Top Deals & Hot Markets 2005

Some Oustanding Performances: A Degree of Normalcy is Returning

By Mike Randle

The results of this year's SB&D 100 don't exactly remind one of the days when things were as easy as shooting fish in a barrel. That, of course, would be the mid-to-late-1990s when economic developers didn't have to work so hard and deals would fly every time the phone rang, which was often. OK, it wasn't that easy, but compared to the last four years it sure seemed that way.

Of course things are never as bad or good as they seem and while 2001 and 2002 were economic development nightmares in the South -- even worse elsewhere -- the years' of 2003 and 2004 haven't been too bad for states and markets in the South. The year of 2003 signaled the year of recovery as total jobs in our annual SB&D 100 increased as did investment totals for the first time in a while. But still, in 2003 some of the South's economic development all star states such as North Carolina, Georgia and Texas were still struggling to even turn half as many deals as they did in the go-go '90s. And some of the smaller states that had been consistent deal turners for years like South Carolina and Kentucky were still unable to jumpstart themselves as late as 2003.

But this year just about every state in the South saw an increase in deal turning activity. The Carolinas for example saw tremendous improvement and reminded us of how they performed before the recession years of 2001 and 2002. Large states such as Texas and Georgia also improved, though those two are still way off their performances of the late 1990s.

Other large states like Florida, Tennessee and Virginia weathered the downturn much better than their cousins' North Carolina, Georgia and Texas, as did small states' Alabama and Louisiana. Other small state performances, like Arkansas, Kansas, Mississippi, Oklahoma and West Virginia have experienced roller coaster years over the last five years, up and down depending on the year. In most cases they were all up this year.

This year a sense of normalcy has returned to the SB&D 100. Some of the more successful states of a decade ago that got hammered early this decade are back in fine form. No state represents that resurgence more than North Carolina.

In this, the 2005 Hot Markets report, you'll see some familiar local markets being recognized. You will also see some new markets ranked at the top of their divisions. States with the most markets being recognized this year are Alabama and North Carolina with five each. South Carolina features four markets and three Virginia markets performed well enough to place first, second or third in their category.

How We Rank States and Markets

It should be noted that the SB&D 100 is not a survey of executives who choose which markets they believe are the most attractive in the South. The Hot Markets report ranks states, mega-markets (over 2 million in population), major markets (750,000-1.99 million), mid-markets (250,000-749,999), small markets (100,000-249,999), micropolitan markets(10,000-99,999) and rural markets (under 10,000) based on the number of corporate and industrial job and investment announcements they successfully attract that feature 200 or more jobs and/or $30 million in investment.

State Category

ALABAMA: STATE OF THE YEAR (365 Points)

In the 12-year history of the SB&D 100 we have never recognized, until now, any Southern state three years-in-a-row as State of the Year. This is Alabama's third consecutive "State of the Year" honor. In fact, prior to Alabama earning "State of the Year" its first time in 2003, no small Southern state had been recognized with the honor.

Again, Alabama placed first in the important per capita ranking, or the number of deals it turned of 200 jobs and/or $30 million in investment or more per million residents. And that race wasn't even close. Alabama turned more than 12 big deals per million residents. The second-place state, Virginia, barely turned eight big deals per million residents. Alabama has won the per capita title for three straight years.

SB&D State of the Year Winners 1994-2005

2005 Alabama and North Carolina

2004 Alabama

2003 Alabama

2002 Florida

2001 Virginia

2000 Tennessee

1999 Virginia

1998 North Carolina

1997 Texas

1996 Virginia

1995 Florida

1994 Texas

Of Alabama's 57 deals making the big board, 47 came from the manufacturing sector. And while automotive has driven this state in recent years, that wasn't the case as much this year. Of the 47 manufacturing deals that met our thresholds, only nine came from the automotive industry. It should also be noted that only Florida (59), North Carolina (68), Texas (96) and Virginia (62) turned more big deals than Alabama did in 2004. As you know, those four states dominate Alabama in total population.

The fact that the automotive industry didn't account for the majority of big deals in Alabama means this state can perform at a tremendously high level without that industry dominating its numbers. That's a sign of economic maturity and it's a strong indication Alabama has separated itself from its traditional peer Southern states such as Kentucky, Louisiana, Oklahoma and South Carolina. If anything, Alabama has not yet joined the economic elite of the South's six destination states (Florida, Georgia, North Carolina, Tennessee, Texas and Virginia), but it has left its peers.

