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Southern Business & Development's 15th Anniversary Edition Part I 1993-1997

In 2007 and 2008, Southern Business & Development magazine, the parent company of SouthernAutoCorridor.com, celebrated its 15th anniversary. During our 15th anniversary, we wrote a four-part feature series that looked back 15 years and looked ahead five years at what occurred and what is likely to occur in economic development in the South. This is Part I of the series, which looked at economic development events and issues in the South from 1993-1997. If you would like to subscribe to SB&D, click on the "Subscribe to SB&D for Free" button on the default page of this Web site. if you qualify, you will receive SB&D the magazine for free.

The South's Economy Has Changed so Much in 15 Years

By Michael C. Randle

Editor's Note: This issue marks the first of four that will celebrate SB&D's 15th Anniversary. This edition will review significant economic development projects, events and issues that occurred in the South in years' 1993-1997. The fall edition (December) will look back to years' 1998-2002 and the winter issue will focus on 2003-2007. The last issue celebrating Southern Business & Development's 15th Anniversary (spring) will look forward as we predict what will likely occur in economic development in the South over the next five years.

The year was 1993 and Southern Business & Development printed its first edition. Like many startups, we had little knowledge of what we were doing when we published our first issue in the spring of that year. Regardless, we have saved every word from those early editions and so many of those words paint an economic landscape in the American South that is so different than what we know of the region today.

We began this quest of educating companies and their leaders on the advantages of living, working and operating a business in the South just after the recession and Gulf War period that was '91 and '92. A new president, a Southerner, Bill Clinton, had just taken office and things began to level out economically to a degree in 1993. The South's economy wasn't robust by any means, but hope and some new enthusiasm had taken hold way back in 1993.

This was a time when the Internet was available, but few companies or individuals used it. In most cases, connection to the Internet in 1993 was not only a privilege, it was impossible to receive service. But forget that. Most people didn’t even know what the Internet was until 1994.

When we started this publication, phones and facsimiles ruled the world of communication. Cell phones, forget it. They were called "car phones" and they were installed on some stick on the floorboard of your car’s passenger side seat.

A New Day and a New President

President Clinton's first year in office wasn't without incident. He had trouble getting his policies up and running but once he did, the economy followed. Federal initiatives called Enterprise Zones, a first, were implemented to create jobs in distressed areas of the country, particularly in the South. Other economic development initiatives were coming out of Washington to restart the economy from what was a short, but deep recession and, of course, the Gulf War in Kuwait. It was a time like no other time that we can think of when the feds were leading economic development in this country to a large degree.

In 1993, two huge developments occurred in the South. BMW broke ground on its first U.S. assembly plant in Greer, S.C., and Mercedes-Benz picked a cow field located between Birmingham and Tuscaloosa, Ala., for its first U.S. assembly plant. German automakers were now investing in the South and no one, from New York to Los Angeles to Detroit could believe it.  

Sure, by 1993 Nissan, Saturn and Toyota had already set up shop in Tennessee and Kentucky. And in 1993, domestic automakers operated plants in many Southern states. But, South Carolina and Alabama for the picky, prestigious German automakers? The two deals, more than any two projects that we can think of over the last 15 years, represent the upper crust of manufacturing in the region.

In fact, it’s our belief that those two German plants paved the way for so many more high-brow manufacturing facilities to be located in the South in subsequent years. After all, if the South's labor was good enough for the prudent German automakers, then it was good enough for any corporation, such as Boeing, Texas Instruments, Honda, Pfizer, Bridgestone/Firestone, Gulfstream, Hyundai, Samsung, Michelin, Toyota, Nissan, BASF, Lockheed Martin and others that landed massive projects in the South later on.

So, when we started Southern Business & Development, the Southern Automotive Corridor (www.SouthernAutoCorridor.com) might have already been "born." Yet, it grew up quickly in 1993. BMW's choice of South Carolina and Mercedes' choice of Alabama certainly woke a few economists up throughout the country and the world. Those two deals were paramount in changing this region's economy to what it is today.

