Mike Randle, Editor

SHOCKER!
Take That! Manufacturing Dominates Service Sector in the 2005 SB&D 100

Wasn't it Mark Twain who said, "The reports of my demise are greatly exaggerated." There isn't a person reading this that hasn't heard another quote from economists, university types, talking heads or even politicos in Washington who have said recently, "Manufacturing is gone from this country and it's not coming back."

Most of that talk began in the late 1990s when low-wage manufacturing plants throughout the U.S., especially in the South, began closing with regularity. By the time the recession came full-tilt all of the experts ranted long and hard about how manufacturing was dead in the U.S.

The problem with economic experts as far as we're concerned is they paint with too broad a brush. In other words, their information and opinions focus on the U.S. as a whole and not the South in particular. For you reading this, it's important to realize that the U.S. economy and the South's economy are two different things altogether.

I remember listening to one of those experts at a Southern Economic Development Council conference held in Memphis in 2003. He spoke about how manufacturing was finished "in this country" and what a sad state of affairs the future held for the U.S. economy. That guy didn't realize who he was speaking to. Every member of the audience represented the South's economy, not the economy of the Northeast, Midwest or West. By the way, he was from Illinois.

A perfect example of how the South's economy is so different from the U.S. economy is the difference in performances today by the automotive industry based in the Great Lakes and the automotive industry based in the South. Again, I was at a SEDC meeting, this one in 2004 focusing on the auto industry and speaker after speaker representing automotive parts suppliers based in the Midwest talked of doom and gloom. No economic expert, I don't care where they are from, can associate the South's automotive industry with doom and gloom. In fact, almost every day now we hear from parts suppliers based in the Midwest through www.SouthernAutoCorridor.com who say they must locate a plant in the South because it's the only place in the U.S. where the auto industry is growing.

At the height of the slamming we wrote that manufacturing will never be "dead" in the South. In fact, during the recession we wrote that manufacturing will expand rapidly in the South once the economy begins to turn around. We also wrote that it might not expand anywhere else in the U.S. but the South.

Our reasoning was and still is this: the South is the least expensive place in the U.S. in which to make something in the largest consumer market on the planet. There are many other factors that support a growing manufacturing sector in the South when the economy isn't tanking, like right to work laws and the region's labor force and its unrivaled work ethic. But for all practical purposes the bottom line is this: there are products that have to be made in the U.S. for the U.S. consumer. Those products, more than not, have been made in the South for decades. In the future, however, almost all of those products will be made in the South.

The 2005 SB&D 100, which can be found in this edition, features both the top 100 job announcements made in the South the previous calendar year and the top 100 investment announcements made in the region the previous calendar year (2004). We rank the lists by jobs and capital investment but we also describe what each deal does, such as the manufacturing of auto parts or a call center. We also publish several hundred deals that don't make either SB&D 100 ranking down to 200 jobs and down to $30 million in investment.

In calendar year 2004, there were 601 corporate and industrial announcements made in the South that either featured 200 jobs or more, $30 million or more in investment or both. Of those 601 deals announced in the South, 377 were made by manufacturers and 224 came from the services sector. It's the first time since 1996 that the Jobs 100 saw manufacturing win out over services. The Investment 100, we should add, has never been topped by services in the 12-year history of the SB&D 100.

So, manufacturing's demise in the South has been greatly exaggerated. In fact, not only is it not dead, it is very much alive and grew faster than the services sector in 2004. Now that's a shocker!

mike@sb-d.com