Spring 2006

QUIZ

This issue is our annual SB&D 100 edition. It's the issue when we rank Southern states and markets on their performance at attracting jobs and capital investment based on data from the previous calendar year. After reviewing the data, we make our choice of "State of the Year" very carefully. Alabama (4 times), Florida (2), North Carolina (3), Tennessee (1), Texas (2) and Virginia (3) are the only states in the South that have earned our "State of the Year" designation since we first published the SB&D 100 in 1994.

Our quiz this quarter is, which Southern state that has not won "State of the Year" honors to date, has earned more "Honorable Mentions" than any other state in the South? (a) Louisiana (b) South Carolina (c) West Virginia (d) Mississippi

(Scroll down for answer)

Editorial

Union Labor: Is it Really a Disadvantage to All Industry?

There is no doubt that the problems facing some large employers in this country, such as GM, Ford, Delta and others, are directly tied to labor union contracts that those companies approved at one time or another. Those three companies are perfect examples of U.S.-based corporate icons that are currently finding it difficult to compete with their competitors, both foreign and domestic, that are not union organized.

For decades now, the South has sold itself to locating industry partly on the fact that union membership in the region is lower than that found in other U.S. regions. After all, almost every Southern state is a "right-to-work" state. But in another period of labor shortages popping up in parts of the South, is union labor really the kiss of death for every company? A short meeting with a company owner here in Birmingham motivated me to ask that question.

In the spring quarter I ran into one of my old classmates from Mountain Brook High School while walking into the new Ross Bridge Resort in Birmingham to make a speech. I said, "Hey, Chip! Your business must be humming because of the hurricane recovery on the Gulf Coast." Chip owns a successful roofing company and has for about 20 years now.

His response was not expected. "No, Mike, we're not doing any of that work down there. There are so few union members in the roofing business anymore that it's hard to find workers who are trained in roof construction." What?

Chip went on to say, "In the '80s and '90s, the roofers we used to hire after a hurricane hit the Gulf coast were union trained ... they knew what they were doing. We didn't have to train them. Today, we can't find workers with that kind of training. So we don't do those kinds of projects anymore."

What I heard from Chip, who is the owner of the company, was somewhat shocking. There are no industry recruiters in the South who boast about their union labor. But in this case, the reduction of union-trained roofing workers prevented Chip and his company from bidding on a single one of what must be hundreds of thousands of roofing contracts in the areas affected by the 2005 hurricane season. That's certainly something to think about.

mike@sb-d.com

Rumors Fly About Huge Deals Under Negotiation in Louisiana and Mississippi

There are rumors in economic development circles in the South that there are some huge investment projects about to be announced in Louisiana and Mississippi. The new Gulf Opportunity Zone Act can provide tens of millions of federal dollars to prospective companies looking to locate in designated counties and parishes in Texas, Louisiana, Mississippi, Alabama and Florida that sustained damage in the 2005 hurricane season. One of the deals rumored to be announced any day now totals several billion dollars.

Southern Markets Dominate Job Growth List

Business 2.0 magazine's recently published top 10 list for major market job growth included seven markets in the South. Las Vegas topped the top 10 and Riverside, Calif. and Phoenix made the top 10 from outside the South. Orlando, Austin, Jacksonville, Tampa-St-Pete, Dallas/Fort Worth, Charlotte and Atlanta made up the rest of the magazine's top 10.

Migration to the South Slows

In the last four decades millions of Americans have relocated to the South. Since 1960, approximately 14 million people moved from the Midwest, Northeast and West to Southern states. According to the U.S. Census Bureau, the South averaged a net inmigration of 396,000 people annually between 1990 and 2000. Newly published reports by the Bureau show that average dropped in the first four years of this decade. Between 2001 and 2004, the South had an annual net inmigration average of 371,000 people from other regions of the U.S. Florida was by far the location of choice, with about 190,000 people moving to the Sunshine State in each of those four years. That total represents more than half of the South's total net inmigration. Florida averaged an annual net inmigration gain of 112,000 persons between 1990 and 2000.

Forbes Cites Southern Markets

Forbes published its annual feature on the "Best Places for Business and Careers" in the spring and six of the nation's top metros are Southern markets. Raleigh, N.C. placed second in the ranking and Houston, Knoxville, Nashville, Durham, N.C. and Fayetteville, Ark., all made the Forbes top 10.

Three Southern States Sit Atop Cyberstates Report

Virginia was recently named by AeA, the nation's largest trade association representing all segments of the high-tech industry, as the No. 1 state for high-tech job growth. The report, Cyberstates 2006, covers all 50 U.S. states, D.C. and Puerto Rico. Florida ranked second in the report, followed by Maryland, New Hampshire and Puerto Rico.

