The state of the rural South’s economy

By Mike Randle

A Fodor pick for one of America's Best Small Towns, Bardstown, Ky., continues earning accolades for its historic charm, one-of-a-kind attractions and bustling Courthouse Square. Photo by Kip McGinnis

The populations of U.S. regions look quite different than they did 60 years ago. In 1955, the American West was home to just 24 million people. Today, it has grown dramatically to 74.1 million residents. The growth of the Midwest and Northeast since 1955 has been minimal compared to the South and West. The Midwest currently has 62.5 million (43 million in 1955) and the Northeast has 61.3 million (42 million in 1955) residents respectively. In contrast, the population of the American South has ballooned from 48 million to over 121 million people in 60 years, a total that is very close to matching the populations of the Northeast and the Midwest combined. If Census migration patterns continue as they are, sometime in 2016 or 2017, the South will contain more people than the Northeast AND the Midwest combined.

If you Google “the South,” the first site that pops up is a Wikipedia page. Part of the copy on the page reads, “Apart from its climate, the living experience in the South increasingly resembles the rest of the nation. The arrival of millions of Northerners (especially in major metropolitan areas and coastal areas) and millions of Hispanics means the introduction of cultural values and social norms not rooted in Southern traditions. Observers conclude that collective identity and Southern distinctiveness are thus declining, particularly when defined against ‘an earlier South that was somehow more authentic, real, more unified and distinct.’ The process has worked both ways, however, with aspects of Southern culture spreading throughout a greater portion of the rest of the United States in a process termed ‘Southernization.’ ”

Today, the South is defined as a diverse economic engine that drives the nation’s economy. Go ahead and pick your economic indicator, whatever it might be. Use population, the number of metros in the U.S., retail purchases, manufacturing jobs, service jobs — whatever — the South always accounts for between 37 and 40 percent of the nation’s total or more.

In fact, the South leads all U.S. regions in every economic category the federal government tracks, including GDP. While the South doesn’t quite account for 40 percent of U.S. GDP, the region’s Gross Regional Product at $5.84 trillion in fiscal year 2014 dwarfs the West’s $4.05 trillion, which is in second place.

As for job creation, you can throw out that 40 percent figure most years. For example, from April 2012 to April 2013, the South accounted for 44 percent of all new jobs created in the U.S. Some years it’s over 50 percent of all new jobs created in the country.

There are no other U.S. regions that can remotely match the number of major market economies located in the American South. Of the 50 largest markets in the U.S., the South is home to 22, and the West is home to just 12. In the Northeast there are eight, the same number as in the Midwest.

Even more, look at post-recession population growth in the 50 largest U.S. metros. From 2010 to 2012, the eight largest markets in the Northeast saw their populations grow by a mere .78 percent. At .73 percent, growth was even more anemic in the eight largest markets in the Midwest.

But in the West, in the 12 markets there that are included in the 50 largest markets in the U.S., populations grew by 2.89 percent. Topping regional growth were the 22 Southern MSAs. They grew by 3.15 percent from 2010 to 2012. Clearly, the West and the South are dominating regional growth, and it has been that way for more than four decades.

The South’s economic bulls are its major markets, not necessarily its mega-markets such as Atlanta, Dallas-Fort Worth, Houston, Tampa Bay and Miami. Those mega-markets are huge drivers, but what makes the South a mile wide and a mile deep are the secondary major markets such as Austin, San Antonio, New Orleans, Baton Rouge, Nashville, Memphis, Charlotte, Raleigh-Durham, Oklahoma City, Tulsa, Orlando, Greenville, Birmingham, Hampton Roads, Louisville. . .you can go on and on when naming growing economic centers of influence in the South that are not the size of a Chicago, New York, Houston or Atlanta.

And that list doesn’t even reach to the South’s dynamic mid-markets. The American South has dozens of metro players driving the world’s fourth largest economy. And that’s what makes the South’s economy what it is today. It is a team sport, where other regions are home to single, massive metro economies — like Chicago, New York or Boston — with few supporting team members. To prove that point, name another metro economic powerhouse in Illinois, New York or Massachusetts.

