QUIZ #1

Where in the South is generally called the "birthplace of the modern PC?" This city and site is also where Bill Gates allegedly first sold IBM, the world's largest computer maker at the time into a licensing agreement for an operating system for personal computers. You have 8 sites in the South to choose from: (1) Dallas, Tex; (2) Boca Raton, Fla.; (3) Falls Church, Va.; (4) Research Triangle, N.C.; (5) Norcross, Ga.; (6) Cary, N.C.; (7) Fairfax County, Va.; (8) Loudoun County, Va.

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DaimlerChrysler Won't Announce Van Plant This Year

Giving no reason, officials with DaimlerChrysler have said they will not make a decision on a site for a 3,000-employee, $750 million cargo van plant this calendar year. The company was expected to make a decision this summer on the facility. The massive auto and truck manufacturer seemed to be leaning toward Charleston, S. C. for the plant, with Savannah and Jacksonville on the short list. Meantime, Louisiana and Arkansas officials have hinted they will bring their states into the fray for the plant. It is not known whether a new site search will begin, or the plant is simply being delayed until next year.

Phase-Two for Nissan's Mississippi Plant

On July 1, Carlos Ghosn, president of Nissan, announced that Nissan North America would invest an additional $500 million to expand its new assembly plant under construction in Canton/Madison County, Miss. The expansion will result in 1,300 additional jobs and increase capacity at the plant from 250,000 vehicle units annually to 400,000. The expansion will make room for increased production of the popular Nissan Altima in the spring of 2004. The Canton facility will also build full-size pickups, SUVs for Infiniti and Nissan and the next generation Quest minivan. Nissan's large assembly plant in Smyrna, Tenn. will continue to build the Altima and Xterra SUV, but will add the Maxima next year.

North Carolina Considers Greater Incentives

In 1993, officials for the state of North Carolina publicly derided Alabama officials for "giving away the store" in the landing of Mercedes Benz. In fact, in the Winter 1994 edition of this magazine, then North Carolina Department of Commerce Assistant Director David Sheehan was quoted as saying, "We prefer to market North Carolina's inherent advantages. We are committed to being competitive, but we won't give away the store. In a time of limited resources, it doesn't make sense to spend as much as Alabama has to attract an industrial recruit. They're counting way too much on the multiplier effect. They're never going to get the kind of payback they're projecting," Sheehan was quoted as saying in a SB&D cover story titled, "Where Do You Draw the Line on Incentives."

In hindsight, Sheehan was wrong. Not only has Mercedes expanded its Vance, Ala., facility to roughly double its original size, the plant paved the way for Toyota, Honda and Hyundai's mega-projects in the state. Payback? Payback is hell, especially if you're North Carolina, which saw over 60,000 manufacturing jobs leave the state in 2001.

On top of all that, in May officials for Eli Lilly chose Northern Virginia over Durham, N.C. for a $425 million pharmaceutical facility. Site consultants throughout the region pointed to North Carolina's meager incentives as the primary reason Lilly chose Virginia. Many are calling the Eli Lilly project one of the most prestigious deals in the South over the last 10 years.

Ten years after Alabama gave Mercedes over $250 million in incentives to locate in the state and two months after Eli Lilly shunned the Tar Heel State, some North Carolina officials and media outlets are now admitting that the state's ability to compete with its neighbors in the South for major projects is hampered by strict limits on incentives under the William S. Lee Act. With so many lost manufacturing jobs, officials in North Carolina point out that replacing those jobs through the recruitment of new industry is paramount. Currently, the North Carolina General Assembly and Gov. Mike Easley are considering over a dozen recommendations on how to improve the state's incentive programs. Some of those recommendations include new incentives for non-manufacturing industries and headquarters, front-end incentives for high-tech and biotech firms, expanded tax credits based on jobs created and the continuance of tax breaks for venture capital investment in startup operations.

New UPS Sorting Facility Operational

In 1999, UPS announced a new $1.1 billion expansion of its air hub in Louisville that would employ 6,000 new workers. The new automated sorting hub announcement was named SB&D's 1999 "Deal of the Year." Called Hub 2000, the new facility was tested for the first time in June and it passed with flying colors UPS officials said. The new sorting hub will increase package-sorting capabilities from 215,000 to 304,000 packages per hour.

Missouri Closes Seven Development Offices

Shrinking state budgets have forced officials in Missouri to close all seven of its regional economic development offices. The state field offices were set up in order for the Missouri Department of Economic Development to have local representation throughout the state. Department officials maintain they will reorganize development efforts to make up for the loss of the field offices.

