2005 SB&D Job 100

Chalk Up Two Consecutive Years of Growth

Total Jobs Created by the "100" Rises, but not to '90s Levels Yet

By Mike Randle

Want a simple and accurate way to judge how the South's economy is performing? Just take note of the threshold created by the SB&D Job 100 in any given year. The threshold is the 100th-largest job announcement made in the South every year. For four straight years, from 1997 to 2000, the 100th-largest job announcement (new, expanded or relocated announcement) created 600 new jobs. In the recession year of 2001 the threshold dropped to 483. It fell to an all-time low of 320 jobs in 2002, when the recession didn't let up for the entire year. But in 2003, the 100th-largest announcement rose to 400 jobs, indicating the South's economy was recovering.

When the SB&D Job threshold mark is dropping, it simply means there are fewer and smaller corporate announcements being made in the South. When it is rising, it means there are more deals and they are larger in employment numbers. The 320 jobs represented by the 100th-largest job deal announced in 2002 was the lowest total in the 12-year history of the SB&D 100. Similarly, 2002 was probably the worst economic year for the South in that 12-year period of 1993 to 2004.

This year's Job 100 threshold, or the 100th-largest job-making announcement made in the South in calendar year 2004, is up to 450 jobs. So, since the economy turned in 2000, the threshold has gone like this: 600 jobs (2000); 483 jobs (2001); 320 jobs (2002); 400 jobs (2003) and 450 jobs (2004). I'd say that is about as accurate of a method in which to judge the South's economy as any. It represents in exact time frame when the South's economy began to tumble, when it hit rock bottom and when it began to recover.

Recovery is the ongoing theme with the 2005 and 2004 SB&D Job 100s. This year represents not only the second consecutive year the threshold has risen, it is also the second consecutive year the total jobs created by the 100-largest corporate announcements made in the South has increased. >From 1997 to 2003, the total jobs created by the SB&D 100 decreased each and every year, indicating that a full four years before the recession officially began projects were decreasing in number and size (see chart No. 1). In the years prior to the 1997 SB&D Job 100, total jobs increased each year.

Chart No. 1

*Total Jobs Created by the SB&D Job 100 1994-2005

* Job totals are derived from announcements made the previous calendar year

By looking at Chart No. 1, you'll notice that the total jobs created by the Job 100 from 1994 to 2001 topped the 100,000 mark. By 2003, that figure had fallen to a woeful 68,651 jobs, or about half the jobs created by the 100-largest deals in the South in 1997. This year, with 91,135 jobs, almost 16,000 more jobs were created by the Job 100. Not only that, the magical 100,000 mark is again within sight.

The 2005 SB&D Job 100: Top Industry Sectors

All of the usual industry sector suspects are at the top of this year's big job deal list. Call centers once again led the field of deals announced in the South in calendar year 2004. This year 54 call centers with 200 jobs or more made our lists. That's a healthy increase from last year's total of 38. In fact, call centers saw their total number of big deals drop dramatically in the recession years, but now it looks like those pesky deals are back with a vengeance. We're not sure why they have come back so strong. The increased level of complaints directed to companies operating call center operations overseas probably has something to do with so many call centers opening up in the South last year. Of course, a growing economy means more customer service operations as well.

The No. 2 industry in big job announcements this year is the automotive industry, with 40 deals of 200 jobs or more. In terms of total deals making all of our lists, the automotive industry is the No. 1 industry in the South with a total of 73 deals with 200 jobs and/or $30 million in investment (for more information on the South's automotive industry go to www.SouthernAutoCorridor.com). But on the Job 100 side this year, automotive had to settle for second place behind the call center sector. The two industries ran one-two last year as well.

Distribution came in third place in this year's Job 100 followed by financial services. Those four sectors have led all other sectors each year in the SB&D Job 100 for four straight years now.

Industry sectors threatening the big four this year are electronics (including semiconductors and computer assembly - 17 deals of 200 jobs or more announced), telecom and info tech (16 deals) and biotech (including medical devices and pharma - 15 deals with 200 jobs or more). The biotech industry is finally beginning to live up to its billing of five or six years ago. That's when many predicted the South would be the next frontier for the life sciences. That is occurring, but it's primarily coming from the life sciences manufacturing sector, even though there have been some significant R&D deals over the last two or three years. The 15 big bio deals matches last year's number, meaning there is some consistency beginning to build in that important sector.