The “other” South

Almost exactly 10 years ago, in the fall of 2004, SB&D published a cover story optimistically titled, “After five tough years, deals are back in the rural South and manufacturing is leading the way.” The cover photo featured former Arkansas Gov. Mike Huckabee with Hino Motors executives breaking ground on the new Japanese automotive supplier’s plant in the Delta region of Arkansas. Those “five tough years” mentioned in the title were tough because during that time so many rural Southern plants closed, picked up their equipment and offshored to Asia and elsewhere.

Many have forgotten, but when George W. Bush assumed the office of President in the winter of 2001, things weren’t so rosy with the South’s or the nation’s economy. There was a two- or three-year stretch from 2004 to 2006 when it seemed that the economy was stable. . .but it really wasn’t. Offshoring, while slowing, continued. And virtually all of North America had lost a sizable chunk of its manufacturing base and was bleeding critical jobs at alarming rates to Asia, specifically China.

If the nation was losing its manufacturing base to offshoring, what was happening in the rural South, where manufacturing rules? Repeating a popular phrase in today’s media, parts of the rural South’s economy were a “dumpster fire.” There was a herd mentality at the time to offshore manufacturing capacity — an economic phenomenon that began in the early 1990s and continued unabated for almost 15 more years — and the rural South was especially hard hit.

One of the reasons why the rural South’s manufacturing base was losing ground to offshoring from the early 1990s to around 2005 is that back then, much of the industry was “footloose.” Footlose industries are those that are not tied to a specific location or country, such as furniture, textiles and apparel manufacturing. Since that time, much of the manufacturing now done in the rural South is tied to a specific location. Automotive suppliers are a perfect example, as they need to be located near one of the Southern Auto Corridor’s 19 assembly plants. And the term “footloose” really needs a new definition because so many manufacturers are now making the decision to onshore, reshore, make it where you sell it, whatever you want to call it, in today’s economic model.

But conditions would get worse before they got better in small town South — offshoring slowed at about the same time the economy began to crater in 2007. Unemployment rates skyrocketed in many nonmetro areas during the Great Recession. Plant closures and mass layoff events occurred in much greater numbers than even at the height of the offshoring period. Instead of offshoring, many of the rural South’s manufacturing plants were simply shuttered during the recession.

Fast forward to 2015 and the U.S. economy is now hitting on all cylinders for the first time since the late 1990s. While the numbers aren’t in yet, as of this writing, 2014 should be the best job generating year since 1999. With 2.65 million people added to payrolls from January to November, 2014 will certainly be a banner year for job creation. Nonfarm payrolls grew by 321,000 in November. That figure represented the strongest job generating month in three years. It was preceded by payroll gains of 243,000 in October and 271,000 in September.

So, five years out of the worst recession post World War II, and some are comparing the current economy to the go-go 1990s. I recall former Nashville Chamber of Commerce President Fred Harris telling me in the late 1990s about the state of Nashville’s economy. “Michael, it is better than I have ever seen it. We have people who are working who don’t even want to work.” Fred’s statement was correct since Nashville’s unemployment rate was below three percent when he called me. Nashville is hot again, being called the “it” city, but it hasn’t reached full employment yet. (Nashville’s current unemployment rate is 5.3 percent.)

When major markets run out of labor, as Nashville did in the late 1990s, that is typically a good sign for the rural South. What occurs simply is this: job generation ramps up in the South’s metros to a point where labor availability is exhausted. That forces growing companies to look outside of metropolitan areas to find labor sheds that are available. In short, for a growing company to build to capacity in a white-hot economy, companies must locate in rural areas. . .the last frontier of labor availability.

Today, as the economy continues to grow, have rural regions benefited yet from tight labor markets in metropolitan areas? In September, Bill Bishop wrote in the Daily Yonder that 57 percent of rural residents in the U.S. lived in a county where the local employment rate either matched or was lower than the national average. That sounds like a pretty healthy number until you dig a little further into the data.