A few things need to happen before Alabama joins the South's economic elite. One is a jump in population growth. Another is the establishment of at least one major league sports franchise (a dome in Birmingham is under consideration). You may laugh at that notion, but who would have thought the NBA would be in Memphis or the NFL in Nashville 10 years ago? The last thing that needs to happen for Alabama to join the South' elite states is for the state to continue this run of significant and numerous corporate and industrial announcements. Alabama's points for most of the 1990s averaged about 180 in the SB&D 100. That has risen to an average of about 300 today.

Last year saw central and south Alabama really contribute to Alabama's second State of the Year with all of the parts suppliers for Hyundai that announced plants in those two parts of the state. This year it was north Alabama ruling deals in the state. Huntsville is this year's Mid-Market of the Year, Decatur is this year's Small Market of the Year and Cullman is being cited in the Micropolitan division.

NORTH CAROLINA: STATE OF THE YEAR (460 Points)

We've never had a tie for State of the Year honors because since 1994 there was always just one state that stood out among the rest. This year it was two. Alabama won State of the Year last year with 280 points. That being the case, how could we not give them that honor again after posting 365 points in 2005? North Carolina, on the other hand, posted a puny total of 160 points last year. But this year North Carolina rung up 460 points, the highest one-year increase of any Southern state in the history of the "100." How, then, could we not recognize North Carolina with State of the Year honors this year as well?

The Tar Heel State really turned it around in 2004. In fact, during calendar years' 2001, 2002 and 2003, North Carolina could muster but 535 points combined. So the Grande Dame of economic development, as we like to call North Carolina, was getting hit by double barrels. For one, new job and investment generation was drying up. At the same time, plant mortality rates were going through the roof. Both problems were solved for the most part in calendar year 2004. Deals are way up in N.C. and far less doors are being padlocked. Not only that, North Carolina turned one of its highest profile deals in years in 2004 with the new Dell facility in Winston-Salem.

Since we're writing about the Tar Heel State's tremendous comeback from three or four years of hip-deep economic trouble, I'd like to take this opportunity to do a little editorializing. North Carolina may be the South's most conservative state in many ways, some good and some bad. One ultra-conservative viewpoint found in the state centers on the use of state and local government incentives in the landing of industry. Right now lawsuits are being prepared to block the Dell deal, if possible, because of the incentive package the state is giving the Texas-based computer maker.

Well, wouldn't you know it. North Carolina has a banner year, ending four years of economic development devastation (and that's not being dramatic) and the anti-incentive folks come out of the woodwork. Note to the anti-incentive activists in North Carolina: Look folks, if you're against the way the economic development game is played today in the South then you can go back to the way things were in your state in 2001, 2002 and 2003. Those were dark days, with plants closing almost daily and very few good jobs being generated by new and expanded projects.

Economic development officials in North Carolina just finished off their best year in years in the creation of new jobs and more and bigger capital investments. Those same officials should be given a pat on the back and a raise, not threatened with lawsuits as a result of their success. For the anti-incentive folks in North Carolina, I want to give you another thing to think about. Alabama has doled out about $800 million in incentives to just four high profile companies in the last 12 years: Toyota, Mercedes-Benz, Honda and Hyundai. In those 12 years those four companies have returned to the people of Alabama more than $6 billion (that's with a "B") in salaries alone. That doesn't count the salaries paid by nearly 200 parts suppliers those four companies have drawn to Alabama since 1993 and all of the ancillary stuff that goes with it; housing, retail sales, future tax revenue, etc. You may call that $800 million "corporate welfare." But if Bill Gates invested $800 million and got more than $6 billion in return 12 years later you'd call him a genius. Now wouldn't you?

SOUTH CAROLINA: SPECIAL RECOGNITION (225 Points)

For all practical purposes South Carolina has been in the same situation as North Carolina over the last several years, just not quite as bad. It's good to see hard work rewarded in the case of the Palmetto State's efforts. The state reorganized its economic development agency three years ago and during that time it struggled and fell hard last year with just 110 points earned. Here's a portion of what we wrote in last year's state summary concerning South Carolina. "This year should be the bottom for the Palmetto State. There's new optimism coming out of there and that's half the battle won when you're struggling. ...we'll jump on South Carolina's (bandwagon) because the state is primed for big deals."