Other industries performing well this year in big job deals are building products, food processing, headquarter operations, wood products, and the new homeland security industry. Homeland security, while creating jobs throughout the region, announced some monster deals in and around the D.C. region. Northern Virginia especially benefited from the new industry with 11,000 jobs announced by just four companies in one day in 2004.

Chart No. 2

 Top Industries 2005 SB&D 100

(Total Announced Deals 200 Jobs or More and/or $30 Million or More in Investment)

Chart No. 2 shows deals with 200 jobs or more in selected industry sectors followed by deals announced with $30 million or more in investment. Using that data, the ranking differs from the Job 100 ranking, with the top four industries being automotive, call centers, distribution and biotech. As you can see by studying Chart No. 2, some industries such as call centers perform well on the job side and poorly on the investment side. On the other hand, industries that are highly capital intensive, such as oil & gas, rarely announce large job projects.

Those industries that have consistently performed well on both sides of the ledger over the last several years include automotive, distribution, biotech, food processing and financial services. Building products and headquarter operations have just recently shown they are sectors that are growing as are aviation/aerospace, apparel/textiles and metal products. Aerospace and metals, along with electronics, shipbuilding and repair, plastics and healthcare have performed inconsistently over the years, meaning they will show strongly one year and disappear the next. And apparel and textiles were left for dead a few years ago. Apparently there's still life in the apparel and textiles sector, one of the oldest industry sectors in the South.

2005 SB&D Job 100: Manufacturing vs. Non-Manufacturing

Here's a switch. It was just about three years ago that many expert economists were predicting that manufacturing in this country had fallen and that it would not get up. We maintained nothing could be further from the truth. After all, the South is the least expensive region of the four U.S. regions to make something in the largest consumer market in the world. Surely manufacturing couldn't be dead in the South.

But years' 2000-2002 (SB&D 100 years' 2001-2003) tested our belief that manufacturing would make a strong comeback in the region. The SB&D 100 in those years was dominated by services, with about 65 percent of deals with 200 jobs or more coming from non-manufacturing sectors. Would there ever be another year when manufacturing outperformed services by any measure? We got closer to the answer to that question with last year's Job 100.

When numbers for the 2004 SB&D 100 were revealed, they showed that of the 305 corporate and industrial announcements made in calendar year 2003 that projected 200 jobs or more, 145 were of the manufacturing variety. Now that was a comeback, with 48 percent of all big job deals coming from the manufacturing sector.

With this, the 2005 SB&D 100, the tide has completely turned. For the first time since 1996, more manufacturing deals were rung up than service-related deals. This year's SB&D Job 100 shows that of 381 deals announced last year with 200 or more jobs, 198 were made by manufacturers and 183 by the services sector. After this year's tremendously successful run by the manufacturing sector, the people who predicted its demise a few years back should be made known and held responsible. We won't expose them here, but we know who they are. We just hope you do, too.

Chart No. 3

Manufacturing vs. Non-Manufacturing

(Total Announced Deals in the South with 200 Jobs or More)

2005 SB&D Job 100: The States

Last year eight of the South's 17 states increased their sum of large job generating announcements from the previous year. In 2003 only five could top their performance from the year before. This year's SB&D Job 100 saw every state but two turn more big deals than the prior year. North Carolina more than doubled its number of deals with 200 or more jobs. The Tar Heel State has had a tough go of it in the last four or five years. North Carolina turned 16 deals with 200 or more jobs in calendar year 2003, 11 in 2002 and 14 in 2001. In 2004, the year the 2005 SB&D 100 is based on, that total increased to 34.

Georgia, Kansas, Oklahoma, South Carolina and Virginia also raised their big job deals significantly, but overall, every state improved. Only Kentucky and Texas did not match or increase their totals of deals turned of 200 jobs or more and they didn't fall far. Last year Kentucky closed 14 deals with 200 or more jobs. This year Kentucky turned an even dozen. Last year Texas turned 60 and this year the total dropped slightly to 57.

The South's two largest states, Texas and Florida, continue to slowly build from the lows of 2001 and 2002. Actually, Florida weathered the crash of those years better than any other Southern state other than Alabama. But Texas' big job deals fell to 28 in the 2003 SB&D Job 100. This year that total has risen to 57, which, still, is nowhere near the Lone Star State's record year of 1997 when 136 companies announced deals with 200 jobs or more.

We saw where some magazines are giving Texas the year's top state award. There's no question they have improved from some crash and burn years. But, again, they are nowhere near where they were in deals turned eight years ago. Our question is how can you give Texas a "state of the year" award when there are other states that are performing better right now than they have in their entire economic development histories?

