QUIZ

True or False: During July-September 2002, the 17-state American South (107 million in population) experienced less mass layoffs than the state of California (33 million in population).

(Scroll down for answer)

Mass Exodus of Business from D.C. Hasn't Occurred

This magazine projected in the first edition published after 9/11 that private employers and even highly sensitive government centers would pick up and move in droves out of the District of Columbia to perceived safer sites in adjoining Maryland and Virginia. It wasn't just us predicting the exodus. Real estate officials predicted it, too. But current numbers show that hasn't been the case more than a year after 9/11. Vacancy rates in the central district near the White House, Capitol and other primary government buildings have not increased. If anything, they are decreasing with one exception; Leases that have terminated in office buildings located near the Central Intelligence Agency facility have seen weak renewal rates.

Tax Incentives Alert Names Southern States

According to a study by Stafford Publications' monthly Tax Incentives Report, seven of the nation's most lucrative job creation tax credits come from states in the South. Excellent bottom-line incentive programs based on tax credits were cited in Alabama, Arkansas, Louisiana, Mississippi, North Carolina, South Carolina and Texas in the report. New Mexico, Minnesota and New York also had favorable tax credits for businesses willing to invest and create jobs. Many of the states cited in the report featured large job tax credits for companies locating in rural locations.

Auto Suppliers Take Gripes to Washington

The Motor & Equipment Manufacturers Association (MEMA) went to Washington in October to explain to lawmakers problems associated with the Bush administration's steel safeguard program. The association, which is primarily made up of suppliers to the automotive industry, said that since March 2002, when Bush's steel safeguard program began, suppliers have seen price increases of steel go up as much as 50 percent. They also complained of a shortage of steel since the program went into effect. Officials with MEMA warned government leaders in Washington that suppliers are facing possible layoffs, plant closures or, worse yet, moving their operations overseas.

Hyundai Suppliers Line Up

On November 14, just days after a major Hyundai supplier picked Montgomery for a 430-employee facility, Alabama Gov. Don Siegelman said the state will land at least 13 other supplier projects to the plant, creating hundreds of jobs. Siegelman said Hyundai Mobis represented the first domino to fall as major Hyundai suppliers choose where they will set up operations in the state.

Toyota Site Search Down to Two?

Even after several published reports indicated Toyota had chosen San Antonio for its next U.S. plant, company officials remain mum. As of deadline, two sites seem to still be in the running for the important project: San Antonio and Marion, Ark., located just across the Mississippi River from Memphis. Word on the street has it that Toyota's sales executives want the San Antonio site. With 22 million people, Texas would be a major market for the full-size pickup truck that will be built at the plant. On the other hand, we hear that the manufacturing sector of Toyota would prefer the Marion site. That site is located near a vast network of existing automotive suppliers in Tennessee, Kentucky, Mississippi, Alabama, Georgia and the Carolinas.

Atlanta Leads Nation in African American Affluence

Atlanta leads all major metros in the U.S. in the percentage of black households with annual incomes between $35,000 and $75,000, as well as upper income households of $75,000 or more. More than 38 percent of African American households in the Atlanta area earn more than $35,000 a year. That figure topped Dallas-Fort Worth and Miami-Fort Lauderdale. Houston, Washington D.C., Detroit, St. Louis, Chicago, Baltimore and Cleveland rounded out the top 10.

DaimlerChrysler Picks Georgia

The much-anticipated end of DaimlerChrysler's site search for a $750 million cargo van plant apparently has become a wonderful reality for outgoing Georgia Gov. Roy Barnes. It has been well documented in this publication that Barnes set his sights on garnering a high-profile automotive deal while in office. With DaimlerChrysler picking a site near Savannah, he now has one. The new assembly plant, which might not break ground for several years, will be built -- if built -- on nearly 1,500 acres at the intersection of Interstates 95 and 16 in Pooler, Ga. Chrysler's new Sprinter cargo van will be built at the facility, which is expected to employ 3,000. Savannah outbid Jacksonville and a site near Charleston, S.C. for the prestigious project.

GM Investing $500 Million in Kansas

General Motors will temporarily close its Kansas City, Kan., assembly plant in order to refit to build the new Chevrolet Malibu. GM is investing $500 million to retool the facility and move production of the Pontiac Grand Prix, which has been assembled at the plant, to Canada. Production of the Malibu is expected to begin in the fall of 2003.

Atlanta Wants Trade HQ

Atlanta has emerged as one of the leading sites for the headquarters of the Free Trade of the America's, a new organization made up of 34 countries in the Western Hemisphere. The group would rival the European Trade Union. Combined, the 34 countries represent $14 trillion in GDP, a total that towers over the European Union's GDP. Former President Jimmy Carter is helping lead Atlanta's effort at garnering the prestigious project. Miami and Panama City, Panama are vying for the trade headquarters as well.

