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1. ThyssenKrupp's $3.7 Billion Steel Plant

In the spring quarter of 2007, Alabama triumphed over Louisiana in the contest to win the $3.7 billion ThyssenKrupp AG steel-mill complex, which is projected to employ 2,700 workers by 2010. In winning what may be the biggest private industrial development project of the decade, Alabama offered TK $811 million in cash and tax incentives, and the Alabama State Port Authority promised to invest at least $115 million at the Port of Mobile, less than Louisiana's $197 million, which reflected the extensive work that needed to be done at the proposed site near Baton Rouge.

Port Mobile will build a terminal where steel slabs from a TK mill in Brazil are to be transferred from ships and onto barges for delivery some 45 miles to the new steel making and processing complex in northern Mobile County.

On June 5, 2007 Alabama voters approved increasing the state Capital Improvement Trust Fund’s borrowing limit by $400 million, of which $195 million is to be given to ThyssenKrupp AG as part of the incentive package. The special election drew a small voter turnout, but tallied a comfortable majority of yes votes.

The company’s steel and stainless divisions will jointly build and operate the Alabama facility. The complex will have a state-of-the-art hot-strip mill to serve both steel and stainless operations. With an annual capacity of 5.2 million metric tons, the joint-use mill will process 3 million tons of slabs from Brazil, plus processing up to 1 million tons made in an electric mill to be built at the Alabama site.

Construction of the plant is expected to create 29,000 jobs, according to TK’s projections. The plant will serve industries including automotive, construction, electrical and utility, in addition to serving manufacturers of appliances, precision machinery and engineered products.
 
TK executives said the project is the central element in its strategy to increase sales of steel and stainless steel in North America, where it already is a significant supplier.

2. It is Tupelo! For Toyota!

On Tuesday, February 27, 2007, Toyota Motor Corp. announced its $1.3 billion, 2000-employee SUV assembly plant in Northeast Mississippi, near Tupelo. The 1,700-acre core site is located in Blue Springs, Miss., which is about 20 miles from Tupelo proper.

The Japanese automaker plans to begin production of the Highlander SUV model some time in 2010. Toyota will have an initial annual capacity of 150,000 vehicles. Operations at the plant will include stamping, plastics, body weld, paint operations and vehicle assembly.

Mississippi economic development officials reported that the new assembly facility will provide 2,000 direct jobs, an estimated 2,000 parts supplier jobs in the Northeast Mississippi region and about 2,000 temporary construction jobs. Annual payroll is expected to be $328 million Toyota officials said.

Incentives to the Japanese automaker include a bond issue of $293.9 million. Of that, $145.7 million will be spent on offsite infrastructure and $147 million on onsite infrastructure and training. Other incentives include a 20-year income tax exemption, sales and use tax exemptions, a 30-year fee lieu on property taxes, rebates on building materials and a withholding tax rebate of up to 3.5 percent of taxes withheld.

3. The Google Deals

California-based, Internet search-engine giant Google picked three sites in the South in the past year or so for large data centers. Google has committed almost $2 billion in the three data centers to date. They are located in Lenoir, N.C., Pryor, Okla., and Goose Creek, S.C.

The deals weren't without controversy. While working on closing the Lenoir, N.C. deal, Google officials were incensed when news about the project leaked to the press. Google blamed North Carolina lawmakers for the leak, which we maintained in the winter 2007 issue was the last group or source Google should have pointed fingers at. We wrote an editorial about that situation and you can read it by going to http://www.sb-d.com/Issues/winter2007southbound/index.asp

4. The Drought and the Water Crisis

Over the last year much of the South has experienced one of the worst droughts in the region's history. In turn, water availability has been affected like few years in the past, prompting some states in the region to challenge their neighbors in water wars that have been battled in various courts for years.

The struggle over water rights -- centered on river systems that run through multiple states -- has been waged between Alabama, Georgia, Florida and Tennessee and North and South Carolina. Unfortunately, there does not seem to be an end to the conflict. Alabama, Georgia and Florida have been in one legal stage or another fighting over water rights for over a decade now.

5. Several Southern States Turn Their Economies Around

In the last year or two, Missouri, Texas, South Carolina, Arkansas, Georgia, West Virginia and Mississippi have made significant strides in turning around their economies, some of which had been struggling, choppy or simply stagnant since the recession and down times of late 2001, all of 2002 and parts of 2003. In 2006 and 2007, Missouri performed better in economic development than it had since 1993. South Carolina has turned their economy around after several years of higher-than-normal unemployment rates and Arkansas finally earned that banner year we had been waiting for when it turned more deals in 2007 than it had in any of former Gov. Huckabee's 10 years in office.

In the past year, Georgia and Mississippi have performed well, too, landing the last two automotive assembly plant prizes in the Southern Auto Corridor (www.SouthernAutoCorridor.com) and developing areas of the two states that need development. It used to be that a deal in Georgia was a deal in Atlanta. That is no longer the case. And Northeast Mississippi is benefiting in huge measures from the automotive industry, after years of suffering from furniture-related plant closures. As for West Virginia, 2007 was the lowest average unemployment rate year in the state's history at 4.6 percent.

