So, How Bad Was It?

Manufacturers Close and Leave in Droves. Perot's "sucking sound" Claim Emerges in 2001.

By Lee Burlett

Remember when Ross Perot was running for president in 1992? Remember those 30 minute commercials he bought on network television where he used numerous large charts to pound home his theories to skeptical Americans? Remember Perot claiming the passage of NAFTA would lead to a "giant sucking sound" of manufacturing jobs leaving this country?

Well, it took awhile but it looks as if Perot's theory hit the South in big way in 2001. That giant sucking sound you heard were manufacturing jobs leaving markets of all sizes in virtually every Southern state last year. That giant clanking sound you heard were locks being placed on plant doors throughout the region.

Two-thousand-and-one will be remembered as the year scores of manufacturers said goodbye to the industry-friendly American South and for many, said, hello Mexico!

So, how bad was it? Put it this way: Every Southern state lost manufacturing jobs on a net basis in 2001. In fact, about 317,000 manufacturing jobs were lost in the South during the last calendar year. Add that to the 600,000 lost in the rest of the country and you get a total of 917,000 manufacturing jobs that vanished in this country last year. No wonder Perot said it would sound like a giant sucking sound. Whooooosh, and their gone!

Leading the lost manufacturing jobs parade in the South last year was North Carolina, with an astonishing 61,000 pink slips between January 1, 2001 and December 31, 2001. During that same period, Texas lost 29,000, Georgia lost 26,000 and Missouri lost 25,000 manufacturing jobs. Leading per capita manufacturing job losses in the South last year were North Carolina and South Carolina, which lost 24,000 jobs. That figure must be frightening to Palmetto State officials. Add the 61,000 manufacturing job losses in North Carolina and the Carolinas accounted for slightly more than one out of every four manufacturing jobs lost in the South in 2001.

Lost Manufacturing Jobs in the American South in 2001 (rounded to the nearest thousand)

Alabama: -17,0000
Arkansas: -17,000
Florida: -13,000
Georgia: -26,000
Kansas: -4,000
Kentucky: -17,000
Louisiana: -7,000
Maryland: -8,000
Mississippi: -15,000
Missouri: -25,000
North Carolina: -61,000
Oklahoma: -8,000
South Carolina: -24,000
Tennessee: -24,000
Texas: -29,000
Virginia: -18,000
West Virginia: -4,000

Source: Bureau of Labor Statistics

Also hit hard on a per capita basis were Alabama, Arkansas, Kentucky, Mississippi and Tennessee. Virginia didn't fair much better than those states either. In fact, there really wasn't a bright spot in the entire bunch. For the South's manufacturing sector, it was a stinker of a year.

Lost manufacturing jobs certainly had an effect on unemployment rates in the South. In January of 2001, unemployment in the nation's most populated region was at 3.7 percent. Currently, the American South's unemployment rate is around 5.4 percent. But some markets in the South are seeing their unemployment rates rise to levels not seen in over 15 years.

For example, here's a sampling of the South's hardest hit individual markets (rise of 2% or more) and their unemployment rate in November 2000 first, followed by the their unemployment rate in November 2001:

Florence, Ala: 5.8 to 9.3
Decatur, Ala: 3.7 to 5.8
Miami: 5.5 to 7.5
Orlando: 2.6 to 4.8
Charlotte: 3.4 to 5.4
Greensboro/Winston-Salem/High Point: 3.1 to 5.3
Hickory/Morganton: 2.8 to 7.9
Raleigh/Durham: 1.8 to 4.1
Rocky Mount, NC: 6.6 to 9.4
Wilmington, NC: 3.9 to 6.4
Greenville/Spartanburg: 2.0 to 4.4
Austin: 1.8 to 4.7
Dallas: 2.8 to 5.8
Fort Worth: 2.9 to 4.9
Sherman, Tex: 3.5 to 6.5
Danville, Va: 3.2 to 9.0

Source: Bureau of Labor Statistics

As you can see, the last market on the list, Danville, Virginia, experienced almost a tripling of its unemployment rate in just one year. Furthermore, high tech markets such as Raleigh and Austin, which for all practical purposes had no labor availability just one year ago, now have some talented labor available for hire.

Other Sectors Growing

So you can see, manufacturing took a big hit in the South in 2001. But, what about the other sectors? Other than the manufacturing sector, the numbers from 2001 are more positive than negative in general. The construction sector, a segment of the economy that's usually slammed during recessions, performed fairly well in 2001, with a total of 43,400 net new jobs added to payrolls in the South. States that stood out in the construction sector last year were Florida, with nearly 10,000 newly created net jobs, Texas with 14,000, Virginia with 10,000 and Kansas, Louisiana and North Carolina generating about 4,000 each.

Georgia with a net loss of 5,800 construction jobs, was the only state in the South that saw a significant loss of jobs in the construction sector. In all other Southern states, it was a wash, with about the same number of construction jobs in place as there were in 2000.

The wholesale and retail trade sector in the South also saw a slight net gain in job creation with 38,000 jobs added for the year. Again, Florida and Texas led the way with 21,000 and 30,000 net gains respectively. Tennessee, South Carolina, North Carolina and Louisiana saw some significant gains, yet Alabama, Georgia, Maryland and Missouri experienced significant net losses of jobs in the trade sector. The other Southern states saw no significant gains or losses in the trade sector in 2001.