The Economy Improves Like Never Before in the South

Nineteen-Ninety-Five-through 1997 were some of the best years in the South's history in the category of creating jobs and turning deals. In 1993, the jobless rate in the South averaged 6.6 percent, or just .3 percentage points below the national unemployment average that year of 6.9 percent. But, by 1997, the last year we are focusing on in this issue, the South's unemployment rate averaged 4.5 percent for the year, while the nation's unemployment average was slightly higher at 4.7 percent.

In 1993, there was some quirky numbers going on with state unemployment averages. Florida, for example, had a 7.33 percent unemployment rate in '93, Texas' rate was at 7.25 percent and West Virginia's unemployment rate topped 10 percent. By 1997, those high rates of unemployed in those three states leveled out and today none of the South's three highest unemployment rate states in 1993 have rates higher than 4.4 percent.

From Chicken Plants to Automotive Plants

If you can recall, 1993-1997 were five great years to live, work and play in the South and in the U.S. in general. We were at peace, we were building what would be an incredible run at prosperity and the mood of the people in the region and the country would best be described in our opinion as "exuberant" and "confident." The economy grew at leaps and bounds and it was “real.” The dot-com era had not begun so the growth in the region’s economy had little of the smoke and mirrors that was evident later in the 1990s. And the manufacturing sector had not yet hit the bumpy road it took later on either. Between 1993 and 1997, basic economic development models were working and the South was prospering.

The industry sectors that would eventually propel the South to incredible heights later on were established between 1993 and 1997. Those would be the automotive sector, the distribution/warehouse sector and the financial services sector in particular. Those three industries began to show in great numbers in the South during that period and pushed aside traditional "Southern" industries such as apparel and textiles, agribusiness and the wood products industry.

We were just beginning to ditch $6 an hour mundane jobs for $12 an hour careers that were more technical in nature. Of course, the financial services sector was creating thousands of millionaires in virtually every Southern state in the mid-1990s, particularly in North Carolina, Florida, Texas and Virginia.

It should be noted all three of the aforementioned traditional, "old line" industries, contribute greatly to the South's economy, even today. But, the South was so addicted to those three industries -- apparel and textiles, agribusiness and wood products, such as furniture -- that it was simply a matter of transference. And that transfer, or what we call "from chicken plants to auto plants," occurred for the first time with regularity during the years of 1993-1997.

For example, chicken plants (poultry processing) represented the second-leading industry sector in our first SB&D 100 that came out in 1994 (deals turned in 1993). In fact, 11 of the top 100 employment deals announced in the South in 1993 were poultry processors.

While still around, there are few chicken, apparel or furniture plants making our top deals rankings today. So the South has gone from chicken, apparel, textiles and furniture as their primary industries to automotive, distribution, financial services and other sexy stuff like aerospace, aviation and biotech in just 15 years. It has been an amazing transformation.

Events, Issues and Deals from 1993 to 1997

While it is impossible for us to include here every significant event, issue or deal that significantly affected economic development in the South between 1993 to 1997, we are going to attempt to feature just a few that we feel were incredibly important to the development of the region. Some of these you may have forgotten about. We haven't.

Regionalism and Cooperation

For years economic development, or industrial development as it was called back in the day, was practiced with ruthless aggression.  Adjoining counties, much less states, basically practiced economic development, or the recruitment of industry, much like a dog fight. Trash talking was common. I recall visiting one county in North Carolina in early 1993. When the appointment concluded, I asked the economic developer there how to get to a town in the next county. His response was, "Go down highway 302 and when you start seeing the single and double-wide trailers and toothless people, then you will know you are there."

It wasn't just government based economic developers who practiced economic development in an incredibly competitive environment. Utilities pulled out all of the stops, too. Gas companies and electric companies, in particular, hated each other. And that's not a stretch.

For example, we actually ran an advertisement from an electric cooperative that featured a line-drawing of the back of a house. The house had a propane tank in the back yard. The headline from the electric cooperative's ad was, "The bomb in your back yard."