Bishop’s data indicated that almost all of those rural counties with unemployment rates lower than the national average are in the Great Plains, from Texas to North Dakota and Montana. The West and the Southeast, two of the fastest growing areas of the country, have fewer rural counties with unemployment rates that are below the national average.

Bishop wrote in the Daily Yonder article, “What was that about the Sunbelt? You remember the Sunbelt, right, the ever-growing, job-producing, always-booming heart of the nation’s economy? To find rural counties with unemployment rates at or below the national average, you have to swing your gaze to the Great Plains, or gasp, the Northeast. Don’t look at the Pacific Coast or the Southeast. Yep, the Great Plains just might be the new Sunbelt — only without the hype.”

Note to Bishop: Much of the rural South has lagged behind other U.S. region’s rural areas since Reconstruction. Furthermore, there’s a big difference between the Great Plains and the South. For one, rural counties in the South are more densely populated — although still rural — than those in the Great Plains. More densely populated rural counties in the South rely heavily on manufacturing jobs and those counties are the ones that “took the largest hits,” in the Great Recession according to an article written by Wyatt Orme for High Country News in September titled, “Rural and small town employment still lags.” The more sparsely populated rural counties, such as those in the Great Plains, rely mostly on agriculture as an economic base, which fared well during the recession. And oil and gas extraction is predominantly located in rural counties in the Great Plains, while little of that activity is seen in the rural Southeast.

The Economic Research Service of the U.S. Department of Agriculture produced a study recently which showed that since the economic downturn began in 2007, both nonmetro and metro areas have made up losses in employment. However, employment has grown on average by only 1.57 percent cumulatively in nonmetro counties compared to 3.82 percent average growth in metro counties. From the second quarter of 2010 to the second quarter of 2014, metro employment grew by 5 percent, while nonmetro employment grew by just 1.1 percent, according to USDA.

In May of 2014, five years after the end of the recession, nonfarm employment in the U.S. reached pre-recession highs. Metro employment has surpassed pre-recession highs, but in the rural U.S., there are still about 800,000 fewer jobs than there were in 2007. About 500,000 of those lost jobs are in the American South.

Poverty rates in the nonmetro South remain higher than any other place in America. The latest data from the USDA and the Census Bureau show that 22.1 percent of rural Southerners are at or below the poverty level. That is a much greater percentage than any other U.S region when comparing metro and non-metro poverty.

Chart No. 1

Poverty rates by region and metro/non-metro residence, 2013

Region % Non-metro % Metro
Northeast 14.2 13.5
Midwest 13.6 13.3
West 16.2 14.9
South 22.1 15.2

Reshoring is helping the rural South recover from the Great Recession. Some of the region's rural areas are capturing traditional industries such as furniture, apparel and textile manufacturing. Gildan Yarns and Activewear has been very active in North Carolina, hiring hundreds.

Source: USDA, Economic Research Service using data from U.S. Census Bureau, 2014.

One aspect of the rural South’s economy that is not helping the situation is the fact that it is not growing. For the first time ever, population growth in rural counties in the U.S. is essentially nonexistent according to numbers gathered from the USDA in 2012 and 2013. According to Orme’s article, “Small towns and rural areas have seen periods of exodus in the past, but never before has rural America experienced population loss.”

Here is more data about population loss in rural counties from the USDA website: “The number of people living in nonmetropolitan (nonmetro) counties stood at 46.2 million in 2013 — nearly 15 percent of U.S. residents spread across 72 percent of the nation’s land area. Nonmetro areas lost population between July 2012 and 2013, continuing a three-year trend. While hundreds of individual counties have lost population over the years, this is the first period of overall population decline in nonmetro America.”

Further data from USDA showed that over 1,200 nonmetro counties in the U.S. have lost population since 2010 with a decline of 400,000 residents. Just over 700 nonmetro counties gained population, adding over 300,000 residents, for a net loss of just 100,000 people nationwide. It’s not much, but as written earlier, it is unprecedented simply because it has never occurred before.

