September 1, 2005

Editorial

New Orleans will be Back, as will the Mississippi Gulf Coast
By Mike Randle

Today is day number 15 since Hurricane Katrina hit the northern Gulf Coast and the cable news channels, interestingly, are questioning whether "New Orleans will be back." Experts from economic think tanks from outside the South are discussing the future of the New Orleans economy, political hacks in Washington are pointing fingers at who's to blame for the government's apparent slow response to the disaster and I heard that Rush Limbaugh, who's from Missouri but currently lives in South Florida, said today that the area's recovery from the hurricane is a "liberal vs. conservative" issue. Even John Walsh of America's Most Wanted fame, a resident of Florida, and Sean Penn have been interviewed for their takes on the situation in New Orleans. Puuuuuuleeeeeeze!

And who is Ali Felshi and why does his opinion count as he breaks out on CNN the standard Bureau of Labor Statistics book for use as a forecast for where those displaced workers in Louisiana and Mississippi will find jobs? Ali noted Detroit and Chicago as poor candidates to draw those leaving the Gulf Coast looking for jobs (ya think?). He did mention Northern Virginia's and Richmond's low unemployment rate and that those markets could be areas the displaced could find work all because of the mid-3 percent unemployment rate found in the Old Dominion. Louisiana and Mississippi workers moving to Virginia? Well, a few might. Ninety-nine-point-nine percent won't.

The displaced workers from the Mississippi Gulf Coast and the New Orleans region are going to find jobs as close to their lost homes as possible. These unfortunate people will find work quicker in Alabama, Tennessee, Arkansas, Florida, Georgia, Texas and in other parts of Mississippi and Louisiana than in states further away from ground zero. And when it is time to go home, they will go home, at least the majority of them.

There might be one long, but necessary migration for some folks affected by the storm. Of the 20,000 people who worked for the casinos on the Mississippi Gulf Coast and in New Orleans, I would say that a good portion of those will relocate, many permanently, to other large gaming states such as Nevada, New Jersey and Indiana. Some of the Indian casinos in the South could also be their destination as will other casinos in Mississippi.

More from the Television

I wonder how many of the people giving their opinions on the tube, radio and the Internet concerning the future of New Orleans have walked that city's old streets for years, talked to the labor force, visited the factories, high-rise office buildings and the ports or gotten to know the political leadership? I have. That's not an arrogant or know-it-all statement, it's simply the truth. It's also a statement of frustration considering the folks I've seen on television talking about the future of the central Gulf Coast.

Yes, I know Mississippi. I know New Orleans. I know Louisiana. I know Gov. Blanco, I know Mayor Nagin, I know the people, I know the city and I've known Louisiana's Secretary of Commerce Mike Olivier for 15 years. I'm not lobbying for the job, but I would like to see or hear in the national media from someone who knows Louisiana's and Mississippi's economies, people and various social structures. Most of the folks I'm watching who have an opinion about those things wouldn't know any of those parties or issues if one of them bit 'em on the knee.

Is New Orleans such a Poor City?

One thing being hammered home in the media about New Orleans is that it's "unique" in that the city has such a large African-American population. I've read and heard how "poor" New Orleans is and I assume that's being said over and over because of the large number of African-Americans seen on our television screens who did not evacuate and therefore had to fend for themselves in what is being described as one of the worst national disasters in America's history. New Orleans is not any different from any of the other port towns in the South when it comes to a large African-American population. The same can be found in Charleston, Savannah, Mobile, Houston, Jacksonville, and Baltimore.

Let me inform those who are surprised by the large number of "poor" who could not evacuate before Katrina hit the South, specifically New Orleans. If a Category Four hurricane hit "downtown" Detroit, Los Angeles, New York, Atlanta, Cleveland, Baltimore, Houston, Chicago or St. Louis, the total number of people who could not evacuate would not be less than what we've seen in New Orleans. On the contrary, the number of people who could not or would not evacuate in those aforementioned markets would be much higher than what was seen in New Orleans. In some cases, such as Los Angeles, Chicago or New York, millions more. Granted, the degree of flooding wouldn't be an issue as it was in New Orleans. But the lack of mobility by the poor in those markets is no different than almost all inner cities throughout the U.S. And what we've been watching on television during this disaster is New Orlean's inner city, not its suburbs, exurbs or agurbs.

Would there be looters and snipers firing at rescuers in Los Angeles, New York or Chicago if a natural disaster of Katrina's magnitude slammed the central business districts of those markets? What do you think? Look, no matter what you've heard from the media since the hurricane hit, New Orlean's downtown is no different than other major downtowns in America today. The majority of the residents in large cities in this country have lower incomes than what's found in the suburbs.

They will be Back

Greater New Orleans, the Mississippi Gulf Coast and the part of south Alabama that was hit by Katrina will see more rebuilding resources than any hurricane-slammed region in the history of this country. Why? Well, Katrina is already being called the worst disaster to hit the U.S., which is debatable. More importantly though, fingers were pointed at the federal government's slow response to the catastrophe. As a result, the federal government will make up for it during the recovery period and at the forefront will be the Army Corp of Engineers.

And it will be the federal government that hastens the rebuilding of the levee system that protects New Orleans. It will be improved with a redundancy system. Instead of one levee wall or berm, look for three back to back to back. From what I'm hearing, New Orleans officials are even thinking about designing a "Venice, Italy" version of the Big Easy. Why not bring in canals that could assist in flooding issues not unlike what they have done in Venice? That would really make New Orleans a waterfront city, which it really wasn't prior to Katrina.