My favorite ruthless economic development marketing tactic from back then was not from the South, but it indicates clearly how economic development was practiced in the early 1990s. I don't recall what year it was, but it was the year California suffered from a major earthquake, mudslides and huge wildfires. In response, the state of Arizona bought a back page ad in the Los Angeles Times that featured a big bug. The headline read, "What's next, Locusts? Move your company to Arizona before it's too late."

One of the most important events or issues that began in the early 1990s in the practice of economic development in the South was the advent of regionalism. Regionalism is the banding together of multiple counties or other economic development entities in an attempt to bring a one-for-all, all-for-one effort to create jobs and investment. Since the practice of economic development had been so competitive among counties and states in the region -- even towns in the same county -- regionalism took some time to take hold. It was simply a matter of gaining trust and the understanding that if a large project lands in one county, it's also good for the counties or parishes that are located nearby.

North Carolina and Virginia were the forerunners of regionalism in the South and it began in earnest in those two states in the early and mid-1990s. Other states followed as did markets.

Tampa Bay was one of the first major markets in the South to successfully create a regional effort at attracting jobs and capital investment. The Tampa Bay Partnership was formed in early 1993. While it took some time for one of the South's largest markets to gain the trust among its members – the economic development organizations in St. Pete, Tampa, Sarasota, Clearwater, among many others -- the Tampa Bay Partnership, to us, is one of the best examples of success at regionalism in the entire South. The large Hampton Roads region in Virginia was also one of the first multi-market regions in the South to band together as well.

The Rebound and Rebound, Again, of Oklahoma City

If you haven't visited Oklahoma City lately, you are missing out on one of the greatest economic development success stories in the South in the last 15 years. Everyone knows about the Oklahoma City bombing that occurred at the Alfred P. Murrah Building on April 19, 1995. It was horrific, a tragedy that ranks up there with Hurricane Katrina, 9/11 and others that we would like to forget about if we could.

Even those who know the great rebound story that is Oklahoma City, few know the details. In 1993, the same year this magazine was born, Oklahoma City voters passed a one-cent sales tax that funded a five-year Metropolitan Area Projects bill, or "MAPS." The initiative funded by taxpayers, called for renovation and construction of nine major projects in OKC's central business district, including sports, recreational, learning, cultural and convention facilities.

The nine MAPS projects took 10 years to complete, much of that time coexisting with the city's efforts to rebuild after the bombing. The result, to us, is a city that embraces change and growth, and one that had little confidence before it invested in itself, but now has tons of it.

The Mississippi Miracle

Some will argue if gambling is a wealth builder or a wealth taker. It's our opinion that gaming is like any other economic development project. Whether it is "right" or not depends on where it is located and the economic factors and situations that are present. In the case of Mississippi, particularly the Gulf Coast portion of the state, passing dockside gambling was a no-brainer and has helped that region build wealth. Thousands of people each year flock to the Mississippi Gulf Coast from all over the world to gamble at the casinos there.

Called the "Mississippi Miracle" Hancock County and Harrison County residents passed dockside gambling in the early 1990s. From 1993-1997, casinos invested billions of dollars on the Mississippi Gulf Coast and continue to do so. The casinos have created thousands of jobs and paid billions in state, city and county taxes. The subsequent surge in new residents and visitors to the Gulf Coast prompted new construction, both residential and commercial.

In 2005, the booming casino industry was devastated by Hurricane Katrina, but legislators acted fast and voted to allow gambling vessels to locate onshore within 800 feet of the Gulf of Mexico shoreline. Today, 11 casinos are up and running on the coast and they are experiencing record revenues. The "Mississippi Miracle" has significantly changed the complexion of the Mississippi Gulf Coast and has been a massive economic engine for the coast and the entire state.

The Port of South Louisiana Opens

Southern Business & Development is not the only one celebrating its 15th anniversary. The Port of South Louisiana was first developed in 1993 and since has become the largest tonnage port in America. Considering how old many of the nation's ports are, that is no small accomplishment to become the largest in just 15 years.

