Winter 2006

QUOTE

"There's no sense in taking powder home, boys. Let's shoot it."

Joe Max Higgins, CEO of the Columbus-Lowndes Development Link in the Atlanta Journal Constitution on March 10. Mere days before Kia chose West Point, Ga. for its first U.S. assembly plant, Higgins led an effort to lure Kia to a site between Columbus and Starkville, Miss. Reports that a $900-million-plus incentive package had been arranged from various governments, including the feds, were unconfirmed by the state of Mississippi. Furthermore, Leland Speed, the director of the Mississippi Development Authority, said that Higgins didn't have the authority to offer the incentive package to Kia. One Atlanta Journal Constitution writer wrote that the package was a "pig in a poke." But we loved Higgins' delightful description of the efforts he and others made to gain the Kia plant. We can say quite confidently that Higgins wasn't the only person behind the large incentive package. Almost two years ago, U.S. Sen. Trent Lott of Mississippi claimed that "Kia is the next automaker to call the Southern Auto Corridor home" and that Mississippi would get it. We believe it was Lott that made the incredible offer to Kia via the media, not face-to-face, at the end of its site search and we find it refreshing that a U.S. Senator would get that involved with his home state.

QUIZ

In the last three years this place has become one of Dell's favorite locations in the South to invest in. The Round Rock, Tex.-based computer maker currently employs about 1,000 workers here, and announced in early March it will add at least 400 more within the next five months. Where is this place?

(a) Atlanta, Ga. (b) Orlando, Fla. (c) Oklahoma City, Okla. (d) Little Rock, Ark.

(Scroll down for answer)

It's Georgia for Kia

After a search that took almost two years, Korean automaker Kia has chosen West Georgia for its first U.S. automotive assembly plant. The deal is huge for the Peach State as it begins to rebuild its automotive sector after Ford and GM announced in the winter quarter they are closing their Atlanta area assembly plants. The site is a greenfield location on Interstate 85 in West Point, Ga. The location is about 20 miles from Hyundai's largest supplier, Mando, which operates its plant and North American headquarters in Opelika, Ala. Hyundai is Kia's parent company. Kia considered sites in Mississippi and the Florida Panhandle before choosing West Georgia. The deal is expected to include more than $1 billion in investments and will eventually result in over 2,000 employees. Kia represents the seventh major foreign-owned auto assembly plant to be built in the Southern Auto Corridor since 1992. For more information go to www.SouthernAutoCorridor.com

Proposed Incentive Package to Kia Believed to be Second-Largest in U.S. History

In the late winter quarter it was reported that Mississippi, led by U.S. Senator Trent Lott and officials in Columbus, Miss., put together an incentive package for Kia Motors that totaled nearly $1 billion. Approximately $240 million would have come from federal tax concessions as a result of the new Gulf Opportunity Zone Act. Another $280 million would have come from the state of Mississippi, $175 million in tax incentives from the local Lowndes County government and a variety of other inducements, for a grand total of nearly $1 billion. That figure, we think, is the second-largest incentive package ever proposed in U.S. economic development history. The largest? A package proposed to Boeing by the state of Washington that topped $3 billion.

MeadWestvaco Realigns Packaging Businesses and Establishes New Headquarters in Virginia

On February 15, MeadWestvaco Corp., a Fortune 500 company, announced a plan aimed at strengthening the company's position in packaging in key global markets and driving cost and operational efficiencies. The company's plans include realigning its packaging business, establishing a new research-focused Packaging Innovation Center in Raleigh, N.C. and consolidating its U.S. corporate locations and key administrative functions into a new headquarters in Richmond, Va. The relocation of MeadWestvaco's headquarters from Stamford, Conn., to Richmond will result in an estimated 400 new jobs in Virginia's capital city. The new center in Raleigh will create about 200 new jobs. MeadWestvaco was created in 2002 when the Mead Corp., and Westvaco Corp., merged. The company employs over 22,000 people worldwide and has several operations in the American South.