The most important factor behind the rapid comeback of New Orleans and the Mississippi Gulf Coast from this catastrophe is simple. You can't redesign the Mississippi River. It ends near New Orleans. Barges from inland ports filled with goods from the heart of our nation hook up with ocean going ships at ports in and around New Orleans. And of course, there is the oil factor. That being the case, New Orleans must be rebuilt in fine form, as will the areas around the Port of Gulfport and the major ship building and repair facilities in Pascagoula. In other words, a rebuilt New Orleans is a national and international issue, not just a regional one.

Hurricane Katrina was a disaster of the highest magnitude, one we haven't experienced in the U.S. in several generations. But in time, certainly years, but not as long as some folks think, New Orleans and the Mississippi Gulf Coast will be back much better than before.

mike@sb-d.com

Apparently Kia's Plant Plans Easier to Predict than Hyundai's

In the winter 2003/2004 edition of Southern Business & Development (almost two years ago), we wrote an editorial with the headline, "Here's a Prediction: Kia will announce its First U.S. Plant in 2006 and we know where it will be Built." In the editorial, we predicted that Kia will announce its first U.S. plant in the spring of 2006 and that the location will be Meridian, Miss.

Just last month (August 2005), much was made of Mississippi Gov. Haley Barbour's trip to Korea for a visit with Hyundai-Kia Automotive Group Chairman Chung Mong-Koo. Kia officials admitted that Mississippi is at the top of the list as a location for the Korean automaker's first U.S. plant. And Gov. Barbour revealed in August that Kia's first choice for a site in Mississippi is Meridian.

We have written for almost two years now that Kia will build its first U.S. plant in the Southern Auto Corridor, specifically in Mississippi and even more specifically in Meridian. But before Kia builds, its South Korean partner, Hyundai, must ramp up its new plant in Montgomery, Ala., and have at least a nine month sales history of vehicles made at that plant. When will that be? Spring of 2006. It may be that Kia is even more predictable than Hyundai when it comes to when and where it will announce its first North American assembly plant. Nine months before Hyundai announced its first facility in 2002, we wrote that it was going to Montgomery, Ala. (for more information on the Southern Auto Corridor, go to www.SouthernAutoCorridor.com)

mike@sb-d.com

Human Genome Sciences (HGS) has almost completed its massive $250 million manufacturing plant near its headquarters, which it expects to have approved for use within one year. The Rockville, Md.-based developer of gene-based drugs will soon complete the 290,000-square-foot facility this year and expects to have it validated by federal regulators so that it will be ready to manufacture drugs. The new plant is being built on 10 acres adjacent to an existing HGS manufacturing plant and located on the Belward Research Campus of Johns Hopkins University. At the new facility, the company will be able to produce drugs on a commercial scale. With its own drugs in late-stage testing, HGS will use the facility to manufacture these new products once given FDA approval. In addition, the company will manufacture other companies’ drugs while it waits for its own to gain approval. When complete, the new project will be capable of producing several different biotech drugs, including human proteins, antibodies, and fusion proteins created by joining two genes together. (for more information on the life sciences industry in the South, go to www.BioIndustrySouth.com)

Samsung Proposed Incentives for Austin Expansion Top $200 Million

One of the largest investment deals in the American South's history is being negotiated by Korean semiconductor maker Samsung and local and statewide officials in Texas. Samsung is looking to expand its fab plant in northeast Austin, Tex., by investing $3.5 billion and hiring an additional 700 workers. The city of Austin has already upped its proposed $48 million incentive package to nearly $60 million to Samsung and an additional $150 million is expected to come from the state of Texas and Travis County to help finalize the deal.

Eli Lilly Reduces Size of Virginia Project Announced Three Years Ago

Indianapolis-based pharmaceutical giant Eli Lilly announced in 2002 it would build a 600,000-square-foot, 700-employee insulin plant in Manassas, Va., which is located in the Washington, D.C. region. The plant has yet to break ground. In the summer quarter, the company announced it will build the facility by 2009, but it will be scaled back to 300,000 square feet and 350 employees. Eli Lilly will spend about $350 million in the deal, down from $450 million.

If Atlanta can do it, every City can

Atlanta, known as having some of the worst vehicle traffic in the South, was upgraded this summer by the Environmental Protection Agency for its improvement in air quality. The upgrade means that Atlanta has earned attainment status for ozone as a result of measures put in place between 2002 and 2004. It also means that efforts that actually began in 1978 have significantly reduced ozone concentrations in the Atlanta metro. The EPA also approved a maintenance plan for the Atlanta area in an effort to keep attainment status.

International Paper Relocates HQ from Connecticut to Memphis

International Paper (IP) the world's largest paper and forest products company, is relocating its worldwide headquarters from Stamford, Conn., to Memphis. The decision was made in mid-August. Currently about 3,000 IP workers are in Memphis. The headquarter relocation deal is expected to add about 100 jobs in Memphis. Cost factors were cited by IP officials, even though Stamford, Conn., officials maintain that the relocation will break an agreement made by IP that it would keep its global headquarters in Stamford until 2010.

Nissan Shipping Mississippi-Made Minivans to China

In the late summer quarter, Japanese automaker Nissan began shipping Quest minivans produced at its plant in Canton, Miss. to China. Nissan has set a mark of 4.2 million worldwide vehicle sales by fiscal year 2007 and China may the market that gets them there. It has been estimated that as many as 100 million vehicles could be sold in China over the next 10 years. The Quest models will be shipped fully assembled and will travel by rail from Mississippi to ports in California and then on to China.

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