Mike Randle, Editor

If You Don't Give the Underdog Credit When It Wins, It's a Shame

If someone asked me, "Which three states in the South had the best state business climates in each of the last 10 years?," this is how I would respond.

1993: North Carolina, Georgia, Florida
1994: Georgia, North Carolina, Alabama
1995: Texas, Florida, North Carolina
1996: Texas, South Carolina, Virginia
1997: Virginia, Texas, Georgia
1998: Virginia, Tennessee, Georgia
1999: Tennessee, Virginia, Florida
2000: Virginia, Tennessee, Oklahoma
2001: Florida, Virginia, Mississippi
2002: (see First Annual Southern State Business Climate Index this issue)

I ranked those state business climates by memory. Since reporting on business in the South has been our job exclusively for the last 10 years -- the only publication in the universe to do that -- I'd say that ranking of Southern state business climates is pretty accurate.

By studying that group you can see that year-in and year-out, large states in the South rank at the top of the business climate ledger. Yes, we have absolutely dazzled you over the last 10 years with economic data coming out of states in the South such as Texas, Virginia, Georgia, Florida, North Carolina and Tennessee. In the last 10 years those six Southern states have been at the top of not only the South's but the nation's business climate rankings as a result of their job making juggernaut status. In fact, of our 10 State of the Year awards we've given out every spring since 1993 in the SB&D 100, nine have come from those large Southern states (over 5 million in population). The 10-year count goes like this: Virginia has won three SB&D State of the Year awards, Texas and Florida have garnered two each and Tennessee and North Carolina have won one each since 1993. The only small state to win our State of the Year designation was Alabama way back in 1994.

Yes, the last 10 years have been so good to the South's largest states. But this year isn't one of them. Nor was last year. New economy industries, if that's what you want to call telecom, dot-com and energy trading, settled in the South's largest states and markets. For the most part, those industries hadn't yet found their way to the South's smallest states before they experienced a temporary, but devastating breakdown. That being the case, those industries have negatively affected the South's largest states' economies, while the South's smallest states like Alabama, Arkansas, Kansas, Mississippi and South Carolina saw little negative effect.

For more than 10 years it's been our job to track the economies of all the South's states. We have tracked them and published the results, we believe, more accurately and in more of a fair, objective way than any other source other than the federal government (unlike the Feds, we do have an opinion from time to time). We noticed in the spring of this year that something was happening that hasn't happened in 10 years; Some of the South's smallest states were turning some pretty impressive deals and outperforming the South's largest states economically. The numbers from the feds prove it.

That realization, confirmed the deadline week of this edition, gave us no option other than to strongly refute two state business climate rankings that came out in late September and early November. The two business climate rankings were compiled by Development Counsellors International and Site Selection magazine.

According to those two respected economic development information outlets, the following states currently have the nation's best business climates: North Carolina, Texas, Michigan, Georgia, Florida and South Carolina. The two groups agreed in their top five of NC, TX, GA, and FL. But Site Selection added Michigan to its top five, while DCI placed South Carolina in its top five. Other than South Carolina, all of those states would be described as large states.

While we don't wish to make waves, we strongly disagree with Site Selection's and DCI's state business climate rankings of 2002. We disagree with their rankings so much that right at the deadline of this edition we pulled our original feature story and replaced it with our own ranking of state business climates in the South. Since we realized our ranking would carry little weight if it consisted of surveys and other subjective sources, we set criteria and came up with what we believe is an excellent method to rank state business climates.

What our study found is quite remarkable. You'll be surprised at which states we placed at the top of our first annual Southern State Business Climate Index. I will give you a hint. They have been underdogs for 10 straight years.