EPA Declares Crittenden County, Ark. a Clean Air Economic Development Zone

In mid-February, the Environmental Protection Agency eased air quality restrictions on Crittenden County, Ark., located across the river from Memphis, Tenn. A supersite in Marion, Ark. that was scoped closely by Toyota in 2002 is located in Crittenden County. In 2004, Crittenden County was cited by the EPA for failure to maintain clean air designation. The ruling also cited Memphis and Shelby County, but did not cite any other counties in the Memphis MSA, including two counties in northern Mississippi. Crittenden is the first county in the country to receive the special EPA designation, which was placed under the 1990 Clear Air Act. EPA officials said the designation will make it possible for new industry, specifically a major automotive assembly plant, to locate in the county and still meet air quality goals. Crittenden County is home to a Hino Motors parts plant in Marion. Hino is affiliated with Japanese automaker Toyota.

Missouri Passes Tax Break for Vehicles Built in the State

The Missouri State House overwhelmingly passed legislation in the winter quarter that would waive the state's 4.2 percent sales tax on all models of vehicles built in Missouri. Currently Ford, DaimlerChrysler and General Motors operate six plants in the state, however, Ford announced in January it is closing its St. Louis plant.

North Carolina Research Campus Breaks Ground

The 350-acre biotech center being built in downtown Kannapolis, N.C., by David Murdock and several universities in the Tar Heel State broke ground in the winter quarter. The first building, a 311,000-square-foot core lab facility, will house researchers that will focus on nutritional and agricultural studies. Go to www.BioIndustrySouth.com for more information on the life sciences industry in the South.

No Word yet from U.S. Army Corps of Engineers on New Orleans Rebuilding

The recovery from Hurricane Katrina has been more than tough in the areas affected. The disaster was so large that it's hard for any government that's involved to point to great progress, even seven months later. Some are asking why there's been little if any rebuilding of damaged structures. Well, that's up to the Army Corps of Engineers. As of this writing, the Corps has not given approval to anyone in the New Orleans area to rebuild. The holdup centers on the elevations where rebuilding can take place. Word is it may be June before the Corps reveals the specific elevations where building can take place.

Port of New Orleans Activity Reaches Pre-Katrina Levels

Port of New Orleans CEO Gary LaGrange reported in late February that activity at the port has reached 100 percent of pre-Hurricane Katrina levels, even though only 70 percent of the port's facilities are operational. The port averaged about 20 ships a week prior to Katrina and during the week of February 20, about 30 ships were expected to call. The Port of New Orleans sustained about $85 million in damage from Hurricane Katrina.

Data Centers are Hot

You can't talk to the economic development community in the South more than a day or two before a member discloses he or she is working a data center deal. Data center projects are hot in the South and there's no question the threats of natural or manmade disasters and what they may do to a company's financial records are driving many of those prospective deals. In fact, we know of one search that is going on now that involves a company that left Manhattan after 9/11 and landed in Florida a year later. Because of the hurricane season of 2005, the company is now looking to relocate its data center again, this time from Florida to central Virginia.

South Carolina Leads U.S. in Attracting Foreign Investment

According to the Organization for International Investment, South Carolina ranks first in the nation in the share of its private sector work force supported by U.S. subsidiaries of companies headquartered abroad. Direct foreign investment employment accounts for about 127,500 jobs in the Palmetto State, or 8.4 percent of its private industry employment. There are 604 foreign companies operating in South Carolina and those firms accounted for more than 10,000 new jobs created in the state over the last five years.

Center for Hydrogen Research Opens in South Carolina (PHOTO)

The Center for Hydrogen Research officially opened in Aiken County, S.C. The center was designed to facilitate cooperative research among the Savannah River National Laboratory, universities and industry to develop new products and services necessary for the emerging hydrogen economy. Work is being done at the center on a variety of hydrogen applications, including fuel cell development. The 60,000-square-foot facility houses lab space for both the Savannah River National Lab researchers and private partners to investigate and test the storage, production and supporting disciplines of hydrogen.