This event is most certainly the result of the loss of jobs, particularly manufacturing jobs, during the recession. Mass layoffs over the past 20 years due to small town South manufacturers offshoring — coupled with the closing of factories during the recession — has created a flight to metros for people looking for work. According to a USDA report, zero population growth and even population losses in rural counties account for roughly half of nonmetro job growth deficits.

Chart No. 2

Rural vs. Urban. Unemployment Rates in Southern States 2013

Rural Urban
Alabama 7.6 6.1
Arkansas 8.6 6.9
Florida 7.2 7.2
Georgia 9.5 7.9
Kentucky 9.4 7.5
Louisiana 7.5 5.9
Mississippi 9.7 7.5
Missouri 6.7 6.5
North Carolina 9.4 7.7
Oklahoma 5.3 5.5
South Carolina 10.0 7.2
Tennessee 10.0 7.7
Texas 6.4 6.3
Virginia 7.7 5.3
West Virginia 7.3 6.0

Economic factors weighing in the rural South’s favor

The Chinese have landed. After years of chasing ghosts, Chinese investments in the South in 2014 grew 20-fold. Pictured is Alabama Gov. Robert Bentley at Golden Dragon's new copper plant in rural West Alabama. The rural South has had many champions over the decades. Winthrop Rockefeller, Lyndon Johnson, Jimmy Carter and Bill Clinton certainly stand out as powerful individuals who focused on improving the economic conditions of the rural South.

On July 4, 1938, President Franklin D. Roosevelt said in a speech, “It is my conviction that the South presents right now the nation’s No. 1 economic problem — the nation’s problem — not merely the South’s. For we have an economic unbalance in the nation as a whole, due to this very condition of the South. It is an unbalance that can and must be righted, for the sake of the South and of the nation.”

Five years after the end of the Great Recession may not be enough time to evaluate the state of the rural South’s economy. But this we know; history has shown that there is no greater champion for the rural South than a fast-growing economy. The effects of the Great Recession created many skeptics when it comes to believing that the economy is really improving. But even the most ambivalent have to give a nod to this economy right now. Here are some facts:

* The U.S. economy has added jobs for 57 straight months, the longest sustained period in history.

* The U.S. has seen net job gains of 200,000 or more for 10 consecutive months, the longest stretch of 200,000-plus net monthly gains in over 16 years.

* In November there was a sharp rise in average hourly earnings.

* The unemployment rate in the U.S. has dropped from 8.3 percent in January 2012 to 5.8 percent in November 2014. The South’s’ unemployment rate in November was 6.2 percent.

* The manufacturing sector added 28,000 net new workers in November, the highest monthly total in 2014.

The petrochemical industry is a huge economic driver in the rural South. Pictured is Cheniere Energy's LNG export plant under construction in Cameron Parish, La. The $18 billion deal is one of the largest underway in the American South. Last point is this — while job growth in rural areas in the U.S. has been less than half that of urban areas since the end of the recession, first quarter 2014 data showed a decent spike in rural job gains. It was the largest gain in net rural jobs since the end of the recession and it was maintained in the second quarter. Could this be the rural South’s time?

There are several economic factors working in the nonmetro South’s favor. For one, upcoming labor shortages in the region’s metros will naturally force growing companies to look to the rural South for labor. Economists are predicting real gross product to grow by 3.1 percent in 2015, a major improvement over the 2.2 percent expected for 2014. If that occurs, the South’s metropolitan areas will see much tighter labor markets by year’s end.

The very reason why the rural South took it on the chin may be the key factor behind recovering the jobs it lost in the recession. Manufacturing is growing in the South like no time in the past 25 years. There were more manufacturing announcements meeting or exceeding 200 jobs and/or $30 million in investment in the 2014 SB&D 100 ranking than any year since 1992. And with reshoring not expected to peak for a few more years according to the Boston Consulting Group, we expect the manufacturing sector will continue to gain steam.