Finally, a Large Semiconductor Deal in the South

In the mid-and-late 1990s, states in the South courted them like no other industry. Yet, the semiconductor industry hasn't shown significantly in the South in seven years now. In September, however, Samsung Austin announced it was investing $50 million to upgrade its existing Austin plant. The plant is converting to manufacture double rate DRAM chips, which are projected to be the best selling chips in 2004.

Southern Governors Against Federal Power Transmission Plan

Governors in the South are officially opposed to a plan devised by the Federal Energy Regulatory Commission that they say could raise power rates in the American South. The opposition was made at the Southern Governor's Conference in New Orleans in September. The FERC wants customers to pay for upgrades to transmission facilities in order to deliver power efficiently from coast to coast.

Louisiana Energy Chooses Hartsville, Tenn. for $1.1 Billion Plant

Louisiana Energy Services (LES) finally picked a site near Hartsville, Tenn., for its $1.1 billion uranium enrichment facility. Tennessee was in a heated competition with a site in Northeast Alabama for the large project. The site in Hartsville was owned by the Tennessee Valley Authority, but has now been transferred to a local agency. TVA also owns the Alabama site, which is near Hollywood and the Bellefonte nuclear power facility. The new facility will provide enriched uranium for U.S. nuclear facilities and is the first new uranium enrichment plant to be built in the U.S. in 50 years. LES is a partnership of Duke Energy, Entergy, Excelon, Canadian-based Cameco and Urenco, a European company.

QUIZ ANSWER

Amazingly, it's true. California saw 1,336 mass layoffs (50 or more laid off employees) in the summer quarter according to the Bureau of Labor Statistics, while the South as a whole saw 1,050. In addition, California experienced 7,417 mass layoffs between September 2001 and September 2002. That total was a third of all mass layoffs announced in the U.S. during that time.

EDITORIAL

North Carolina Officials Accept Increased Incentives, But Not Without Complaint

By Lee Burlett

In the 1960s, '70s and for most of the 1980s, North Carolina was the shining economic development star in the South. Simple attractions such as a lower cost of living and operating a business had companies, especially manufacturers from the Northeast, flocking to the Tar Heel State. On the other side of the industry sector ledger, the Research Triangle Park added a high-tech advantage over other Southern states. Yes, North Carolina developed and created a huge, positive perception among the national media during those three decades. That perception over the last several years has tarnished.

The perception has rusted simply because other states in the South have become much more competitive in the economic development arena, especially those states that border North Carolina. When other states in the South implemented attractive incentive packages in the late 1980s and early 1990s, North Carolina politicos and economic development officials took a conservative stance. They denounced those incentives, saying they will undoubtedly affect those states' education funds. Little did North Carolina officials realize that by not increasing their incentives, major manufacturers would choose other states for bellcow projects. Without those projects combined with a massive bloodletting of manufacturing closures, North Carolina's tax collections have suffered. Officials within the state now say it is North Carolina that could see funding for education drop as a result of lower tax collections from business.

In an effort to become more competitive, Gov. Mike Easley has implemented a new incentive package to lure industry. The North Carolina Economic Stimulus and Job Creation Act passed by the NC General Assembly in October. The act does provide much greater incentives to qualified companies than the Williams S. Lee Act, which has once again been rewritten (for more information on new incentives in NC go to www.nccommerce.com).

What we want to know is, what took North Carolina so long to pass a competitive incentives package? We realize incentive skeptics are more prevalent in NC than in most Southern states. In fact, those same skeptics complained about increased incentives until the 11th hour with this new legislation. We also realize NC is one of the most conservative states in the South. But passage of this legislation should have been done years ago. Passing it now, while the right thing to do, is a reactive measure not a proactive one.

Study Indicates Southern Business Owners Upbeat About Economy

A poll conducted by Pennsylvania-based International Communications Research for the Network of City Business Journals indicates that business owners in the South are more upbeat about the state of the economy, both regional and national, than business owners in the Northeast and Midwest. Forty-three percent of business owners in the South polled said that the current national economy is weak, while 46 percent said the South's economy is weak. Business owners in the Northeast who were polled showed a 57 percent negative view on the national economy with 54 percent saying the Northeast's economy is struggling. The study showed that 49 percent of business owners in the Midwest viewed the national economy as weak. When asked about their region's economy, business owners polled in the Midwest claimed it's worse than the nation with 52 percent describing it as poor. On the other hand, business owners in the West showed the most confidence with only 41 percent indicating the national economy is weak. Yet, 44 percent of those same business owners in the West said their own regional economy is weaker than the national economy. The Network of City Business Journals is a subsidiary of American City Business Journals, which owns and operates 41 local business publications in all four regions of the U.S. Go to www.bizjournals.com.