ThyssenKrupp, one of the biggest industrial projects in U.S. history, almost landed its $3.7 billion steel project -- it is being built in South Alabama -- on Port of South Louisiana property. Look for another large steel project to take its place soon at the Port.

The Port of South Louisiana is huge -- 33,000 acres and 54 miles of frontage on the Mississippi River -- and is home to some massive developments, including those by Marathon, Valero, Cargill, Faustino and Syngas, just to name a few. The deepwater port is located between New Orleans and Baton Rouge. The port accounts for an astounding 15 percent of total U.S. exports.

Semiconductor Industry Fever

Between 1993 and 1997, state and local economic development agencies were falling all over themselves in an effort land what then was thought to be a slew of pending semiconductor plant announcements. Virtually every Southern state had made preparations to court the industry and the billions that were expected to be spent per deal.

But it was not to be. During the five years, there were only eight significant semiconductor deals announced in the South (1,000 jobs or more). While there were 15 total semiconductor projects announced during that time, only five were new projects. One of those new projects was never built, so it turned out to be only seven fabs. Furthermore, only Virginia (2 semiconductor projects), Florida (one) and Texas (four deals) landed a computer chip plant or had an expansion of one. So the semiconductor craze of the mid-1990s was short-lived for most Southern states. 

South Lands Three Major League Sports Franchises, Olympics come to Atlanta

In 1993, Jacksonville and Charlotte joined the list of markets in the South that earned an NFL expansion team. In 1997 Houston moved its team to Nashville to play and later Houston got the Texans. Also during that time, the Florida Marlins started play in Major League Baseball (1993).

In 1996, the South, specifically Atlanta, was the center of the world's attention as the Olympic Games paid a visit. Informally known as the Centennial Olympics, the Games had a profound impact on the city of Atlanta and it can be argued that the games were the single-most important corporate recruitment event in the South's history.

The Changing of the Guard: Most Active Industry Sectors

As mentioned, for so long the American South was home to low-wage industries such as those found in apparel, textiles, agribusiness and wood products. Again, those sectors continue to be huge players in the South, but their numbers have been reduced dramatically. In the first five years of this magazine’s life, we began to see exactly what industries would replace the traditional industries that were beginning to go offshore in droves by the mid-1990s.

Based on total jobs announced, of the top 150 deals announced in the South during years' 1993-1997, the financial services sector led all other sectors with 25 big deals. In second place were call centers (20) and 14 big deals that came from the electronics sector (not counting semiconductors).

There was one new industry sector in the mix. For the first time ever, major corporations, several of which were Fortune 500s, announced they were relocating their headquarters to the South from 1993-1997. Prior to 1993, only one Fortune 500 company had relocated to the South in 25 years and that was in 1990 when Exxon (now Exxon Mobil) relocated its global headquarters from New Jersey to Irving, Tex.

Top 10 Industry Sectors 1993-1997

Industry

1. Financial services
2. Call Centers
3. Electronics
4. Automotive
5. Headquarters
6. Semiconductors
7. Poultry processing
8. Distribution
9. Telecommunications
10. Aviation/Aerospace

 # of Deals*

25
20
14
10
9
8
8
8
7
6

* Deals announced with 1,000 or more jobs between 1993 and 1997. For a complete list, turn to page 43.

Quality of Jobs Begins to Increase Dramatically

In the years that were 1993-1997, the South began to see more and more noteworthy corporations make major investments in the region. We have already mentioned BMW and Mercedes-Benz and their choice of South Carolina and Alabama during the period. Even today, the South remains the exclusive location of the two German automaker's assembly operations in the U.S.

Check this list of companies that made huge investments in the South between 1993 and 1997: IBM-Toshiba, Boeing, Samsung, Citicorp, Texas Instruments, Intel, Bridgestone/Firestone, SKC, FedEx, Volvo, Michelin, AT&T and Nucor. In years' 1993-1997, those 13 companies made capital investments in the South that totaled just over $15 billion (that's with a "B"). You can see the list of the top 300 deals announced in the South between 1993 and 1997 by turning to page 43.


    
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