A spike in rural job generation is not the only economic development surprise in the South in 2014. Foreign direct investment from the Chinese is finally surfacing in the region. The Chinese have been a no-show in the U.S., essentially the last large Asian economy to make significant investments in the South, following the Japanese and the Koreans. In 2014, Chinese companies invested 20-fold more in the South in new plants and acquisitions than what they have done in any other year. And a good portion — about half — of those investments were made in nonmetro counties.

Chart No. 3

Rural vs. Urban: Population in Southern States 2013

Rural 1980 Rural 2013 Urban 1980 Urban 2013
Alabama 1,100,514 1,159,361 2,793,511 3,674,361
Arkansas 1,095,600 1,152,099 1,190,757 2,959,373
Florida 447,307 702,636 7,674,145 18,850,224
Georgia 1,299,405 1,772,222 4,163,577 8,219,945
Kentucky 1,689,447 1,837,294 1,970,877 2,558,001
Louisiana 802,611 768,088 3,403,505 4,206,116
Mississippi 1,560,410 1,632,059 960,360 1,359,148
Missouri 1,342,220 1,556,587 3,574,546 4,487,584
North Carolina 1,688,108 2,208,984 4,191,987 7,639,076
Oklahoma 1,250,773 1,347,249 1,774,714 2,503,319
South Carolina 650,153 753,364 2,470,576 4,021,475
Tennessee 1,159,151 1,491,022 3,431,872 5,004,956
Texas 2,460,759 3,023,593 11,764,754 23,424,600
Virginia 999,497 1,061,716 4,335,161 7,198,689
West Virginia 819,286 714,605 1,130,900 1,139,699

Source: USDA, Economic Research Service

Education in the rural South is the key

If we are indeed in the midst of an economic run not seen in almost two decades, leaders in the rural South must understand that to maximize this rare opportunity, education is the key. The path politicos and educators are taking today to educate the rural South’s workforce is unique.

If a sustained, growing economy not seen since the late 1990s is underway, the rural South is engaging in a tactic that is critical to its recovery. The race to shift education and worker training, particularly in rural areas, away from the four-year university model to a two-year technical degree, is showing real signs of success.

Note the third item in Chart No. 4 (completing some college in the South) that has an asterisk. The percentage of people who have completed some college or earned a two-year degree in the rural and urban South is very close to being equal. This is the category the workforce states in the region are targeting in an effort to improve workforce skills. If those persons without a degree, but with some college, that are located in the rural South can complete at least their two-year degree — preferably in a trade —  then the South’s nonmetros areas will be much more attractive to locating industry. Data shows this is now being accomplished better than at any time in years.

But there are barriers — like the history of the struggles of manufacturing up until 2007 when it began its resurgence — and stereotypes and other hurdles to clear in an effort to convince kids in the rural South that a two-year trade degree could land them a job paying six figures. For one, many of the parents and grandparents of those kids are the very ones who, working at a manufacturing plant, lost their jobs to offshoring and the recession.

Chart No. 4

Rural vs. Urban: Education in the South (Persons 25 and older)

Not completing high school in the South
Rural 1980 Urban 1980 Rural 2013 Urban 2013
45.3 41.6 21.4 14.2


Completing high school only in the South
Rural 1980 Urban 1980 Rural 2013 Urban 2013
26.0 31.4 37.1 29.4


*Completing some college in the South
Rural 1980 Urban 1980 Rural 2013 Urban 2013
9.4 12.52 27.6 29.3


Completing college in the South
Rural 1980 Urban 1980 Rural 2013 Urban 2013
9.1 13.6 15.0 27.0

*Includes two-year degrees. Source: USDA, Economic Research Service

Secondly, we have lost an entire generation of manufacturing workers in the region, particularly in the apparel, textile and furniture manufacturing sectors. Those industries are reshoring in healthy numbers, but for almost two decades, there were few if any significant new and expanded projects in those industries. That being the case, there was no need to train workers for those jobs.