"Worldport" New Name for UPS Louisville Hub

UPS has named its newly expanded Louisville air hub, "Worldport." The Atlanta-based delivery company's primary center of hub operations began operating from its new $1.1 billion, 275-million-square-foot facility (that's 275 with a "m" not a "t") in August. The expansion was named one of the top 10 deals in the South over the last 10 years in the 10th Anniversary Edition of Southern Business & Development (go to www.sb-d.com).

South Florida's Trade Slump

International trade giant South Florida may see its total value of imports and exports revert back to mid-1990 levels this year. Current U.S. Commerce Department statistics indicate that South Florida is on track to reach only $44 billion in trade this year compared to a peak of $56 billion in 2000. Latin and South American trade is down across the board and are the primary reasons behind the trade slump.

QUIZ

Match these total miles of Interstate with each U.S. region (South, Northeast, Midwest and West): (a) 12,432 miles; (b) 5,780 miles; (c) 17,785 miles; (d) 12,369 miles.

(Scroll down for answer)

Sour Grapes in Michigan

In late September, the Michigan Department of Environmental Quality filed complaints with the Environmental Protection Agency challenging Hyundai's air permits for a massive plant it is building just south of Montgomery, Ala. In an unprecedented move to block Montgomery's $1 billion Hyundai plant, MDEQ submitted an eight-page objection regarding air permits for Hyundai. The Birmingham (Ala.) News reported that Dennis Drake, head of the air quality division of MDEQ, said he filed the comments and challenges to the Hyundai permit not out of sour grapes, but to help preserve Michigan's existing auto industry. Drake said automakers in Michigan are telling him the state is tougher on them in regards to air quality than states in the South, where numerous new auto assembly plants have been built or announced in the last 10 years. Drake said the technology required for the Hyundai facility is not as stringent as what Michigan requires according to the EPA. Michigan is an EPA-delegated state, while Alabama is an EPA-authorized state. The difference is Alabama has the power to grant permits on its own with regional EPA approval coming out of Atlanta. Michigan, on the other hand, has to approve air quality permits by EPA standards. Michigan's automotive industry, which still accounts for a third of all automobiles and trucks made in the U.S., is stagnating. Drake said the state can't afford to lose any plants to the American South. In contrast, the South's automotive industry is growing at an astounding rate.

BMW Expands Once Again in South Carolina

Following a string of expansions since announcing its assembly plant in Greer, S.C. in 1992, German automaker Bavarian Motor Works announced in late September it would spend $500 million to upgrade its facility there. The foreign automaker builds the X5, Z3 and Z4 vehicles at the plant. The company will add an estimated 500 workers to the 4,500-employee facility. BMW has invested over $2 billion in the plant since 1992.

Creative Dealing in Alabama

The state of Alabama has agreed to purchase a former Delphi Corp. plant for nearly $11 million as an incentive for the company to expand its Athens, Ala., facility by $22 million. The former Delphi plant the state is purchasing is vacant. The deal paves the way for Delphi to expand its Athens plant, which employs nearly 3,000, and add another 100 jobs. Delphi considered expanding plants in other states until Alabama agreed to the deal. Delphi makes short axles at the Athens facility.

Consultant Says Headquarter Relocations Likely

Citing Boeing's move from Seattle to Chicago, a Princeton, N.J. site consultant claims more major corporate headquarter relocations are on the way. John Boyd, president of the Boyd Co., says that cutting corporate headquarter operating costs is the next big thing in site selection. Boyd says that major corporations have, as a result of NAFTA, already retooled their manufacturing plants, bolstered or relocated their distribution hubs and have completed research on the next move: cutting costs at headquarter operations. According to Boyd, that means many companies will move their headquarters to more centralized, less congested and less costly locations.

Report Indicates Appalachian Universities Key to High-Tech Growth

Appalachia, a vast, mostly rural region of the South and small parts of the Midwest and Northeast, has for decades been beset by poverty. A study recently done by the University of North Carolina indicates that a shortage of professionals living in the region, namely engineers and scientists, is the primary reason why Appalachia is not growing as fast as the rest of the South in the technology sector. The study says that while states such as North Carolina, South Carolina, Virginia, Tennessee and West Virginia have implemented programs to help high-tech's introduction into Appalachia, those programs will not work until higher learning institutions in the region offer more information technology and biotechnology degrees. The study also cited fewer high-tech degrees per capita given out by Appalachian universities. The report did acknowledge that Appalachian universities are improving steadily in national rankings in advanced technology degrees and that these centers for higher learning will be the deciding factor, not state programs, on whether or not high-tech takes a foothold in Appalachia in the near future.