Southern States Make Venture Investment Report

The Council for Entrepreneurial Development, based in the Research Triangle, ranked the top states in the U.S. for venture investments and six Southern states made the organization's 2005 year-end report. Texas ranked third in the nation, behind California and Massachusetts and North Carolina (8th), Maryland (10th), Virginia (11th), Florida (12th) and Georgia (13th) were Southern states that ranked in the top 15.

A Brief Update on Florida's One-Year-Old Higher Minimum Wage Law

A year ago Florida lawmakers approved a bill that raised the state's minimum wage to $6.15 an hour. A study done by Florida International University in conjunction with the University of Chicago shows no negative economic effects from the minimum wage increase. Minimum wage industries, such as those in the tourism sector, continue to perform well, the state's unemployment rate remains very low and no indication of inflation sparked by the wage hike has been found in Florida by the two universities that conducted the study.

UPS Investing $1B in Louisville Hub

Atlanta-based United Parcel Service is once again expanding its package sorting hub in Louisville, Ky. UPS is adding 1.1 million square feet to its 5.1-million-square-foot facility, which is located at the Louisville airport. The expansion is expected to result in 5,000 new full-time and part-time workers that will bring employment at the hub to over 12,500. The expansion at the UPS hub is being attributed to strong growth in international shipments. The company has purchased 20 Airbus A380s to accommodate the rise in international shipments.

Alabama, Mississippi Sign Joint Workforce Initiative

Mississippi Gov. Haley Barbour and Alabama Gov. Bob Riley signed a joint memorandum of understanding that activates a federal $15 million workforce innovation grant benefiting 36 counties in the two states. Called the Workforce Innovation in Regional Economic Development (WIRED) grant, the workforce training initiative will utilize eight community and junior colleges in both states in an effort to train workers and promote entrepreneurship and business recruitment to rural East Mississippi and rural West Alabama. The grant was provided by the U.S. Department Labor and it's the only bi-state rural grant awarded in the U.S.

New Port Slated for North Carolina

The first new deep sea port in the South in decades is underway as North Carolina's Council of State approved the North Carolina State Port's Authority's purchase of a 600-acre tract on the west bank of the Cape Fear River in Brunswick County, N.C. The land in southeast North Carolina, is located adjacent to Progress Energy's Brunswick Nuclear Power Plant. That will be the site of the Port Authority's new North Carolina International Port (NCIP). Early projections show that the new port would create about 50,000 jobs, with about 2,000 directly. The new port, which will take eight years to build, will have the capacity to handle 2 million containers a year.

Chinese Company Adding 1,000 New Jobs in South Carolina

China-based Haier is expanding its Kershaw County, S.C. facilities, a deal that is expected to result in a $150 million investment and about 1,000 new jobs. Currently about 200 employees work at the plant in Camden, which in 1999 represented the first and largest Chinese manufacturing facility in the U.S. The company will build appliances used to freeze and cool food and beverage products.

National Nanotechnology Manufacturing Center Celebrates Groundbreaking in Rural Georgia

The groundbreaking for the National Nanotechnology Manufacturing Center (NNMC) was held recently in rural Swainsboro, Ga. The center, located at the Pathway Technology Park, is a joint venture between the Joint Development Authority in Swainsboro, the U.S. Army's Picatinny Arsenal and Georgia's nanoFAB. Georgia Tech Research Institute and other major U.S. universities will be sources of technology projects with the Center serving as a clearing house for Georgia nanoFAB's scale up and manufacturing. The NNMC will function as a public-private partnership by manufacturing nano and micro scale products for both military and commercial use.

Second Lowndes County, Miss. Site Certified by TVA

TVA announced in the spring that an 1800-acre site in Lowndes County, Miss. (Columbus), has been certified by McCallum Sweeney Consulting of Greenville, S.C., as a "megasite," or large industrial property suitable for a major automotive manufacturing plant. The site, known as Crossroads, is the second site to be certified in Lowndes County. SeverCorr, a steelmaker, has begun construction on an $880 million, 1.2-million-square-foot facility on the first megasite certified in the county.

South's Largest Market Second in Gross Regional Product

A study done by the Greater Washington Initiative showed that in 2005 the gross regional product of the Baltimore/Washington/Northern Virginia region totaled $246.8 billion. The figure ranked second in the world in GRP for metro areas, with only Tokyo generating more at $335.1 billion in 2005.

Drug Maker Chooses Durham, N.C. for Research and Manufacturing Center

United Therapeutics will build a research and manufacturing center in Durham, N.C., investing $54.3 million and creating 160 new jobs. The company, which develops treatments for heart problems, infectious diseases and cancer, will put the 125,000-square-foot facility in Research Triangle Park. For more information on the South's biotech industry, go to the BioIndustrySouth.com section found on page 24 or log onto www.BioIndustrySouth.com .

