 of those coming out of Atlanta. We know Texas is a big place, but for the sake of comparisons, the state created about 30,000 jobs in January of this year. Of those, about 15,000 came from Dallas-Fort Worth, a third of Atlanta's projected jobs for the year all done in D/FW in one month. We have never underestimated Atlanta's ability to come back. In fact, Atlanta is one of the South's greatest comeback kids. Our concern centers on the fact that there are several new high rise office buildings under construction or planned inside the Perimeter. The square footage of Class A office space that may be coming out of the ground in the next two years totals about 2.5 million square feet. Our simple question is, if you can't fill 10 million square feet of Class A space, why is 2.5 million square feet more of what you can’t fill being built? We realize some of the new projects are pre-leased to an extent, but from what we are finding those are companies already in Class A space in Atlanta and are simply moving to the new projects.

Everglades Project Honored

The American Council of Engineering Companies has chosen a 27-square-mile Florida Everglades restoration project as the most significant engineering accomplishment at its annual Engineering Excellence Awards. The South Florida restoration project won over Chicago's Millennium Park and the Rion-Antirion Bridge in Greece.

Texas, Mexico Water Dispute Solved

In the spring quarter Mexico agreed to repay its entire water debt to Texas' Rio Grande Valley by the fall of this year. The agreement ends a 12-year dispute between Texas and Mexico over water rights in the Rio Grande Valley. Mexico will deliver about 750,000 acre-feet of water under the terms of the 1944 Water Sharing Treaty signed by Mexico and the U.S. The return of the water owed by Mexico will benefit Texas farmers, ranchers and industry in South Texas.

Union Pacific Relocating Rail in Central Texas

In the spring quarter the state of Texas and Union Pacific Railroad agreed to a plan to relocate UP's freight lines in Central Texas in order to pave the way for a new commuter rail line from Georgetown, Tex. to San Antonio. A bill was drawn up in the legislative session to put $100 million a year into the relocation of rail lines in densely populated areas of the Lone Star State. The Texas Dept. of Transportation will be in charge of the relocation money and would be able to issue up to $1 billion in bonds for rail-oriented projects.

Washington Mutual to Hire 4,200 in Texas

Seattle-based Washington Mutual, a financial services company, announced in the spring it will locate a new regional operations center in either San Antonio or somewhere in the Dallas/Fort Worth metro. The deal was announced by Washington Mutual's Chairman and CEO Kerry Killinger. The project is expected to create about 4,200 jobs over seven years.

Is Project Pinetree Two Separate Deals?

We've speculated for three months now about the company behind "Project Pinetree." After much thought we now believe there are two large automotive projects scouting the Southern Auto Corridor (www.SouthernAutoCorridor.com). One of those is Korean-automaker Kia. Site searchers for that project were seen in northeast Louisiana and Crestview, Fla. during the spring quarter. As for Chattanooga and Limestone, County, Ala. being on the short list for "Pinetree" as we first reported, we believe that project is separate from the Kia search. It's our gut feeling that site search is being conducted by a German automaker, specifically Audi or BMW.

Sony Looking to Build Large R&D Facility at Research Triangle Park

Sony Ericsson, a mobile phone maker that is owned equally by Japan's Sony Corp. and Sweden's Ericsson, is considering a build-to-suit facility in North Carolina's Research Triangle Park that would accommodate it largest R&D group in North America. The mobile phone company sells most of its wireless units through Cingular in the U.S. The new facility will total 180,000 square feet. Sony Ericsson employs about 600 workers at smaller facility in RTP. The company sold 9.4 million phones in the first quarter of 2005.

Economic Development Bills Shot Down in Georgia

Significant pro-business legislation passed in the recent Georgia legislative session, including changes in Georgia's tort laws. However, two bills specific to the practice of economic development in the Peach State were shot down. Senate Bill 5 didn't pass. It would have allowed developers to use eminent domain to take private land for various developments. House Bill 218, which would have made negotiations between expanding and relocating companies and economic development officials more confidential, also died on the House floor.

Three Southern States Make Top Nanotech Ranking

Texas, Maryland and North Carolina made Small Times magazine's fourth annual top Ten U.S. States for nano and micro-technology industry sectors. The magazine gives points in its ranking for workforce, research, innovation, industry, venture capital and operating costs. Texas was ranked fifth, Maryland seventh and North Carolina eighth. California, Massachusetts and New Mexico ranked Nos. 1, 2 and 3.

Dell hiring this summer and will begin Production in September

When it comes to getting a plant up and running Round Rock, Texas-based Dell doesn't fool around. The computer maker, which announced a $100 million, 700-employee, 500,000-square-foot plant in Winston-Salem, N.C. on December 22, 2004, expects to have the facility producing computers by the end of September. While there have been instances in the South when plants the size of the Dell's in Winston-Salem were built and in production in nine months, it has been extremely rare. Dell's initial hires will be sent to other production facilities in Texas and Tennessee for training prior to full time work on the North Carolina plant in September.

North Carolina Aerospace Alliance Gets Boost

The Golden Leaf Foundation, which administers 50 percent of the money North Carolina receives from the settlement made by cigarette makers, is investing almost $10 million in the newly created North Carolina Aerospace Alliance. The Alliance will assist companies in the manufacture of spare parts for older military aircraft that are still in service.

Alabama Port Expansion Gets Approval

The Alabama State Senate approved a measure to provide $80 million to assist the Alabama State Port Authority in funding the construction of the new Choctaw Point Terminal in Mobile. The new container and intermodal terminal will ultimately cost $300 million and will be operational in 2007.

Atlanta’s Commute Worst in Nation

Oregon-based researcher and demographer Bert Sperling reported in the spring quarter that Atlanta’s typical commutes to and from work are some of the longest and are the costliest in the U.S. Sperling reported that the typical commute in Atlanta averages 60 miles each workday and another 60 miles on the weekend. The report stated that in Atlanta, a family with two commuters will spend approximately $4,500 a year in commuting to and from work.

Loudoun County, Va. Nation’s Fastest Growing County

A suburb of Washington, D.C. has been recognized by ESRI as the fastest growing county in the U.S. According to the company, Loudoun County, Va., is growing at an annual rate of 8.3 percent. The national population growth rate is 1.1 percent. Loudoun County had 169,599 residents in 2000. It currently is home to 257,240 residents.

QUIZ ANSWER

he second place industry sector in the number of deals turned in 2004 was call centers (55 deals), followed by the third-place industry, distribution, with 41 deals. The fourth-best performing sector was biotech with 30 deals of 200 jobs and/or $30 million in investment. For more information on industry performances go to the 2005 SB&D 100 section listed under the Features category.