Ten Comeback Kids

By Mike Randle

Every community or state has a tough go of it from time to time. The years' 2000-2003 were no picnic for many Southern states and communities. Here, we have identified 10 states, regions or communities that had a tough time of it during the recession, yet have come back strong in the last couple of years.

1. North Carolina

No state in the South lost more manufacturing jobs per capita than North Carolina from 2000 to 2004. That's because no state in the South was home to a larger percentage of textile and apparel industries. While that industry has closed plants throughout the state of North Carolina and continues to do so, the closure rate has slowed dramatically in the last year. With all that's happened, one would think there aren't any textile plants left in the Tar Heel State. That's not the case as the industry remains a huge employer of North Carolina workers. Regardless, the state is moving on to other things.

We can say with great confidence that no Southern state has turned more deals overall than North Carolina since the summer of 2004. Those deals have come in large, medium and small sizes and have involved all types of industry sectors. The Dell deal announced late in 2004 topped off what we think is the first year in four years that North Carolina saw an increase in big deals turned from the previous year. All we can say is it's about time and it was only a matter of time before the "Grand Dame" of economic development came back in grand fashion.

2. The Mississippi Delta

Everyone likes an underdog, but everyone adores an underdog that has performed well. Conjure up the Mississippi Delta in your mind, no matter if you've visited the region or not, and images of hot dust devils twirling about crop lines as far as the eye can see is one picture that probably comes to mind. Poverty in the Delta? Sure, that comes to mind, too.

Yet, today you don't have to look hard to see an improving economic picture in the Mississippi Delta region. Most of the new job creation has occurred in the Arkansas and Mississippi portions of the Delta. There, the automotive industry has staked a claim that is not only substantial; it may be paving the way for something that is the biggest thing to ever occur to the Mississippi Delta region: an automotive assembly plant.

No less than 10 significant automotive deals have been struck in the Delta over the last couple of years. That's saying something considering no substantial automotive deals have found the region in years. And these automotive players are no jacklegs. Hino Motors (a part of Toyota), Denso, Systex and Eakas have set up shop recently on the Arkansas side of the Delta and Textron, Visteon, Calsonic, Casco, Yorozu, SportRack and Faurecia have established a foothold on the Mississippi side of the Delta. Five years ago, none of those automotive parts suppliers existed in the region.

3. Louisiana

This state is just beginning its comeback mode. The comeback can be seen in the form of three of the largest deals ever announced in Louisiana and they were all announced last year. The comeback also includes phasing out certain business taxes in an effort to improve Louisiana's climate for existing industry. And when you have a new governor that has, in just a short period of time, exemplified outstanding leadership qualities in the direction of economic development in general, something that's not been seen in Louisiana for quite some time, then that comeback will result in a consistent job generation effort.

Louisiana has always ranked near the top in the South just about every year in state capital investment. That's because most big investment deals that occur each year in the Bayou State are of the petrochemical variety. Gov. Kathleen Blanco realizes that the petrochemical industry is extremely important to the state. But at the same time, she knows that other industries such as automotive are the real job makers. And job generation is at the top of her agenda.

Blanco made a brilliant move in hiring Mike Olivier, the former head of the Harrison County (Miss.) Development Commission. Olivier is the one missing link that Blanco needed to find. Olivier is a veteran deal-turner, something else that has been hard to find in Louisiana over the years.

4. Texas

We'll give Texas the No. 3 Comeback Kid spot, even though there's nothing kid-like about the South's only sub-nation. Texas is a 16-foot-high economic grizzly bear. Feed it and it grows to 18-feet in one year. Don't feed it for three years or more and it becomes a sniveling little cub. We were blown away beginning in 1999 and all the way through 2002 that no one in Texas seemed to realize the bear had shrunk to mini-me size. Either officials in Texas were unaware of their plunging number of deals turned or they were too embarrassed to admit they were losing jobs by the tens of thousands and doing very little to replace them.