Remaining incredibly consistent with 2000, were the number of jobs in the FIRE sector (finance, insurance, real estate) in the South in 2001. No state lost a measurable number of jobs in FIRE, unless you count Georgia's net loss of 1,300 out of a total of 204,000 employed in that industry in the Peach State. That was the highest number of lost FIRE jobs experienced by any Southern state in 2001. Most states gained, with Oklahoma's 3,000-plus being the highest on a per capita basis. Florida and Texas added 10,000 and 9,000 jobs in the FIRE sector on a net basis and every other state remained relatively the same as in 2000. The FIRE sector accounted for 26,700 net new jobs in 2001.

While manufacturing was a bust in 2001, the services sector was the only one to add a significant number of jobs to state employment coffers. Services added, on a net basis, about 200,000 jobs in the South in 2001. Once again Florida and Texas led the way. Florida's services sector added more than 97,000 new jobs in 2001 and Texas added more than 42,000. Also adding significant service jobs to their economies in 2001 were Kentucky (14,000), North Carolina (20,000), Tennessee (15,000) and Virginia (17,000). Performing well in service job generation per capita in 2001 were West Virginia (4,000), Oklahoma (15,000), Kansas (5,000) and Arkansas (4,000). Only four Southern states lost jobs in the services sector last year. Mississippi's and Louisiana's service sector job losses were minimal. However, Missouri lost 9,000 service jobs last year and Georgia got hammered, losing nearly 25,000 jobs in the services sector.

The government's effect on job rolls in the South in 2001 continued to be a positive one. Each year since 1995, the government sector has created, on a net average, approximately 111,000 jobs in the South. Two-thousand-one was no different. The government sector -- excluding the military -- showed a positive net of 107,000 jobs last year.

Last year, Florida, Texas and North Carolina led all other Southern states in public sector net job increases last with 20,000, 29,000 and 24,000 jobs added, respectively. Virginia added 9,000 government jobs and Oklahoma added 6,000, making it No. 1 per capita in the South. Only South Carolina and Tennessee saw a decrease in government employment in 2001.

The Winners and the Loosers

Other than the consistent, across-the-board jobs losses incurred by every Southern state in the manufacturing sector, last year's economic downturn apparently showed no other pattern. For example, Georgia lost 26,000 manufacturing jobs and concluded the year with a net loss of 89,000 jobs. No other Southern state lost as many jobs on a net basis. On the other hand, North Carolina, which led the South with over 60,000 lost manufacturing jobs, ended the year with just 10,000 total jobs lost. Both states have similar economies: rural areas based on manufacturing and agribusiness and major markets based on FIRE, services, trade and government.

Then you have the numbers posted by Virginia and its next door neighbor Maryland. Those two states have very similar economies with high-tech, services and government at its central cores. The two states also represent the largest cluster of dot-coms and related industries in the South. Furthermore, Virginia has many more manufacturers, especially in its central, northwest and southwest regions. Since 2001 was such a bad year for job creation in the manufacturing sector, you'd think Virginia wouldn't fare as well Maryland in net jobs created. Not so. Employers in Virginia added 11,000 net jobs, while neighboring Marland lost 11,000.

Here are some other numbers to ponder. Last year, Florida and Texas together created a positive net of over 230,000 jobs compared to 2000. The rest of the South saw a net loss of around 200,000 jobs in 2001. In other words, without Florida and Texas' job gains, the South''s unemployment rate would probably be up another point, or so, or where the West's is right now.

In summary, Florida, Kansas, Kentucky, Oklahoma, Tennessee, Texas and Virginia created jobs in 2001. All other Southern states, led by Georgia (89,000 jobs lost), Missouri (47,000 jobs lost) and Alabama (33,000 jobs lost) lost jobs in 2001.

Jobs Lost or Gained on a Net Basis in 2001

AL: -33,000
AR: -4,000
FL: +138,000
GA: -89,000
KS: +15,000
KY: +4,000
LA: -4,000
MD: -11,000
MS: -23,000
MO: -47,000
NC: -10,000
OK: +16,000
SC: -22,000
TN: +1,000
TX: +92,000
VA: +11,000
WV: -4,000

Source: Bureau of Labor Statistics

Comparing 2001 to Other Years

By adding up each Southern state's net losses or gains, you'll find that there were 30,000 jobs created on a net basis in the South in 2001. Why then, did the South's unemployment rate rise almost two points last year? On average, the South gains about 1.2 million new residents. Using the hypothesis that half of those new residents are employable, then there were 30,000 new jobs created for 600,000 newly employable residents in the South in 2001. Thus, the rise in unemployment.

Now let's compare the 30,000 net jobs created in 2001 to job creation in typical years in the American South. In 1996, there were 47.4 million employed Southerners. In 2000, that figure rose to 50.2 million, meaning the creation of almost 2.8 million new net jobs in the South in four years. That's an average of 700,000 new net jobs created in the South each year from 1996 to 2000.

So, how bad was 2001? Recent averages show there are over 700,000 new net jobs created in the South each year. In 2001, that figure dropped to 30,000. Two-thousand-one will be remembered as the year we heard, for the first time, that "giant sucking sound."