The Specs on Samsung's Massive Chip Plant Officially Announced in Austin in the Spring Quarter

1. Investment: $3.5 to $5 Billion

2. Product: DRAM memory chips on 300-millimeter wafers

3. Employment: 900 jobs at an average annual salary of $63,000

4. Incentives to Samsung: About $250 million

Georgia Officials Sign Telework Law

A new law signed by Georgia Gov. Sonny Perdue in the spring quarter will give tax breaks to employers in the Peach State that let employees work at home. The telework legislation will give employers tax breaks of up to $1,200 per employee for work-at-home expenses in years' 2008 and 2009. The new law is designed to improve the quality of life of certain employees, improve air quality and reduce traffic, especially in the Atlanta metro.

Atlanta Ranked Least Expensive Place to Do Business

In its 2006 Competitive Alternatives study, KPMG recently ranked Atlanta as the least expensive place to conduct business in the U.S. among markets with populations exceeding 1.5 million. The ranking was based on operating costs such as labor, real estate, taxes, utility and transportation costs. Atlanta was followed by Tampa as the least expensive place to operate and Northern Virginia, Dallas/Fort Worth and St. Louis made the consultant's top 10. Only 23 markets were considered and Miami/Fort Lauderdale and many other metros with populations larger than 1.5 million weren't included in the ranking. New York, San Jose and Boston were at the bottom of the 23-market list as the most expensive places to operate

Most Boomers Want to Retire to a Rural Community Study Shows

A small graph published on May 19 in USA Today carried big weight for us. A study done for the National Association of Realtors by Harris Interactive showed that 60 percent of about 2,000 people polled who were born between 1946 and 1964 are planning on retiring to a rural or small town. Of course, like all polls of this type, the location of those that responded is paramount. Regardless, considering the massive migration of people from U.S. regions to the South over the last 25 years, it's logical to assume that the rural South will be the location of choice for many baby boomers.

Pro-Business States Named

The South was well represented again this year in the annual Pollina Corporate Real Estate ranking the top business climates of U.S. States. South Carolina topped this year's list followed by Virginia (2nd), North Carolina (4th), Alabama (5th), Georgia (7th), Florida (8th) and Oklahoma (10th). South Dakota, Wyoming and Washington made up the rest of the top 10.

D/FW Ranked Top Cargo Airport

Air Cargo World magazine recently named the Dallas/Fort Worth International Airport as the "best" cargo airport in the world based on its survey. D/FW topped Memphis International Airport, home to FedEX's primary hub, Fraport Frankfurt and Hong Kong International.

Flagler County Florida is Nation's Fastest Growing

For the second consecutive year, Flagler County, located on the northwest Florida coast, is the fastest growing county in the U.S. According to the Census Bureau, Flagler grew by 10.7 percent between July 1, 2004 and July 1, 2005. The county grew by 10.1 percent the previous year.

Toyota Celebrates 10 Years, Five Expansions in W.Va.

In late May, Japanese automaker Toyota celebrated the 10th anniversary of its engine plant in Buffalo, W.Va. The company has expanded the plant five times in those 10 years, representing a total of $1 billion in investment. The plant in Buffalo, which employs 1,050 workers, has earned "best engine plant productivity" honors three times by The Harbour Report. For more information on the South's automotive industry, turn to SouthernAutoCorridor.com News in this edition or go to www.SouthernAutoCorridor.com.

Texas, Missouri, Tennessee Least Taxed in the South

Texas, Missouri, Tennessee, Alabama, South Carolina and Georgia are six of the 10-least taxed states per capita in the U.S., according to a report recently released by the U.S. Census Bureau. The report showed that residents of Maryland, West Virginia and Arkansas were the highest taxed per capita in the South, even though none of those states ranked in the top 10 nationally. The Bureau ranked Vermont, Hawaii, Wyoming, Connecticut and Delaware as the five-highest taxed states per capita.

Southern States Ranked by Total Tax Per Capita

* Ranked in dollars. Source: U.S. Census Bureau

QUIZ ANSWER

The answer is (a), (b), (c) and (d). Louisiana, South Carolina, West Virginia and Mississippi have all won "Honorable Mention" in our ranking three times each. Georgia has earned a mention twice, as has Oklahoma, Arkansas, Kentucky and Kansas. So far Maryland and Missouri have yet to break into the top 3 in any given year. You can read this year's SB&D 100 by turning to page 27. Since you're online, and can't possibly turn to page 27, try calling 1-800-566-3622 to subscribe to SB&D the magazine. It costs but $25 a year.