But to the rescue Texas came, led primarily by Gov. Rick Perry. Perry's new big deal fund helped in turning several large deals in 2003 and 2004. It can be said without hesitation that Texas has comeback from the depths and risen to the top, a place it should always be considering its size.

5. South Carolina

Like every Southern state, South Carolina experienced a rash of closed plants during the recession. But during that same time some political upheaval was thrown on top of the bad times of the early 2000s, making industrial recruitment doubly hard. But all of that looks to be behind the Palmetto State now.

A leaner South Carolina Department of Commerce (DOC) has landed some healthy investments lately. In fact, 2004 was a banner year for this economic development group. Results of their efforts crossed the $2.5 billion mark for the first time since 2001, yielding nearly 13,000 new jobs for South Carolina. The high numbers reflect several important announcements--$560 million for Vought Aircraft Industries in North Charleston, $175 million for a Walgreen's distribution center in Anderson County, and $200 million for an expansion at a Kimberly Clark facility in Aiken County.

The momentum of 2004 is especially impressive considering that less than three years ago DOC underwent an aggressive restructuring. Its staff was slashed by 25 percent and its divisions were reduced to four instead of 15. The sweeping changes were part of Governor Mark Sanford's Contract for Change, which is based on the idea that it's not more government, but more efficient government and lowering the tax burden that are key to unlocking a state's economic potential. On the positive side of the balance sheet, this reorganization has resulted in a yearly savings of $1.5 million. And remarkably, a more agile, more efficient DOC has emerged that is performing at a much higher level.

South Carolina's Secretary of Commerce Bob Faith explains it like this: "The changes have made it much easier for the agency to adapt to the quicker decision-making when companies are ready to expand or locate a facility. Traditionally, those decisions may have taken years, but now companies are just a lot quicker to pull the trigger."

Giving DOC a renewed focus is the South Carolina Competitiveness Initiative. Developed by Harvard professor Michael Porter, this road map outlines ways to make South Carolina more competitive through developing industry clusters and taking a collaborative approach to economic development. DOC now has a strategic direction and is implementing a solid action plan to attract high-tech and high-skill industries. It's also working to raise prosperity through improving the quality of the state's business environment.

6. Hot Springs, Ark.

In the case of Hot Springs, Ark., its comeback has been in the works for 15 years. In fact, if this category was titled "Comeback Kids of the Decade," Hot Springs would be at the top of the list.

From what we've heard, downtown Hot Springs, a host for affluent throngs from the 1920s-1960s, was a mostly vacant, run-down center for nothing as late as 1990. But in the early 1990s the formation of the Historic Downtown District and the Central Business Improvement District began a renaissance in the downtown area that was given impetus in the early 1990s by the establishment of a thriving fine arts community. Since then all kinds of development and redevelopment has occurred in and around downtown Hot Springs.

But a revitalized downtown is not enough to meet our criteria for a comeback kid. Since 1990, Garland County, where Hot Springs is located, has shown a better than 20 percent growth in its population. Tourism-generated dollars have just about doubled since 1990 as have tax receipts in the county. Job generation in Garland County has also seen a 20 percent jump since the dark days of the early 1990s.

These across-the-board accomplishments by Hot Springs and Garland County have earned the community a write up recently in Forbes and Kiplinger's Newsletter.

7. Morrilton, Ark.

It was called the "Morrilton Miracle." After Levi Strauss and Arrow Automotive Industries closed about four years ago in Morrilton, this community was put to the test. The two manufacturers employed about 1,200 workers in Morrilton, a town of 6,500 in a county of just 20,000 people.

There have been some devastating stories from the recession in rural markets in the South, but Morrilton's story ranks up there as one of the worst. Since those days, however, things have changed. In 2000, Telex Communications announced it was purchasing the former Arrow Automotive building, locating its Electro-Voice speaker business. That deal created 200 new jobs. In 2002 SEMCO announced it was expanding in the town, adding about 90,000 square feet of space. Also announcing was ICT Group, which put in a 400-job call center in Morrilton. And in 2003 and 2004, all kinds of redevelopment has occurred in Morrilton's central business district.

