2006 SB&D 100

"Methodical" is the Best Way to Describe this Year's SB&D 100

Job totals grow slightly, but total investment sets all-time record.

By Mike Randle

On the Jobs Side

The 2006 SB&D 100 showed slight increases over last year in total jobs created by the South's 100-largest corporate announcements. The number of jobs produced by this year's "100" totaled 92,847, which topped last year's sum by about 1,700 jobs. But as chart No. 1 shows, this year's total still does not compare to jobs generated by the "100" in the mid-and-late 1990s. Total jobs created by the SB&D 100 between years' 1995 and 2001 averaged about 121,000 jobs.

Even though we're a long way off levels rung up in the 1990s, some Southern states are sporting unemployment rates that are as low or lower than those found in a few of the great economic years of the '90s. Granted, migration to the South has slowed, but it hasn't slowed much in the 2000s compared to the 1990s. That being the case, what gives? Well, it just might be that the prediction of millions of baby boomers hitting retirement age are no longer predictions. It's happening and it apparently is affecting unemployment rates in the South as folks leave prospective employment rolls to live the life of retirement.

This year represents the fourth consecutive year of job growth after the "100" hit rock bottom in 2003 (calendar year 2002 numbers). And with 483 jobs, the Job 100 threshold (the 100th-largest job announcement) is inching ever so closely to the magical 500 mark, a level not reached since 1999 when the threshold was 600 jobs.

Chart No. 1

*Total Jobs Created by the SB&D Job 100 - 1994-2006

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

Just Missed Deals

While the total jobs generated by the South's 100-largest corporate job announcements increased this year compared to last year -- meaning bigger deals are occurring -- all is not well. Total deals with 200 or more announced jobs decreased this year compared to last year. In calendar year 2004, 391 companies in the South announced new, expanded or relocated deals with 200 or more projected jobs. In 2005 that total dropped to 364 (There are 348 projects of 200 jobs or more published in this edition. The 16 that are missing are confidential announcements that we could not make public).

That simply means that in 2005 there were some larger deals at the top of the SB&D 100, but there were less what we call "Just Missed Deals," or announcements made with 200-plus jobs up to the "100" threshold, which, as mentioned, is 483 jobs this year. That makes this year's list heavier at the top, yet thinner at the bottom.

The top job-making announcement made in calendar year 2005 and No. 1 on the 2006 SB&D 100 list is the Texas Institute for Genomic Medicine in College Station, Tex. The biopharm deal is expected to create 5,000 new jobs. Other huge deals made in the South in 2005 include Washington Mutual's announcement in San Antonio that will produce 4,200 jobs and several defense-related BRAC projects that basically move people from one location to another (For more information on individual announcements, go to the many lists or to the "Best Deals in 2005" found in this section).

Top Industry Sector Performers

Call centers have reigned champion for many years now when it comes to big job deals in the South. This year is no exception with 63 call centers expanding or starting up in the region in 2005, all with 200 announced jobs or more. Distribution and warehousing, which has consistently ranked just behind the automotive industry for quite awhile, took over the second-place spot for the first time this year with 31 deals of 200 jobs or more. The automotive industry fell to third with 28 deals. Headquarter relocations and expansions and the financial services industry made up the top five industry sectors. Over the last eight years, those are the five-most active employment sectors in the South and 2005 followed that trend (See chart No. 2).

Chart No. 2

Top 10 Industries 2006 SB&D 100

(Total Announced Deals in 2005 with 200 Jobs or More)

New vs. Expanded: Debunking the Myth

We have written several times that year after year the SB&D 100 exposes the myth that "80 percent of jobs created come from existing industry." Even a CEO, site searching exec or consultant like yourself has heard that untruth told over and over and over. While 80 percent of new jobs may be created by existing industry in other parts of the country, it's just not the case in the South. Every year since 1993 the SB&D 100 has proven it. One of the biggest problems facing the South's economy is that so many economic developers and political leaders in the region have bought into that flawed theory.

We will admit that in most years, the majority of new jobs created in the South are sourced from existing and expanding business and industry. But it's nowhere close to 80 percent. In fact, there have been several years in the South, all in the mid-1990s, when there were more jobs created by new industry than by expanding/existing industry. Of course, that's based on the criteria of this ranking, which by the way, is anything but arbitrary. No publication that we know of publishes every single corporate announcement that is used in its ranking.

This year's SB&D 100 numbers show that there were 199 deals announced by existing industry with 200 jobs or more. There were 24 that came from relocation deals (which are new) and 141 that came from new announcements. In summary, that's 55 percent coming from existing industry and 45 percent coming from new announcements. Eighty-percent of all new jobs come from existing industry? That's a fable when it comes to economic development in the South and it's been that way every year since we've published this ranking.

Manufacturing vs. Non-manufacturing: Debunking the Myth, Part II

Here's another falsehood spread by the uninformed about economic development in the South. Haven't you heard? "Manufacturing is dead and it's not coming back." If you are a regular reader of this magazine, you may remember last year's SB&D 100 headline. It read, "Shocker! Manufacturing Dominates the Service Sector in the 2005 SB&D 100." Sure, the investment side of the "100" has always been dominated by the manufacturing sector. But that's not a fair comparison. Manufacturing will always outperform services in total investment.

But last year's headline about manufacturing dominating services had to do with this part of the "100," or the jobs side of the ledger, where services thrive. Of the 391 deals announced in the South in 2004 with 200 jobs or more, 198 were of the manufacturing variety and 183 came from the services sector. Granted, services dominated manufacturing deals in the South in years' 1997-2003. It was the other way around in the early 1990s.