Other than the aforementioned Southern states, there's one other state that stands out in this year's Job 100. This is the third incredible SB&D 100 performance for Alabama. Alabama has beaten much larger states such as North Carolina, Tennessee and Georgia straight up over the last three years. And with 34 big job deals this year, it looks as if the Heart of Dixie has now set its sights on even bigger fish such as Virginia and Florida.

Chart No. 4

 2005 SB&D Job 100 State Performance

(Deals 200+ jobs 2004 and 2005)

SB&D Job 100: Per Capita Performance

It's certainly important for a state to improve upon its previous year's performance in the attraction of large job announcements. If you are moving forward and not backward in today's economy, that's a significant achievement. One ranking we place a ton of emphasis on is the state's number of big deals it turns per million residents.

Later on in this section you can read about how markets fare against one another in the SB&D 100. Comparing and ranking markets in their own categories is a race among peers. That's because we rank markets based on their population and in their own category: Mega-market, Major Market, Mid-Market, Small Market, Micropolitan and Rural.

Comparing states and their total number of big deals turned, on the other hand, is almost impossible because of the vast differences in population. For example, the combined populations of Texas, Florida, Georgia and North Carolina totals 56.2 million persons, or more than the total population of the other 12 Southern states. In fact, the total populations of Texas, Florida, Georgia and North Carolina top the entire population of the Northeast (56.2 million to the Northeast's total of 55.1 million).

The best way and possibly only way to judge a state's performance versus its peers is to look at how many big deals it turns per million persons. Chart No. 5 does just that. Alabama has led all Southern states in deals per million residents each of the last three years. As you can see, Texas, which has received a lot of ink lately for its success at landing projects, can only muster a 10th place ranking in the South when judged by how many big job deals it turns per million residents. Florida, the South's second-largest state trails Texas at No. 11.

Chart No. 5

2005 SB&D Job 100: Per Capita Performance

(Deals of 200+ Jobs per Million People)

2005 SB&D Job 100: Notable Deals

Not unlike every year, service sector deals dominated the top of the SB&D Job 100. No service sector in the last few years has turned larger deals than the financial services industry. Countrywide Financial announced it is bringing 5,000 jobs to the Dallas/Fort Worth metro. And the Citigroup and Citicorp divisions continue to hire in the South huge ways. CitiFinancial announced a 1,600-employee deal in South Carolina in 2004, Citigroup turned a deal in Irving, Tex., that created 1,000 jobs and Citicorp Credit announced a 1,400-employee project in Louisville. Not to be outdone, CitiCards picked Guilford County, N.C. for a 900-employee facility.

Homeland security made its first major splash in the South when four companies announced deals on the same day last year that created over 11,000 new jobs. Call centers also returned to our lists as if the South was the only place on the planet to put them. Fifty-four call centers hired at least 200 workers in 2004. The total employment from those deals totaled almost 29,000 jobs.

But manufacturing projects found their way near the top as well. Vought, the aircraft manufacturer and maintenance company announced 3,000 jobs for a project in Grand Prairie, Tex., and of course one of the year's most visible deals, Dell, announced a new plant in Winston-Salem that will house at least 1,500 workers. Other notable deals with 1,000 jobs or more include Texas Energy Center, Adelphia Communications, IBM, Infineon, Verizon, and Echostar.

Some of the more unique deals that generated big jobs last year was a Fiber Basalt Pipe facility built by Global Energy that will create 2,000 jobs, the Huntsman research lab near Houston that created 670 jobs, Electronics Arts expansion in Orlando that created 650 jobs (entertainment software) and Laredo Candle Co., which is creating 500 new jobs in Laredo. We've never had a candle company make any of our lists in the 12-years history of the "100."

2005 SB&D Job 100: Conclusion

If you count up all of the jobs generated in the South from deals of 200-plus jobs you get a total of 165,940 jobs. Expanded projects of 200 jobs or more totaled 221 deals. New projects totaled 171, which should at least put in doubt the theory that "80 percent of all jobs created are created by existing businesses." That may be true in the Midwest, West or Northeast, but it isn't even close to being accurate if you use SB&D Job 100 data. Most years find the totals of new and expanded projects on a pretty equal footing.

And finally, the average number of jobs created by all 392 projects that announced 200 jobs or more was 423 this year. There were 28 different projects that created at least 1,000 jobs.