Here is an example of what we lost and have regained in the course of more than 20 years. In 1996, the South saw, for the first time since World War II, the service sector beating out the manufacturing sector in total projects of 200 jobs or more and/or $30 million or more in captital investments. That year, there were 212 manufacturing projects and 361 service projects announced meeting or exceeding those thresholds in the South. It would get worse for manufacturing. The next year (1997) saw 407 big service deals and 229 manufacturing deals. In 2001, a recession year and the year China joined the WTO, there were 282 service and 164 manufacturing projects meeting or exceeding our thresholds of 200 jobs and/or $30 million in investment. Those 164 deals represented the low performance point for manufacturing in our ranking since it was first published in 1993.

Move on to 2013 and everything has changed. In 2013, there were 410 manufacturing projects and 185 service projects announced in the South meeting or exceeding SB&D’s thresholds. The American South’s economy has done a backflip, from one that was consumer-oriented with service deals in some years tripling the number of manufacturing deals, to an economy that is firmly based in manufacturing. Make that an economy that is dominated by manufacturing when it comes to large, game-changing deals.

This change in the South’s economy caught educators and workforce training officials by surprise. After all, the revolution in the South’s economy to manufacturing-focalized has only been happening for five years, or since 2010. We saw clues of the aboutface as early as 2006, and then again in 2007, but the recession contracted that. Now that we are five years into it, educators know full well what the needs of industry are and they have made great strides in workforce training. One of those advances is dual enrollment, where a high school kid can receive training at a community college while attending high school.

The race to shift education and worker training, particularly in rural areas, away from the four-year university model to a two-year technical degree is showing some real signs of success. Pictured are students at Mid-South Community College in West Memphis, Ark.

Dr. Glen Fenter, president of Mid-South Community College in West Memphis, Ark., and a noted workforce educator in the Delta region of Arkansas, said this about the new model of accentuating two-year degrees over four-year degrees, particularly in nonmetro areas. “We are still, in this country, primarily educating folks with one goal in mind; they are all supposed to go off and get a four-year degree” Fenter said. “Unfortunately, the university system model was only designed to educate about 15 to 20 percent of our gene pool. The rest of those folks have no interest in being on that university campus, they are just being forced by our model to go there. And what happens? They go, they spend about $10,000 to $15,000 that first year, get deep in debt, jack up all of their financial aid, come back home, they can’t get any more financial aid and they have no chance of getting a job with anybody.”

Now that the South's economy is showing significant improvement, many rural areas are investing in site preparation. Pictured (left to right) are Mark Heath, CEO of the Martinsville-Henry County EDC in Martinsville, Va., Lisa Lyle, director of recruitment and marketing, Mike Randle of SB&D.

Fenter continued about improvements in workforce training in the rural South, specifically new methods that are being implemented in the two-year degree model. “We have taken a big step, not just for the Southern region of the United States but for the entire country. I am convinced that our democracy is not sustainable unless we get back to a place in this country where we are producing goods and services that we can sell to the rest of the world. I think the South is uniquely positioned (because of improvements in workforce training) to see some unprecedented evolutions, but we are going to have to play smarter, be more aware of who our competitors are and understand what we have to do to win in this global economy.”


I have a special place in my heart for the rural South. After all, I have visited more than 1,850 nonmetro towns and counties in three decades, and in the fall quarter we barnstormed about 40 small towns in Kentucky. Over the years, dozens of those rural Southern towns and counties have transformed themselves into micropolitan and metro areas. Their success, their growth, means they aren’t defined as “rural” any longer by the Census Bureau. But don’t think that’s a knock on “rural.” Many companies prefer a rural location. Among other things, it makes them a big fish in a small pond. The rural South is also the least expensive place to manufacture in the most productive economy in the world.

Economic development, as it is practiced today, was invented by the mayor of tiny Columbia, Miss., way back in 1929. But the fact that the practice of economic development was concocted in a tiny town in a state that remains one of the poorest in the country, tells you something about the resiliency of the rural South when it comes to the desire to succeed.