Yet, prior to last year, you have to go all the way back to 1995 to find a year when manufacturing posted more big job deals than did the services sector. It was more than noteworthy that last year's SB&D 100 showed that the blue collars beat out the white collars for the first time in 10 years.

To prove to you that manufacturing is not dead in the South, let's look at all deals announced in the region from calendar years' 2002-2005 with 200 announced jobs or more. During that time there were 1,315 deals announced in the region with 200 or more jobs. Of those, 563 were manufacturing deals and 752 came from the services sector. In other words, in the last four years, 43 percent of all job-making announcements with 200 jobs or more came from the manufacturing sector. That figure hardly represents a dead industry.

While manufacturing has held its own in job-intensive projects in the South over the last four years, this year's SB&D 100 indicates that it crashed and burned in 2005. Of the 364 deals announced in calendar year 2005 with 200 jobs or more, only 123 came from manufacturing. That's a mere 34 percent of the total, or almost 10 percent below the average earned over the last four years.

In conclusion, there's no question that these numbers expose the myths as they relate to the South that "80 percent of all jobs come from existing industry" and that "manufacturing is dead." When someone makes those claims simply ask them, "Alright, what part of the country are you referring to? Are you talking about the U.S. as a whole? Are you talking about the Northeast or West?" It's important to make those qualifiers in an effort to know the truth, because there's one thing we've learned about the South's economy; it has very little in common with the rest of the country as a whole. That's been true for over 100 years in the good and the bad.

Chart No. 3

Manufacturing vs. Non-Manufacturing

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

On the Investment Side

While the jobs side of the SB&D 100 is showing steady, if not unspectacular growth, the investment component of the list has raced to a new record. The $26.7 billion, which represents the total value of the 100-largest investment deals announced in the South in calendar year 2005, tops the previous record of $25.8 billion announced in calendar year 2000 and exceeds last year's total by $4.5 billion. But this 2005 crop of capital intensive projects are much more real and accurate than that group that set the record in 2000. Back then a few dozen power plants made the list. About three-in-four of those power plants were never built.

Chart No. 4

SB&D Investment 100 1993-2005

In 2005 there were 233 corporate investments made with $30 million or more in investment. That beats last year's total of 217. It should be noted that we do not count retail, speculative real estate (office or industrial buildings not built for a specific user), lodging or residential real estate projects.

This year's record year includes the typical suspects, such as semiconductors, automotive, steel, pharmaceuticals and the like. But there are some new industries making the list and they center on energy production. For the first time ever wind farms are making it onto our top 100 investment list and if you'll look closely, refineries are beginning to make their mark. New investments in ethanol and coal mining are present, too. We expect refineries and green power to gain more prominence on our big deal investment list for years to come.

Top Industry Sector Performers

By studying this year's SB&D 100, you will find that the automotive industry -- for the eighth consecutive year -- sits at the top-of-the-heap among the South's largest capital investments. In fact, with 33 deals announced with $30 million or more in investment, no other industry even comes close to the automotive sector. The 33 deals equals automotive's total last year. That total almost doubles the number of deals turned by the second-place industry. That has been the case for years now -- that automotive doubles all other industries in the number of deals announced in the South.

Coming in second this year, as it did last year, is the oil and gas industry. Considering what is going on with the price of oil, that is not surprising. Also performing well and making this year's top five industries in the number of large capital investments are distribution, food/beverage, and biotech/pharmaceuticals/medical devices (See chart No. 5 for industry top 10).

Chart No. 5

Top 10 Industries 2006 SB&D 100

(Total Announced Deals in 2005 with $30 Million or More in Investment)

New vs. Expanded and Manufacturing vs. Non-Manufacturing

There were 97 new deals announced in the South last year with $30 million or more in total investment and 113 came from expansions. There were three relocation announcements, one that we could not publish. Not unlike every year since 1993, manufacturing ruled large corporate investments in 2005. Of the 233 $30-million-plus corporate investments announced in the South in 2005, 156 were from manufacturers and only 77 came from non-manufacturers. Distribution, headquarters, financial services and a relatively new category -- very expensive, "Fort Knox" fashioned data centers -- topped the non-manufacturing list.

2006 SB&D 100: State Performances

Compared to last year's totals, 10 Southern states turned more deals that feature 200 jobs and/or $30 million in investment and seven states lost ground from last year. The biggest gains were earned by Florida (+23 deals) and North Carolina (+21 deals). The next biggest state moves came from Texas (+15), Missouri (+7) and West Virginia (+5).

The biggest losers from the 2006 SB&D 100 were Georgia (-23 deals), Oklahoma (-16 deals), Louisiana (-14) and Mississippi (-10). Considering what occurred with Katrina, Louisiana and Mississippi are excused for their performances last year. Georgia's excuse centers totally on Atlanta performing so poorly in 2005, posting its worst year (45 points) since 1993. We can't find an excuse for Oklahoma's weak 2005 performance.

Other notable state performances obviously must start with Alabama. They turned 57 big deals last year and this year that was matched with 58. To give you an idea of how impressive that is, only Florida, North Carolina, Texas and Virginia landed more large job and investment projects in 2005 than did Alabama in the South.

As for North Carolina, it emerged last year after three terrible years. But this year and last year have seen the Tar Heel State come back from those tough times in a huge way.

2006 SB&D 100: State Performance Per Capita

* Points per million residents