Northern Virginia Officials Confront Rumsfield

Officials with the Fairfax County Chamber of Commerce have taken Secretary of Defense Donald Rumsfield to task after he was quoted as saying his department is considering locating defense facilities outside of the Washington and the Northern Virginia area. Other areas around Washington have expressed concerns over Rumsfield's comments as well. Rumsfield told the Washington Times that expansions of the Defense Department might not be made in the Washington area. Economic development officials maintain moving defense offices outside the Capital region will have a devastating effect on the area's economy.

Keebler Uses Georgia's Quick Start

Keebler is using the state of Georgia's Quick Start program, which is designed to develop specific worker training and assess plant efficiency, at its 500-employee facility in Macon. Georgia's Quick Start was designed originally to lure new industries to the Peach State, but has recently been approved for existing industry that invests in new technology. Keebler embarked on the first phase of the program in August when it used Central Georgia Tech for worker training for its plant in Macon.

Texas Has Approved 32 Enterprise Zones in One Year

The Texas Department of Economic Development has certified 32 Enterprise Zones in fiscal year 2002, more than double the 14 approved in fiscal year 2001. Enterprise Zones provide businesses that locate in them additional incentives that cannot be garnered from other programs. The Zones are found throughout the South, primarily in economically distressed areas. Companies that have taken advantage recently of the increased incentives offered by Enterprise Zones in Texas include Wal-Mart and Dana Corporation.

Missouri Job Losses Highest in Nation

Missouri lost 55,000 net jobs between July 2001 and June 2002, earning it the dubious distinction of having the highest relative job loss of any state in the U.S. during that time. Of the 55,000 jobs lost, over 20,000 were manufacturing-based. Washington, Colorado and Georgia were other states that lost a significant amount of jobs during the aforementioned period.

Duke Power Does Its Part to Jumpstart Carolinas

Vacant industrial buildings dot the landscape in the Carolinas, especially Duke Power's home state, North Carolina. A new Duke Power program that gives incentives for companies locating in any of those nearly 1,000 empty buildings is receiving great response from economic developers throughout the Carolina region. Duke is offering an incentive of 50% off power bills in the first year for companies who sign five-year leases on vacant buildings in the power company's territory. To gain the power discount, companies must move into a building that has remained vacant for at least six months and use 500 kilowatts of power for 300 hours each month. Warehouse and industrial vacancy rates have almost doubled in just one year in North Carolina.

Lowe's Could Employ 8,000 at Charlotte Area Campus

The opening of the first building at Lowe's new Iredell County, N.C. campus won't happen for more than a year, yet officials with the giant retailer have hinted that when completed, the facility could house as many as 8,000 workers. The first building, a $90 million, 400,000-square-foot office, is scheduled to open in 2004. Four other buildings will be built for a total of 1.2 million square feet. The home improvement retailer currently has its headquarters in rural Wilkesboro, N.C. Company officials maintain that the new campus located near Mooresville will not become its new headquarters and that employees from Wilkesboro will not be relocated. With $22 billion in sales last year, Lowe's is second only to Atlanta-based Home Depot ($53 billion in sales last year) in home improvement retail sales.

South Does Well in e-Government Ranking

The Center for Government and Government Technology ranked Virginia's government Web site (www.vipnet.org) and Tampa's Web site (www.tampagov.net) the best government Web sites in the state and city category respectively for 2002. Also garnering props in the South included second place Miami-Dade (www.miamidade.gov), Dallas' fifth-place (www.dallascityhall.com), fifth-place Texas (www.texasonline.com) and fifth-place Mississippi (www.mississippi.gov).

Energy Trading Slump Dumps Jobs in Houston

Aftershocks of the Enron debacle continue to hit Houston hard. Two years ago, one of the hottest jobs in Houston was making it as an energy trader. That's not the case today as hundreds of energy traders have received the pink slip from energy companies selling off assets to improve bottom lines. Almost every major energy trader in the South has laid off traders, including Reliant, Duke, El Paso, Aquila, Williams and Dynegy. Since Houston is essentially the South's energy industry heart, most of those layoffs came from the southeast Texas mega-market.

New International Business Center in Richmond is Only Third of its Kind in U.S.

A new incubator designed exclusively to help foreign-based businesses enter U.S. markets has opened in the central business district of downtown Richmond. The incubator is only the third of its kind in the country. The new Richmond International Business Center provides foreign companies with the resources they need to quickly enter the U.S. market. The Greater Richmond region was recently ranked No. 1 by Expansion Management magazine's annual listing of "Top 50 U.S. Metros for European Expansion."

QUIZ ANSWER

The answers are: South: (c) 17,785 miles of Interstate; West: (a) 12,432 miles; (d) Midwest: 12,369 miles; (b) East: 5,780 miles.