2007 SB&D 100
Editor's Note: This web site, www.SouthernAutoCorridor.com, is owned and operated by Southern Business & Development magazine (www.SB-D.com). Each year SB&D comes out with its ranking of the top deals announced in the South the previous calendar year. It's called the SB&D 100.
The following story is the main feature of the 15th annual SB&D 100 that was published in the Spring 2007 edition (June 22, 2007 release) of Southern Business & Development magazine. As always, the South's automotive industry is well represented in the 2007 SB&D 100. For automotive executives looking to the Southern Auto Corridor, we thought it would be useful to include this comprehensive report on all industries expanding, relocating and starting up in the South. For the complete 2007 SB&D 100 results go to www.SB-D.com.
All and All, a Mixed Up Year
Total Jobs Drop, But Investment Totals Go Off the Charts
By Mike Randle
On the Jobs Side
The 2007 SB&D 100 saw the total number of jobs created by the top 100 projects announced in the South in calendar year 2006 drop for the first time in four years. The number of jobs created by this year's SB&D 100 totaled 82,513, or about 10,000 less jobs than what was created by the 2006 SB&D 100 (92,847). Since bottoming out in the 2003 SB&D 100 with 68,651 jobs (calendar year 2002 data), the total number of jobs generated by the South's 100-largest projects has steadily increased until this year. The fact that so many markets in the region were well below the national unemployment rate average in 2006 could be one reason for the declining total found in this year's "100" ranking.
While the sum of all jobs created by the top 100 projects announced in the South in calendar year 2006 did drop, we can say without a doubt that the quality of jobs being created in the South are getting better with each year. Low wage deals that used to show up on our lists in significant numbers have all but vanished. Take a look and see how many apparel, textile, agribusiness and other, typically low-wage projects made any of our lists. There are just a few.
Replacing that sector are higher wage deals in information technology, headquarter relocations, aircraft and aerospace, financial services, the life sciences (www.BioIndustrySouth.com) and of course, the ever-growing automotive industry that makes up the tremendously successful Southern Automotive Corridor (www.SouthernAutoCorridor.com).
While we are still a long way off from the number of jobs created by the top 100 projects each year in the go-go '90s (the average total was approximately 124,000 between 1995 and 1999), this year's sum remains well above the recession years we experienced earlier this decade. But, it is a concern that there were 10,000 less jobs created in 2006 than in 2005. Again, it's the first time since 2003 that the corporate elite failed to top the previous year in job creation.
Also a concern is the fact that the biggest deals announced in the South in calendar year 2006 were smaller. This year's 100th-largest announcement creates a threshold that is a unique and critical indicator of how well we are faring here in the South each and every year. This year's threshold was 400 jobs. Last year it was 483. We wrote in last year's SB&D 100 that we were "inching ever so closely to the magical 500 threshold mark, a level not reached since 1999." Now, with this year's crop of big announcements, we are back down to 400.
Chart No. 1
*Total Jobs Created by the SB&D Job 100 - 1994-2007
Year Jobs Created
* Job totals are derived from announcements made the previous calendar year
Just Missed Deals
While the total jobs generated by the South's 100-largest corporate job announcements decreased this year compared to last year -- meaning smaller deals are occurring -- there is a much greater concern about this year's SB&D 100 on the jobs side. Total projects with 200 or more announced jobs decreased dramatically this year compared to last year. Last year saw 364 companies in the South announce new, expanded or relocated deals with 200 or more projected jobs (that includes the top 100 projects). The year before that it was 391 with 200 or more announced jobs. This year's "100" saw the total number of deals with 200 or more announced jobs drop to one of its lowest levels ever, all the way down to 278.
Again, it could be that unemployment rates are so low in so many places in the South that labor availability is at a premium, therefore less big deals are being announced. And let's not forget about baby-boomers retiring. The South has always been a melting pot for retirees from all over the world and we know for a fact that number has never been higher.
The top job-making announcement made in calendar year 2006 and No. 1 on the 2007 SB&D 100 list is Kia Motors (2,893 jobs). Kia is building an auto assembly plant in West Point, Ga. Other huge deals made in the South in 2006 include Air Tran's 2,500-employee expansion in Atlanta, The Film Factory production studio in New Orleans (2,253 jobs), Fidelity Investment's new project in Raleigh (2,000 jobs) and Gulfstream's 1,500-employee expansion in Savannah. But those making up the top five employment deals announced in the South in 2006, while incredibly significant, pale in comparison to the top five last year. Four of last year's top five employment deals totaled 4,000 jobs or more.
Top Industry Sector Performers
Call centers have reigned industry sector champions for many years now when it comes to big job deals in the South. This year is no exception with 41 call centers expanding or starting up in the region in 2006, all with 200 announced jobs or more. Distribution and warehousing, which has consistently ranked just behind the automotive industry for quite awhile, took the second-place spot this year for the second year-in-a-row with 29 deals of 200 jobs or more. Information technology came in third, with 24 big deals and headquarter relocations and expansions and aircraft/aerospace followed right behind with 21 each. The automotive industry (18 projects) fell to sixth place, the first time that sector has not placed in the top five industry sectors with 200 announced jobs or more since 1997.