Honda Expanding in Alabama

In 1999 this magazine reported that Honda officials were being cautious with initial investment and employment figures when the Japanese automaker first announced its new $400 million, 1,500-employee plant in Lincoln, Ala. in May of that year. We reported that the deal would mean more like 3,500 employees and $1 billion in investment within the first year of operation. Even one Economic Development Partnership of Alabama official chastised us for reporting that. Well we did and we were right. Honda is only in its ninth month of operation at the Lincoln facility and it has already invested nearly $600 million and over 2,300 workers are currently earning paychecks at the plant.

Honda officials announced on July 9 the first expansion of the plant that will double production and add 2,000 workers. The cost of that expansion will be another $400 million, making our $1 billion projection back in 1999 right on target. The company is essentially building another plant (an additional 1 million square-feet) for a second assembly line. Shortly before announcing its expansion in Alabama, Honda Motor President Hiroyuki Yoshino said that a new plant in the U.S. "could be" a solution to supply shortages the company is experiencing. We don't believe Honda's expansion in Alabama is what Yoshino was referring to. As for our prediction that jobs would total 3,500 in the first year of operation? We were 800 short. Honda is expanding while Mercedes is adding 2,000 workers at its Vance, Ala. plant and Hyundai is expected to hire over 4,000 for its Montgomery, Ala. facility.

RadioShack Takes Incentives to Keep HQ in Fort Worth

After more than a year of negotiations, officials with RadioShack have confirmed that the company will build its headquarters in downtown Fort Worth after all. The planned headquarters, which fronts the Trinity River, is expected to cost more than $220 million. The large retailer finally bit on almost $70 million in state tax breaks and about $30 million in infrastructure improvements on the site.

Alltel Hasn't Justified Tax Breaks in Georgia

In 1998, Little Rock-based Alltel signed a five-year agreement promising the creation of 785 jobs in the Atlanta area in order to receive state tax breaks of around $14 million. To date, the company admits it has only filled 134 positions at its Alpharetta campus. The agreement stated that the company must hire at least 150 workers each year over the course of five years. In response, state officials are in the process of acting on claw backs in the contract to retrieve millions in state taxes it says Alltel now owes because it has not lived up to the agreement.

Audit Blasts Tax Breaks in Louisiana

The Louisiana Legislative Auditor's Office has uncovered some sloppy work performed by the Louisiana Department of Economic Development (LDED). The audit found, among other things, that there has been very little accountability by the department to ensure that companies are investing and hiring at the rate agreed upon under the incentive agreement. In addition, the audit found that the LDED could not give an accurate total of tax breaks given out to industry between 1997 and 2001. The auditors made recommendations to reform the incentive programs. LDED agreed to the recommendations.

Corporate Tax on Debt Removed in Louisiana

A bill was approved on June 6 by the Louisiana Senate to eliminate the debt component from the state's corporate franchise tax within six years. The removal of the tax on corporate debt would cost the state approximately $100 million. The bill, passed easily in the Senate, will have a much tougher chance to be passed in the House. Gov. Mike Foster has said he is opposed to the tax break because it would help only the largest of companies.

Texas Lost Nearly 100,000 Jobs in 12 Months

In calendar year 2001, North Carolina and Georgia saw job losses mount to major levels. Yet, from May of 2001 to May of this year, Texas is leading the South in jobs losses. The Lone Star State lost 92,000 jobs in the aforementioned period according to the Bureau of Labor Statistics. Only New York, with 124,000 job losses and Illinois, with 97,000, surpassed Texas' total during the period.

Hagerstown Plant Retooled for Volvo/Mack Truck Engines

On May 28, AB Volvo, parent company for Mack Trucks, announced it would retool its facility in Hagerstown, Md. to build the next generation Mack and Volvo heavy diesel truck engines. The company currently employs 1,200 at the site. The decision marks a major retention deal for Maryland, which is in jeopardy of losing GM's van assembly plant in Baltimore.

QUIZ #2

In 2000, there were 39 mid-markets (250,000-749,999) in the South and 19 major markets (750,000-2,000,000). Today, there are 38 mid-markets and 20 majors. Obviously, one Southern metro graduated from mid-market status to major market status (over 750,000) in the last couple of years. Name that market. Bonus question: Name the mid-market in the South that will most likely be the next major.

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Battling Neighbors in the Metroplex

City officials in Addison, Plano and Richardson, Tex. are banding together to call for new legislation that would limit the way Texas cities can spend tax dollars in the recruitment of industry. The cities are responding to another Dallas/Fort Worth Metroplex neighbor that has pulled out all the stops in luring existing industry in the region to within its city limits. The city of Frisco, which is located north of the aforementioned cities, has implemented an aggressive cash incentive program aimed primarily at existing industry in the Dallas/Fort Worth region. Frisco uses its half-cent economic development sales tax for business recruitment, while Addison, Plano and Richardson have earmarked their half-cent tax for public transportation.