Well, we're not right all of the time but we were right on with those statements made last year about S.C. The 645-job, $565 million Global Aeronautica (Vought Aircraft and Alenia Aeronautica joint venture) deal was one of the biggest of the year in the entire region. The Kimberly Clark, Voridian, General Electric, International Paper, Walgreens, Dollar General and Verizon deals weren't exactly driftwood either. All were either $100 million-plus or 700-job-plus deals or both.

OKLAHOMA: HONORABLE MENTION (170 Points)

Oklahoma doubled its points from last year by focusing on doing what economic developers are supposed to do: create jobs. The Sooner State had seven deals of 500 or more announced jobs and three of those were 1,000 jobs or more.

KANSAS: HONORABLE MENTION (105 Points)

Kansas did what it had to do this year. After an all-time low of 25 points in the 2004 SB&D 100 and a last place per capita ranking the state rallied with 105 points this year. There's something to say about performing well with your back against the wall.

WEST VIRGINIA: HONORABLE MENTION (110 Points)

We've got to give it to West Virginia. Here's an interesting fact. Would you believe that West Virginia's unemployment rate is lower than neighboring Pennsylvania and Ohio? It is.

VIRGINIA: HONORABLE MENTION (420 Points)

We need to just paint Virginia into this spot. With a No. 2 per capita ranking you'd think we'd give more to Virginia. Nope, they have had too many better years. Regardless, we've recognized the Old Dominion as State of the Year three times and Honorable Mention five times in the last 10 years. No Southern state can compare to that.

Mega-Markets

DALLAS/FORT WORTH: MEGA-MARKET OF THE YEAR (240 Points)

This is the second consecutive No. 1 ranking for D/FW in the mega-market category. The sheer number of jobs created in Dallas/Fort Worth in 2004 was astounding. For example, just five deals, Countrywide Financial, Vought, Hotels.com, Target and 21st Century Insurance added 10,000 new jobs in the region.

SB&D 100: Mega-Markets

Market Points

Dallas/Fort Worth 240

D.C./No. Va./Md./W.V. 210

Houston 190

Tampa Bay 105

Atlanta 95

South Florida 60

St. Louis 45

Major Markets

CHARLOTTE: MAJOR MARKET OF THE YEAR (120 Points)

RALEIGH/DURHAM: MAJOR MARKET OF THE YEAR (120 Points)

Something big had to be behind North Carolina earning 300 more points than it did last year and its two largest markets were mostly responsible. But they did it in different ways than in the past. Charlotte is known as one of the South's largest financial centers and Raleigh-Durham as one of the South's largest technology and biotech markets. Well, both markets earned points from those sectors, but it was manufacturing in general that earned the most points in the Charlotte region and in the Triangle. Freightliner, the truck manufacturer contributed 20 points alone to the Charlotte region and Silver Line, a maker of windows was the biggest deal to come out of Raleigh-Durham. The Triangle also turned big deals from Cree, a semiconductor manufacturer and vaccine producer Merck. It's somewhat ironic that manufacturing is the sector that brought N.C. down during the recession and now is at the center of the state's comeback. The Tar Heel State has always been a manufacturing-based state.

ORLANDO: 2ND PLACE MAJOR MARKET (95 Points)

It's just been a few years that Orlando has really performed well in the Major Market division. It broke out in 2002 with its first Major Market of the Year after being unrecognized for seven years. It 2003 Orlando earned third place and last year won Major Market of the Year for the second time. A second place this year continues Orlando's run. This central Florida metro is as hot as any in the South.

GREENSBORO/WINSTON-SALEM/HIGHPOINT: 3RD PLACE MAJOR MARKET (85 Points)

NORFOLK/NEWPORT NEWS/VIRGINIA BEACH: 3RD PLACE MAJOR MARKET (85 Points)

The Hampton Roads region of Virginia is a regular in this spot. This year is no exception. But the Triad region of North Carolina is being recognized in the Major Market division for the first time. It won Mid-Market of the Year in 1994, but that was when the Triad was a mere pup. It is now competing in the Majors division and did quite well this year. Dell, RF Micro, Lowe's, CitiCards and the U.S. Postal Service all contributed to the best year we've ever seen coming out of the Piedmont Triad.

