Top Ten Stories

By Mike Randle

1. The South Dominates National Regional Rankings

We can't remember a year when the South led all U.S. regions in so many rankings. When the country recovers from a recession, it's natural for the strongest economic region to emerge first. Here are just a few of the rankings that cited the South over the past year.

* In the first quarter of 2004, Relocate America named the top places to live in the U.S. The top five markets were located in the South.

* In the second quarter of 2004, Torto Wheaton Research's top five U.S. markets for job growth featured four Southern markets.

* In the summer of 2004, Milken Institute's Best Performing Cities ranking named six Southern markets in its top 10.

* Four of the top five states in infoUSA's top states for new business establishments were Southern states.

* A now defunct, yet respected publication, named five Southern states at the top of its top states for expansion and relocation in the U.S.

* Thirty-two of Expansion Management's 50 Hottest Cities were Southern cities.

* Of Pollina Corporate Real Estate's top 10 Pro-Business States, seven were Southern states.

* Policom Corp. recently ranked their top metros for economic strength. Seven of the top 10 were in the South.

* Total non-farm employment in the South grew at about 1.5 percent from 2000 to July of 2004, while the nation as a whole lost about 2 million jobs.

* The South's jobless rate in 2004 was the lowest in the nation, averaging about 4.9 percent, while the nation's rate averaged about 5.6 percent.

2. State Budgets Improve

It took awhile, but nearly all states in the South have seen their tax receipts increase in the last year, some dramatically. For example, Virginia, after some tough cutbacks between 2001 and 2003, enjoyed a large budget surplus in 2004. But the last four years haven't been easy. Southern governors and their legislative branches have bit the bullet like no four-year period in recent memory, cutting services and thankfully cutting lots of pork. For the most part, states in the South are in better shape than they were four years ago.

3. Four Hurricanes Cause Havoc

Nothing in the South halts economic development faster than bad weather. Much of the South was affected by bad weather in the fall of 2004. Florida was hit by four big hurricanes; Jeanne, Ivan, Francis and Charley. But it wasn't just Florida that faced the brunt of the storms. Alabama, Georgia, the Carolinas, Virginia and Maryland saw significant damage not only to waterfront areas, but inland areas as well from those storms. The damage totals were in the tens of billions of dollars.

4. After Five Devastating Years, the Rural South Comes Back

More damaging than four hurricanes was the devastation done by the huge number of mass layoffs announced by industry operating in the rural South between 1999 and 2003. Some rural Southern markets saw unemployment rates rise from five percent in the late 1990s to over 20 percent by 2002. But in 2004 rural plant moratorium rates dropped dramatically. Even better, more industry announcements were made in the rural South last year than any year since 1999.

Between 1993 and 1998 there were over 100,000 net new manufacturing jobs created in the rural South. More than that number was lost between 2000 and 2003. Yet, if you look at the economic history of the South's outlands there are ups and downs no different than what was experienced between 1993 and 2003. In other words, the rural South's economy is highly cyclical and is more affected by the economy of the U.S. as a whole than major Southern markets are.

To prove that you only have to look at job generation and job losses in the South between 2000 and 2003 compared to the same in the U.S. during that time. Even though the rural South lost hundreds of thousands of jobs between 2000 and 2003, the South as a whole saw an 1.5 percent increase on average in jobs gained. On the other hand the other three U.S. regions accounted for some three million job losses at one point between 2000 and 2003. What that means is the South's metros picked up the slack that was created by its rural regions.

5. 11,000 New Jobs Announced in One Day in Virginia

Since the South earned the ranking as the No. 1 region in the U.S. for economic development, there have been some eye-popping job announcements coming from Southern states over the years. But there have been few days in the South's history when 11,000 new jobs were announced by four companies in the same state and on the same day.

That's exactly what happened when SAIC (4,515 new jobs), SRA International (1,400 new jobs), PricewaterhouseCoopers (600 new jobs) and Booz Allen Hamilton (4,600 new jobs) all announced their expansions in various Virginia locations on November 17, 2004. All of the deals involved homeland security and defense information technology and most of the jobs are a result of new federal contracts. The total investment made by the four companies will exceed $350 million and the average annual wage for the 11,000-plus jobs will total $75,000.