South Florida Neighbors in Spat

Miami-Dade County officials are spitting mad at neighboring Broward County. They have accused Broward economic development officials of raiding Miami-Dade County by luring companies with attractive incentives, including the promise of state incentives. CruisesOnly recently relocated from northern Dade County to Miramar in Broward County. The company, which brought 160 jobs to Broward County and plans to add 100 more, applied for over $300,000 in incentives under Florida's Qualified Target Industry Refund program. Their application was rejected. Officials in Dade and Palm Beach Counties have agreed to sign a resolution that would have county officials alert one another within three days after a company has approached them to move to one of the three counties, including Broward. The resolution further stipulates that the county losing the company would have an opportunity at meeting with the company prior to its move. If nothing can be worked out, the county gaining the company would have to prove there is a risk the company in question would leave Florida altogether if it couldn't relocate unless it was allowed to relocate. Broward officials refuse to sign the resolution, citing confidentiality concerns.

"See Throughs" Again?

Remember the real estate glut of the late 1980s? In almost every major or mega-market in the South (it was worse outside the South), you had at least one major office building, some of which were financed by Savings & Loans (remember them) that were "see throughs." In other words, they had no tenants after completion; no furniture, cubicles or people to hide the view from one side of the building to the other. Well in some of the South's mega-markets, see throughs are making a comeback. They're in Dallas/Fort Worth and they exist in Northern Virginia. The softness of the market has unleashed a slew of incentives for office users in some Southern metros. In the D/FW Metroplex for example, many real estate owners have begun to pay brokers $100 just to tour vacant office space.

Retention Incentives Show for the First Time in South

There are plenty of things the Northeast, Midwest and West have learned from economic development practices in the South over the last three or four decades. Back in the 1960s and 1970s, many states in those regions didn't even practice economic development, or industrial development as it was called then. Because of that, the South, where economic development as it is known today was invented in the 1940s, lured thousands of companies to its turf from the Midwest and Northeast.

Today, however, it may be the South that can learn a thing or two from economic development practitioners in the Midwest and Northeast. Retention incentives, used for about 20 years in those two regions to keep existing industry from relocating or expanding to other regions, are now cropping up slowly in parts of the South for the first time ever. Oklahoma recently passed legislation designed to keep tire makers, specifically Goodyear and Michelin, making tires in the Sooner State. In May, Oklahoma Legislators passed a bill that would give Goodyear as much as $36 million to remain and expand in Lawton. At the same time, Michelin will receive approximately $5 million to expand its plant in Ardmore. It's the first time Oklahoma officials have used retention incentives. In Maryland, retention incentives were used recently to keep Giant Food's distribution center expansion in Howard County. The company threatened to locate its new 368,000-square-foot distribution in Virginia. Look for more retention efforts throughout the South in coming years.

Where's the Best Place to Live in the South?

You know where the best place to live is. For most of you, it's where you're living now. But for those who aren't happy campers, the publication Employment Review suggests you move to Raleigh-Durham, N.C. That is their choice for the "Best Place to Live and Work." Coming in second was Madison, Wis. Third-place was Huntsville, Ala., followed by Tempe, Ariz., and Richmond, Va. finished off the top five best places to live.

Florida to Build Tech Centers

Gov. Jeb Bush signed legislation that will pave the way for the construction of high-tech centers at Florida's universities and colleges. The Florida High Technology Development Initiative creates Centers of Excellence to be built on university and college sites throughout the state. The centers will help foster innovative technology research, develop applications for that research and aid in the recruitment of high-tech industries and workers to the state.

Ten Tier One Suppliers Have Announced in Mississippi

As of July 1, 10 Tier 1 suppliers have announced they are locating in Mississippi to supply the Nissan assembly plant in Canton. Some of the suppliers include Calsonic Kansei, Mi-Tech Steel, Lextron/Visteon Automotive, Johnson Controls and Yorozu Automotive.

Texas Creates New Rural Agency

The Office of Rural Community Affairs, or ORCA, was created by Texas legislators during the last session. The agency merges several rural services including rural community development, outreach and training and health care. ORCA will use funds from the U.S. Department of Housing and Urban Development for economic development, housing projects and sanitation infrastructure in over 1,000 rural Texas communities.