Mid-Markets

HUNTSVILLE: MID-MARKET OF THE YEAR (75 Points)

When a mid-market in the South tallies 75 points, well, that's a heck of a year. Winners have won this division with as few as 35 points and 55 points wins it most years. Needless to say, 2004 was a monster year for Huntsville, Ala. You name the industry sector and it probably added jobs in this north Alabama market. Direct TV, Kohler, Cinram, West Corp., Dynetics, Northrop Grumman, Boeing and Toyota all announced significant projects in Madison County in 2004. That's not your standard mid-market corporate lineup. Huntsville's reputation has probably preceded itself over the years. NASA and some of its high-tech spinoffs have had everything to do with that. But this year's performance not only illustrates Huntsville's potential, it legitimizes its worldwide reputation as one of the South's most unique commercial markets.

KNOXVILLE: 2ND PLACE MID-MARKET (45 Points)

COLUMBIA: 2ND PLACE MID-MARKET (45 Points)

It's been awhile since South Carolina's capital city has been in this spot. Knoxville, on the other hand, has been similar to Orlando in that it arrived on the scene just in the last few years and will not go away.

CHARLESTON: 3RD PLACE MID-MARKET (40 Points)

It's been a regular affair for Charleston to be recognized in the SB&D 100. This historic East Coast metro has won some big deals of late. It's in the running right now for a few more.

Small Markets

DECATUR, AL: SMALL MARKET OF THE YEAR (45 Points)

Something good is in the water of north Alabama. Take some of that water and spit hard and you can hit Decatur from Huntsville. Why the two markets aren't one MSA has always befuddled us. The only thing that separates them is Interstate 65. Decatur, like Huntsville had a year to remember, with nearly $400 million invested by just six companies. Together, Huntsville's and Decatur's points this year (120) would be good enough to tie Charlotte and Raleigh-Durham for the No. 1 spot in the Major Market Division. That's strong!

AIKEN, SC: 2ND PLACE SMALL MARKET (30 Points)

A regular big-time performer in the small market category, Aiken has been recognized by SB&D more times than any market or any state over the last 12 years other than Martinsville, Va. and the state of Virginia.

HICKORY/CATAWBA COUNTY, NC: 3RD PLACE SMALL MARKET (25 Points)

This is a first for this small North Carolina metro. Catawba County turned two huge automotive deals in Getrag Gears' expansion and a new project by ZF Lemforder.

Micro Markets

BARTLESVILLE, OK: MICROPOLITAN MARKET OF THE YEAR (20 Points)

MARTINSVILLE/HENRY COUNTY, VA: MICROPOLITAN MARKET OF THE YEAR (20 Points)

Ho hum for Martinsville/Henry County. They've been through several economic development directors, four different economic development group reorganizations or startups and boat loads of controversy over the last six years and they still outperform virtually every market their size every year in new and expanded projects. In 2000 (1999 data), we named Martinsville/Henry County Small Market of the Year the same week its economic development group, The Patrick Henry Development Council, was disbanded. That year they turned seven deals over 200 jobs, an incredible year for a small market. This year, two big deals were enough to vault Henry County to a tie at the top. Masterbrand Cabinets announced 745 new jobs and StarTek created 500 new jobs.

As for Bartlesville, Okla., the No. 1 ranking is its first. This northeast Oklahoma micro benefited from two 500 job deals from DeLaCruz Golf and Consumer Debt Settlements. Also, in the spring quarter of this year, Wal-Mart opened a 900,000-square-foot distribution center, a deal that will count in next year's SB&D 100.

CULLMAN, AL: 2ND PLACE MICRO MARKET (15 Points)

TALLADEGA, AL: 2ND PLACE MICRO MARKET (15 Points)

These two small Alabama markets are very similar in that both are located on Interstates, they are just outside the Birmingham MSA and both have successfully attracted some outstanding deals over the years, specifically from the automotive sector.

Rural Markets

ASHLAND/CLAY COUNTY, AL: RURAL MARKET OF THE YEAR (15 Points)

GREENVILLE/WASHINGTON COUNTY, MS: RURAL MARKET OF THE YEAR (15 Points)

BENNETTSVILLE/MARLBORO COUNTY, SC: RURAL MARKET OF THE YEAR (15 Points)

JONESVILLE/UNION COUNTY, SC: RURAL MARKET OF THE YEAR (15 Points)

There's a logjam at the top of the Rural Market Divsion. Projects announced in these four rural South markets vary from a 1,000-employee cabinet plant to large automotive deals to a a $75 million yarn factory. The good news is manufacturing is back in the rural South and these markets are leading the way