Over the last three years, including the announcements made in November, approximately 35,000 new homeland security jobs have been created in Virginia and more than $1 billion in capital investment in that sector has been made in Virginia by federal contractors and agencies.

6. Scripps Institute Showdown in Florida

In the fall of 2003 one of the biggest corporate deals in the South's history was turned when the California-based non-profit Scripps Research Institute announced it would build a huge campus in Palm Beach County, Fla. The job numbers associated with the project are staggering. Over 50,000 direct and indirect jobs are expected to be created by the new research campus. In return, the state of Florida and Palm Beach County have agreed to pony up about $500 million in incentives.

In many of the South's biotech hubs, infrastructure was put into place one brick and one building at a time. In fact, cities such as Birmingham and Memphis are just now being recognized as centers for the bio industry after decades of building infrastructure for the life sciences. In the case of Palm Beach County and much of South Florida, the Scripps Institute will put the necessary infrastructure in place for a biotech hub in just two years.

But all is not well in paradise. In 2004, environmentalists in Florida filed lawsuits to stop Scripps from building the project on a 1,920-acre site called Mecca Farms. In the fall of 2004, a spokesperson for a group called 1,000 Friends of Florida claimed that Scripps would be one of the greatest environmental and growth management threats in Florida history. That statement doesn't seem targeted at the Mecca Farms site. That statement targets the entire project.

As of the first quarter of 2005, no work has been done to build a permanent home for Scripps in Palm Beach County. Legal challenges are going to have to be settled before that occurs.

7. North Carolina Opens Checkbook for Dell

In unprecedented fashion, North Carolina won one of the South's most signature deals of 2004, the 1,500-employee Dell project. The recruitment of Dell was unprecedented considering the incentive package the state of North Carolina, Forsyth County and the city of Winston-Salem put together. In total, Dell garnered about $300 million in incentives from the three governments.

Historically, government officials in North Carolina have been the most vocal anti-incentive group of all in the South. Time after time North Carolina would take the "high road" after losing out on another big project, vigorously maintaining that they don't have to "buy" projects in order to compete. Well, with Dell, North Carolina joined other Southern states that have landed huge deals by offering up substantial incentives for a single project. It just goes to show that even the most stubborn of Southern states can realize that if you are going to lure the big buffalo, you're going to have to write a big check. We applaud North Carolina officials for checking their skepticism at the door when it came to landing Dell.

8. Maryland's Biotech Industry Leads Region

Everybody wants it and Maryland has more of it than any state in the South. The biotech industry in Maryland was already impressive prior to 2004. For example, Johns Hopkins' research topped $1 billion in fiscal year 2003, making it the No. 1 institution in research dollars spent in the U.S. for the 24th straight year. It also doesn't hurt that the National Institutes of Health is headquartered in Maryland.

But in 2004, the state's bio industry took a major step up with hundreds of millions in announced new infrastructure. One of those projects is a $500 million life sciences campus located next to Johns Hopkins. In addition, one of the South's biggest bio deals of the year landed in Maryland when Bioport, a Michigan-based company, announced a 200,000-square-foot facility in Frederick. There's also the potential that the largest bio deal of 2005 could call Maryland home if MedImmune announces a $900 million, 1,000-employee manufacturing plant in the state, as it is expected to do.

9. Supplier Park in San Antonio

The next generation automotive assembly plant is taking shape in San Antonio where Toyota is building its newest facility in the South. The automotive parts supplier park apparently is how automakers are going to set up their plants now and in the future. Toyota recently announced that 18 suppliers are going to locate directly on the site of the assembly plant, a strategy that redefines the phrase "just in time" delivery.

The supplier park strategy makes perfect sense when production and cost factors are weighed. However, in terms of labor availability and quality, it's a strategy filled with risk. Maybe that's why Toyota picked a market the size of San Antonio for its newest assembly plant. A market that size should be able to deliver the labor Toyota is looking for to fill the jobs created by the automaker and 18 different suppliers.

10. Automotive Deals in the Mississippi Delta

Everybody loves an underdog and the Mississippi Delta regions of Arkansas and Mississippi are just that. In 2004 the Mississippi Delta had one of its best years in new deal generation in years as several automotive parts suppliers found the region. More will follow if an automaker decides to invest several hundred million dollars in the Delta for a new assembly plant. We believe it is just a matter of time before that happens.