And finally, Texas. The tough times that were prevalent early this decade now are forgotten and no longer are even in the Lone State State’s rear view mirror. Texas' economy has performed well in the last three or four years. Yet, if we are headed for another recession, will Texas be hit first and hardest like the last time? 

And let's not forget North Carolina. The Tar Heel State has had a great three or four-year run, winning "State of the Year" in our SB&D 100 ranking in 2005 and 2006. But, like Texas, North Carolina was hit hard in the last recession. What if there's another one? Will North Carolina hit the skids along with Texas as the two did in 2002? My intuition tells me that North Carolina is much more prepared for another significant downturn than it was earlier this decade.

6. Alabama's Economy Surges Ahead

No state in the South or the country has more positively transformed its economy than has Alabama in the last five or six years. Alabama has consistently beaten all other Southern states for the biggest deals in the largest regional economy in the U.S. The year of 2007 was no exception when Alabama won what is widely reported as one of the largest single capital investments in U.S. history in ThyssenKrupp's $3.7 billion steel manufacturing facility. And here we are in 2008 and the Heart of Dixie has already rung up the biggest deal of the year to date with Northrop Grumman-EADS' 1,500-employee, $600 million aircraft assembly facility.

We have never written this before, but in 2008 we can report with certainty that Alabama is the South's next "destination" state. Florida, Texas, North Carolina, Virginia, Georgia and Tennessee have all earned "destination status" at different times over the last few decades. We have described a destination state as one that consistently ranks at the top in the U.S. in people and companies that migrate to that state in hopes of a better way of life and a better bottom line, respectively. Alabama is there. What has convinced us to make that claim? Well, Alabama's economy has been so strong for most of this decade that it is actually improving the economies of the states that surround it in ways that are very clearly seen to us.

7. The Presidential Election

We wrote a couple of times late last year and earlier this year and as far back as the beginning of President Bush's reelection almost four years ago about the 2008 Presidential election. Our take way back then and in everything we’ve written since was that the far-left and the far-right are non-factors in this election and they would have little say in it. That has occurred, so far. The far-right Republican candidate, former Arkansas Gov. Mike Huckabee, is now out. But what is even more interesting to us is that the Republican candidate, John McCain, is not far right enough for many conservative Republicans. That tells us, at least on the Republican side, that our theory was dead-on.

However, on the Democratic side it gets dicier. Who is perceived to be more centrist, Hillary or Obama? We believe that the one that is perceived to be more aligned with the center will be the one that earns the spot at the top of the ticket.

8. Looks like a Recession to Us. That means the South Looks to the Automotive Industry to Prop it up, Again

In the downturn of 2002 and 2003, several Southern industry sectors retreated. During those two years, deals were few and far between in IT, energy, the life sciences, general manufacturing, food processing, call centers and distribution. One industry that kept growing, even in the recession of 2002, was the automotive industry. In fact, 2002 and 2003 were two of the best years in the Southern Automotive Corridor’s history. 

Now it's 2008 and deja vu all over again. The automotive industry is ramping up again in the Southern Auto Corridor with two assembly plants under construction and a third (VW) is expected to be announced this year in a whole new untapped area of the Corridor: near the Southeast Atlantic Coast.

But this downturn is different than the one in 2002. The financial services sector was not a particularly active player in 2002 and 2003, but it wasn't dead in the water like it looks to be in 2008. Maybe financial services can be replaced by growth that is expected to come from the energy and steel manufacturing sectors.

9. Korean Automakers Make Significant Strides in U.S.

When Hyundai was site searching in the South a few years ago to place the first Korean automotive assembly plant in the U.S., there were some raised eyebrows. It was clear to economic developers and elected officials in the South that the Koreans were significantly behind the Japanese in knowing how business is conducted in the U.S. In other words, the Koreans were doing business as they do it in Korea. That wasn't sitting well with many charged with economic development here in the South.

Skip to 2008 and the Koreans now look like geniuses. Kia placed its plant near Hyundai's Montgomery, Ala. facility in West Point, Ga. That plant is under construction and Hyundai's plant is now well established. The two Korean automakers are now positioning themselves to share a supplier network that will give the two a decided advantage in operating costs in the future.

10. LNG Terminals Under Construction in Cameron Parish, Louisiana

In September of 2005, Cameron Parish, La., was devastated by Hurricane Rita. Cheniere Energy was constructing the first new liquefied natural gas terminal built in this country in 30 years in Cameron Parish when Rita roared through. Cheniere will open the terminal next year, an $800 million energy project. Since Rita, two more LNG terminals are planned for Cameron Parish, which is located in the Lake Charles, La., metropolitan area. The three projects total more than $2.4 billion in investment and will help, more than any economic development project, rebuild the Lake Charles region from the effects of Hurricane Rita.


    
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