8. New Orleans

Just about everyone has visited New Orleans at one time or another. There's been so much going on there for decades that few can say they have "never been to New Orleans." But have you visited lately? If you haven't, you're missing the transformation of a market that some love, yet some hate. It's those latter folks that need to read the following.

The revitalization of New Orleans is happening with a sense of urgency we've never seen before from officials with the Crescent City. Currently, hundreds of millions of dollars are being spent on various projects, including roads, parks, cruise ship docks, ports, storefronts, residential real estate, crime prevention and safety, research parks and a true medical district with university partners' Tulane and LSU. There are new projects popping up in the French Quarter, new tourist developments and a sprucing up of busy Canal Street. Currently Class A office space in downtown New Orleans is 90 percent leased.

The film industry has taken off in New Orleans. A growing biotech sector is also moving ahead. Tourism is at its highest level ever and the Port of New Orleans set records for exports in 2004.

All of these developments are happening for a reason. The greater New Orleans area business community, economic development agencies in the area and local politicians, especially New Orleans Mayor Ray Nagin, have tried a novel approach: working together. It just goes to show that cooperation, not competition, is how things get done, even in a place like New Orleans.

9. Martinsville, Va.

Martinsville and Henry County, Va., like most communities dependent upon textiles, began to see the steady decline of jobs and capital investment more than ten years ago. Since that time, the region absorbed 23 plant closings and numerous downsizings, eliminating more than 10,000 jobs. Facing 35 straight months of double-digit unemployment, topping out at almost 12%, the community knew it was time for a change.

The focus began to shift towards a more diverse economy. Through Patrick Henry Community College, Trade Act programs were made available to those displaced workers with a goal of helping them return to suitable employment. More than 1900 students took advantage of the programs, returning to the workforce with skills to meet the demands of jobs new to the community. Entrepreneurs in the community found new opportunities through the West Piedmont Development Center, an incubator that was opened in 2001 with space for 20 tenants. Businesses locating into the community found new homes in the development of three new business parks designed to accommodate industry of all types and sizes boasting low construction costs and land sites that are pre-graded for quick occupancy. Assistance to these businesses will be provided by the newly formed Martinsville-Henry County Economic Development Corporation, a joint effort of the City of Martinsville, Henry County and the local business community.

The result of these efforts has been the creation of 5,438 jobs and a capital investment of more than $900 million over the past five years. By reaching out to companies that could benefit from the changing economy, the community has successfully enticed distribution operations of Nautica, inbound call center operations of New Roads and StarTek, food processing operations of Knauss Snack Foods, and the manufacturing operations of MasterBrand Cabinets. Martinsville-Henry County is banking on the name recognition associated with the Martinsville Speedway, home to Arrington Manufacturing who builds race engines and performs research and development for the Dodge motorsports program, the NASCAR Craftsman Truck team of HT Motorsports, and the new Virginia Motorsports Technology Center which will house part of Patrick Henry Community College's advanced motorsports curriculum.

10. Raleigh-Durham, N.C.

You're probably wondering how Raleigh-Durham-Chapel Hill, home to the Research Triangle Park and several top-notch universities, could be labeled a "comeback kid." With an unemployment rate that didn't rise above 3.0 from 1993 to midway through 2001, it's hard to believe this economic development model had ever seen hard times.

Of course, "hard times" is a relative phrase. But tell that to the thousands of workers in the Raleigh area who received pink slips from dozens of high-tech companies in late 2001, 2002 and 2003. In the first quarter of 2001 2.2 percent of the work force was jobless. Exactly a year later, that figure rose to 5.1 percent with a high of 5.5 percent in June of 2002.

As mentioned, the Triangle has historically seen some of the lowest unemployment rates in the South. In fact, from 1997 to late 2001, the average rate was about 1.7 percent unemployed with a low of 1.3 percent in several quarters during that period.

Today we're seeing jobs coming back to Raleigh-Durham-Chapel Hill. As of December 2004, the unemployment rate is back down to 3.3 percent.