Alabama's December Unemployment Rate Lowest in its History

One of the South's and the nation's hottest states over the last three years is Alabama. The state has won "State of the Year" honors in our annual SB&D 100 for three years now and the economic momentum doesn't seem to be slowing in the Heart of Dixie. In fact, we can't find a month in any year over the past 50 years where Alabama's unemployment rate was lower than it was in December of 2005. Only 3.5 percent of Alabama's work force was unemployed in December. Alabama's unemployment rate in December of 2004 was 5.3 percent.

Atlanta Airport Takes Double Title

Chicago's O'Hare International and Atlanta's Hartsfield-Jackson airports have split the two measurements used when ranking the world's busiest airport since 1999. Atlanta has topped all other airports in terms of passengers and Chicago has seen the most flights over the last six years. But in 2005 Atlanta overtook Chicago in the number of flights and kept its title as the world's busiest airport in terms of passengers. According to the FAA, Atlanta had 980,197 flight operations last year, which beat O'Hare's 972,246. An estimated 88.4 million passengers went through the Atlanta airport last year, a significant increase over the 83.6 million users in 2004.

South, Florida Dominate Milken Index

Markets in the South, particularly in the state of Florida, continue to dominate the Milken Institute's Best Performing Cities Index. Nine of the ranking's top 10 markets are located in the South and six of those are located in Florida. The annual ranking is based on job growth.

Milken's Best Performing Cities 2005

1. Palm Bay-Melbourne-Titusville, Fla.

2. Cape Coral-Fort Myers, Fla.

3. Naples-Marco Island, Fla.

4. McAllen-Edinburg-Mission, Tex.

5. Deltona-Daytona Beach-Ormond Beach, Fla.

6. Orlando-Kissimmee, Fla.

7. Washington-Arlington-Alexandria, DC-Va.-Md.-W.V.

8. Fayetteville-Springdale-Rogers, Ark.-Mo.

9. Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla.

10. Riverside-San Bernardino-Ontario, Calif.

AT&T Investing $800 Million to bring High-Speed Internet Service to Rural Texas

Texas lawmakers passed Senate Bill 5 during a 2005 special session of the Texas Legislature. The bill set a mandate to introduce high-speed Internet service to every community in Texas. Working under the mandate, AT&T announced in February it is spending $800 million to equip every switching station served by the communications company with DSL capabilities. The company expects the project will be completed by the end of the year.

TVA No. 1 Utility in U.S. for Job Creation

In the winter quarter, the Tennessee Valley Authority, the nation's largest public power provider with almost 9 million customers in seven Southern states, was named by Business Facilities magazine as the No. 1 utility for job creation and job retention. The magazine reported that $3.6 billion was invested and 57,000 jobs were created in Fiscal Year 2005 in the utility's territory.

SeverCorr Earns "Deal of the Year" in Finance Trade Mag

SeverCorr, a startup steel company that will supply high-grade steel to the automotive industry, was named by Project Finance Magazine as the "Deal of the Year." SeverCorr has been cited by the magazine for its success in arranging $880 million in project financing and for the unique way in which the financing was done. The publication noted that the majority of the vendor payments are linked to the long-term performance of SeverCorr. GE Commercial Finance has backed the plant with over $440 million. Construction of the flat-rolled mini-mill is under way in Columbus, Miss.

Naval Station Ingleside to Revert to Port of Corpus Christi at no Cost

The Port of Corpus Christi announced in the winter that Congress has passed a bill that will return Naval Station Ingleside to the Port of Corpus Christi at no cost. An appraisal has not been performed, but reports have the estimated buy-back fee for the property to range between $219 million and $250 million of which the Port will be relieved from paying when reclaiming the property. The Port has already begun plans on how it will redevelop the area for economic development.

QUIZ ANSWER

The answer is (c), Oklahoma City, where Dell operates a large customer service center. In addition to Austin-Round Rock, Dell also has significant operations in the South in Winston-Salem, N.C. and in the Nashville area.