Chart No. 2
Top 10 Industries 2007 SB&D 100
(Total Announced Deals in calendar year 2006 with 200 Jobs or More)
1. Call Centers
3. Info Technology
7. Food & Beverage
8. Financial Services
9. Wood Products
New vs. Expanded: Again, Debunking the Myth
We have written several times that year after year the SB&D 100 exposes the myth that "80 percent of jobs created come from existing industry." Even a CEO, site searching exec or consultant like yourself has heard that untruth over and over and over. While 80 percent of new jobs may be created by existing industry in other parts of the country, it's just not the case in the South. Every year since 1993 the SB&D 100 has proven it. One of the biggest problems facing the South's economy is that so many economic developers and political leaders in the region have bought into that flawed theory. Let us repeat it for the non-believers. There is no possible way that 80 percent of all new jobs, or capital investments, for that matter, come from existing industry that expands in the South.
We will admit that in most years, the majority of new jobs created in the South are sourced from existing and expanding business and industry. But it's nowhere close to 80 percent. In fact, there have been several years in the South, all in the mid-1990s, when there were more jobs created by new industry than by expanding/existing industry. Of course, that's based on the criteria of this ranking, which by the way, is anything but arbitrary. No publication that we know of publishes every single corporate announcement that is used in its ranking. We reveal every deal we use in our rankings. Just check out the charts found in this section.
This year's SB&D 100 numbers show that there were 121 new projects and 157 expanded projects from existing industry with 200 jobs or more announced in the South in 2006. If our calculations are correct, then that means that of the 278 deals of 200 or more jobs made in the South last year, 57 percent came from existing/expanding industry and 43 percent from new projects. Again, not even close to the myth of "80 percent of all new jobs come from existing industry."
Last year saw a similar ratio when 55 percent of the deals came from existing industry and 45 percent came from new announcements. Eighty-percent of all new jobs come from existing industry? That's a fable when it comes to economic development in the South and it's been that way every year since we've gone to the trouble of putting together this ranking.
Manufacturing vs. Non-manufacturing: Again, Debunking the Myth, Part II
Here's another falsehood spread by the uninformed about economic development in the South. Haven't you heard? "Manufacturing is dead and it's not coming back." If you are a regular reader of this magazine, you may remember the 2005 SB&D 100 headline. It read, "Shocker! Manufacturing Dominates the Service Sector in the 2005 SB&D 100." Sure, the investment side of the "100" has always been dominated by the manufacturing sector. But that's not a fair comparison. Manufacturing will always outperform services in total investment.
This year's SB&D 100 debunks myth No. 2 that manufacturing is a dinosaur. Nothing could be further from the truth in the South. Of the 278 corporate and industrial deals announced in the South with 200 jobs or more, 123 were of the manufacturing variety and 157 came from the services sector. I'd say that's a nice balance, don't you think?
To prove to you that manufacturing is not dead in the South, let's look at all deals announced in the region from calendar years' 2002-2006 with 200 announced jobs or more. During that time there were 1,593 deals announced in the region with 200 or more jobs. Of those, 686 were manufacturing deals and 907 came from the services sector. In other words, in the last five years -- five of the worst years -- I might add, according to the experts when it comes to opinions regarding the performance of the manufacturing industry in this country, 43 percent of all job-making announcements with 200 jobs or more came from the manufacturing sector. That percentage hardly represents a dead industry.
In conclusion, there's no question that these numbers expose the myths as they relate to the South that "80 percent of all jobs come from existing industry" and that "manufacturing is dead." When someone makes those claims simply ask them, "Alright, what part of the country are you referring to? Are you talking about the U.S. as a whole? Are you talking about the Northeast or West?" It's important to make those qualifiers in an effort to know the truth, because there's one thing we've learned about the South's economy; it has very little in common with the rest of the country's economy. That's been true for over 100 years in the good and the bad.
Chart No. 3
Manufacturing vs. Non-Manufacturing
(Total Deals in the South with 200 Jobs or More)
Year Mfg. Non-Mfg. Total Deals
2006 123 155 278
2005 123 241 364
2004 198 183 381
2003 145 160 305
2002 97 168 265
2001 105 232 337
2000 179 299 478
1999 194 246 440
1998 248 292 540
1997 229 272 501
1996 235 251 486
1995 256 213 469
1994 241 189 430
1993 234 162 396
On the Investment Side
While the jobs side of the SB&D 100 has declined after four years of steady, yet unspectacular recovery from the recession years, the investment component of the list has raced to a new record again. Last year's SB&D 100 saw $26.7 billion invested by the top 100 investments in the region. At the time, that was a record.
This year's SB&D Investment 100 totaled $44 billion in capital invested by the corporate elite in the South. That figure blows the lid off all investment years in the region. The $44 billion represents the total value of the 100-largest investment deals announced in the South in calendar year 2006. Can you say "oil and gas?"