Bridgestone/Firestone Stays in Nashville

After making it public they were looking at sites outside of Tennessee, officials with Bridgestone/Firestone settled on office space that is currently being used by Tennessee Valley Authority for its corporate headquarters. The tire maker's employees in Nashville are spread out over four buildings. The company wanted to find a site that would accommodate all of its headquarter personnel. The company will sublease about 200,000 square feet from TVA.

Arkansas Economy Not So Bad

Arkansas' economy has fared pretty well during this recession, far better than some Southern states. Arkansas was recently ranked No. 1 in the Purchasers Managers' Index (PMI) among states in the Mid-America region. PMI is a monthly study by Creighton University that weighs production, inventories, prices, employment, imports and exports and new purchases in Missouri, Kansas, Iowa, Arkansas, South Dakota, Nebraska, North Dakota, Minnesota and Oklahoma.

Arkansas Officials Play Incentives Close to the Vest

In June, shortly after Georgia-Pacific chose to expand its Port Hudson, La., facility rather than build a new plant in Crosset, Ark., Jim Pickens, director of the Arkansas Department of Economic Development, said that the state should not match incentives tendered by surrounding states. "It's not always incentives that drive every decision," Pickens was quoted in an Associated Press story. "Theirs (other states) is the Wal-Mart plan: Bring us your tab and we'll beat it. We won't take that approach." A study conducted by the department's public relations firm in April showed that Arkansas' low taxes, low operating costs and existing incentives make the state attractive to manufacturing operations. At the same time, however, the study showed that Arkansas must be more competitive in the attraction of large manufacturers and research and development projects.

Questions Delay Alabama Development Office's New Venture Capital Plan

The launching of CapCos, a plan developed by the Alabama Development Office, the state economic development agency, is being delayed after questions have arisen about the plan's structure. CapCos is designed to give tax credits to insurance companies that invest in "angels," or venture capital firms. Potential users of the program have questioned the complexity of applications, the likelihood of fraud and limits on tax credits outlined and contained in the program. ADO officials have decided to take another look at the structure of the program. The program is designed for insurance companies in Alabama to invest in venture capital firms to save as much as $12.5 million in state taxes, all dependent on how much the companies invest. Alabama insurance company execs claim that $12.5 million is a paltry amount of tax credits, considering they are willing to invest much more into Alabama's startup companies. Under CapCos current structure, there are no restrictions on what kinds of startups can be assisted financially. ADO officials have said the delay in the implementation of CapCos will give the agency time to improve the overall rules of the fund.

Virginia County Richest in the South

Fairfax County, Va. located in the Northern Virginia/D.C. region, is the South's most affluent county according to a study done by American City Business Journals. The study, done by Charlotte-based ACBJ, which owns 41 business journals in the U.S., shows that Fairfax's median family income was $92,146 in the 2000 Census Bureau report. The study also showed that Falls Church, Va., was the South's most affluent city.

West Virginia Markets Scramble for Lottery Money

An economic development panel set up to distribute about $200 million in revenue bonds from West Virginia lottery proceeds has been swamped with over $1 billion in funding requests. The Economic Development Grant Committee was formed in March to distribute grants from the fund. To date over 200 requests have been received by the committee. Because of the large number of requests exceeding the fund total, a decision on where the money will be sent won't come until September.

Toyota Celebrates 10 Millionth U.S. Made Car

With facilities in California, Missouri, West Virginia, New York, Indiana and Alabama, Toyota executives celebrated the making of the 10-millionth automobile in the U.S. by the company at its Georgetown, Ky. assembly plant. The honorary chairman of Toyota Motor Corp., Shoichiro Toyoda, rode in a Camry as it rolled off the assembly line on July 29th. Toyota has invested over $13 billion in U.S. operations since it began its Kentucky operations in 1986.

QUIZ #1 ANSWER

The city and site of the birthplace of the modern PC and where Bill Gates turned his first and most important deal ever is at the intersection of Congress Road and Yamato Road in Boca Raton, Fla. In 1970, IBM built a huge, 2-million-square-foot campus where 12,000 IBM employees were busy developing the personal computer as it exists today. It is also the location where Microsoft founder Bill Gates convinced IBM execs to buy into his unnamed at the time, Windows operating system. Today, the former IBM campus is called T-Rex Corporate Center, where numerous tenants employ up to 20,000 workers. Most of them, however, are low-paid data and clerical workers.

QUIZ #2 ANSWER

The metro area of Tulsa, Okla., with nearly 800,000 residents, is the first mid-market to earn major market status in the South since this magazine was launched in 1992. The answer to the bonus question is El Paso. The west Texas metro's population is currently estimated to be over 700,000. No other mid-market in the South has a higher population.