Chart No. 4
SB&D Investment 100 1994-2007
Total Investment Threshold
2007 $44.0 Billion $78 Million
2006 $26.7 Billion $71 Million
2005 $22.2 Billion $70 Million
2004 $22.1 Billion $55 Million
2003 $18.3 Billion $50 Million
2002 $25.0 Billion $78 Million
2001 $25.8 Billion $80 Million
2000 $24.6 Billion $80 Million
1999 $22.6 Billion $75 Million
1998 $19.8 Billion $70 Million
1997 $23.8 Billion $72 Million
1996 $22.6 Billion $68 Million
1995 $18.8 Billion $50 Million
1994 $17.4 Billion $50 Million
In calendar year 2006, there were 222 corporate investments made with $30 million or more in investment. That is about the same as last year's total of 233 and the year before that saw 217. It should be noted that we do not count retail, speculative real estate (office or industrial buildings not built for a specific user), lodging or residential real estate projects.
This year's record year includes the typical suspects, such as semiconductors, automotive, steel, pharmaceuticals and the like. But there are some new industries making the list and they center on energy production. Oil and gas has always been a big player in the South. But, ethanol projects continue to be a hot, new investments as are the biofuels. And wind farms are making it onto our top 100 investment list for the third straight year. Expect green energy projects to grow with every year. Those deals are simply reactionary projects. We wish they were more proactive investments that we discovered on our various lists years ago.
Top Industry Sector Performers
For the first time in eight years, the automotive industry did not top all other industry sectors in total investment in the South. Automotive fell to second place as oil and gas posted two more big deals on the $30 million and over list than did automotive. The chemical industry, building materials and food and beverage were the sectors that rounded out this year's top five investment industry sectors.
Chart No. 5
Top 10 Industries 2007 SB&D 100
(Total Announced Deals in calendar year 2006 with $30 Million or More in Investment)
1. Oil & Gas 25
2. Automotive 23
3. Chemicals 22
4. Building Materials 19
5. Food & Beverage 18
6. Distribution 13
7. Aircraft/Aerospace 11
8. Bio/Pharma 10
9. Headquarters 8
10. Utilities 6
New vs. Expanded and Manufacturing vs. Non-Manufacturing
There were 106 new deals announced in the South last year with $30 million or more in total investment and 116 came from expansions. Not unlike every year since 1993, in 2006 manufacturing ruled on the investment side of the South's big-bear-deal-sheet. Of the 222 $30-million-plus corporate investments announced in the South in 2006, 158 were from manufacturers and only 64 came from non-manufacturers. Distribution, headquarters, financial services and a relatively new category -- very expensive, "Fort Knox" fashioned data centers -- topped the non-manufacturing list.
2007 SB&D 100: State Performances
Compared to last year's totals, only six Southern states turned more deals that featured 200 or more jobs and/or $30 million or more in investment and 11 states lost ground from last year. The biggest gains were earned by Missouri (+21 deals), Louisiana (+10 deals) and Georgia and Texas (+8 deals).
The biggest losers from the 2007 SB&D 100 compared to the 2006 ranking were Florida (-45 deals) and North Carolina (-34 deals). We received data from Tennessee that showed they were short 28 big projects from last year's total of 41 (giving them a mere 13 this year). But we know full well that Tennessee's report was not complete. We tried to get Tennessee's data from 2006, but we failed, something we rarely do. I can remember only three instances when we received an "incomplete" from a state over the last 15 years and Tennessee is one of those three this year. That being the case, simply ignore Tennessee's numbers because they are wrong.
It should also be noted that both Florida and North Carolina, particularly the Tar Heel State, were on a roll the last couple of years, as evidenced by North Carolina being named "State of the Year" with Alabama in 2005 and 2006. But, Florida and North Carolina are two states who have a roller coaster history when it comes to this ranking. This year's numbers from North Carolina and Florida are perfect examples of those ups and downs that they have experienced over the last 15 or so years.
We must put in some positive comments about Alabama, Texas, Louisiana, Georgia and, in particular, Missouri. Alabama had another 300-plus-point year. That's unbelievable. Alabama has earned "State of the Year" in this ranking the last four years. Texas is back in a big way, but, they still have a ways to go. Louisiana, performing as they did in 2006 was an incredible acheivement, considering what that state went through in 2005. And Missouri, well, their year simply came out of left field. A remarkable year was accomplished by economic development and elected officials in Missouri in 2006.
You can read much more about each Southern state's performance in calendar year 2006 by turning to pages 46 and 47.
2007 SB&D 100: State Performance Per Capita and Total Points
State *PPM Points
1. Alabama 66.3 305
2. Missouri 61.2 355
3. Louisiana 51.1 220
4. Kentucky 48.8 230
5. North Carolina 42.1 375
6. South Carolina 40.7 175
7. Texas 40.6 955
8. Mississippi 39.7 115
9. West Virginia 38.8 70
10. Virginia 32.9 250
11. Georgia 26.4 250
12. Kansas 19.6 55
13. Oklahoma 19.4 70
14. Tennessee 15.8 95
15. Florida 14.4 260
16. Arkansas 8.9 25
17. Maryland 0.9 5
* Points per million residents