The rural South’s economy as a whole has picked itself up and dusted itself off more times than any other place in America. It has recovered after being shaken time and again over the past 150 years. The rural South has come back from the depths of the Great Recession, from the age of offshoring, from the Great Depression to Reconstruction post Civil War. It’s economy is still not all the way back from the latest downturn. The rural South, once again, finds itself in a familiar situation. But the data we are seeing indicates that situation is about to change for the better. Again.

Ten rail, air or interstate frontage sites in the South perfect for any large manufacturer

Commonwealth Crossing Industrial Park
Martinsville, Virginia

Commonwealth Crossing Business Center in Martinsville, Va.

Commonwealth Crossing Business Center (CCBC) is a publicly owned (Henry County) development offering prime sites in a 726-acre rail-served industrial park on the Virginia/North Carolina border. CCBC is located on US 220, only 33 miles north of the Greensboro, N.C. International Airport (PTI).

Two tracts are currently under development: Tract 1 (120-acre pad) and Tract 4 (50-acre pad). Water and sewer are provided by Henry County; electric by AEP; gas by Southwestern Virginia Gas; and high speed, diverse route fiber by Mid-Atlantic Broadband. CCBC was “shovel ready” January 2015.

England Airpark
Alexandria, Louisiana

England Airpark in Alexandria, La.

Located in the center of the state, England Airpark, a 3,000-acre, award-winning, master planned community, offers outstanding business location options. With over $200 million in airfield improvements, and building upon its transportation strengths as a former military facility, England Airpark’s Alexandria International Airport features 747 capable runways, 24-hour tower, full navigation aids, Index D ARFF, major refueling and 24-hour FBO, and Foreign-Trade Zone #261. England Airpark also hosts on-site rail, access to I-49 and the inland Port of Alexandria.

England Airpark’s certified Greenfield sites offer industrial development choices. Two sites, West 1 (700 acres) and East 1 (40 acres), are certified by the State of Louisiana, Cleco and McCallum Sweeney. Two additional certified sites are planned for 2015. Existing buildings are available on campus.

On-site housing, recreation, ample utilities, great quality of life and motivated workforce lands England Airpark firmly in SBD’s Top Ten for 2015.

Frank C. Pidgeon Industrial Park
Memphis, Tennessee
The Frank C. Pidgeon Industrial Park is designed with efficient access to every major market in North America. The park’s location in the center of America’s distribution system is equally efficient for the export of goods to major ports of the world. Located on the banks of the Mississippi River, Pidgeon Industrial Park is characterized by prime industrial land with access to all modes of transportation: five Class I railroads, a new still water harbor, minutes from I-55 and I-40, and Memphis International Airport (home to FedEx World Hub and a major UPS air-ground sorting facility). Memphis is located in the heart of the eastern U.S. and is closer by truck to more major metro areas than any other city in the country.

Pidgeon Industrial Park also has access to robust, in-place utilities. The park’s assortment of lot sizes and easily expandable, flat sites make this standalone industrial park one of the best in the Mid-South.

I-26 Megasite
Newberry County, South Carolina

I-26 Megasite in Newberry County, S.C.

Since December of 2011, the County of Newberry has been working to establish a “megasite” for industrial development. Newberry County’s “I-26 Mega Site” is bounded by Old Whitmire Highway, SC Highway 76, and Interstate-26. The 2,000-acre site has ample rail access from its interior and is convenient to the I-26 interchange at SC Highway 121.

“Our location on I-26 is a huge benefit to this site,” Newberry County Economic Development Director Teresa Powers said. “We are adjacent to both the Columbia [metropolitan statistical area] and the Greenville MSA. We are not technically included in either one, but we are adjacent to both. That allows us the proximity to both of those larger cities. From a workforce standpoint, it’s a definite benefit to the site. We can pull people out of the Columbia area and out of the Greenville area to help provide the labor.

“The property has been tested,” Powers continued. “It’s had a cultural assessment, a review for threatened and endangered species, a phase I environmental study and a geotechnical survey. We’ve done a lot of testing. It also has infrastructure that could support [industry]. There is access to water and sewer and natural gas and electricity in large quantities to serve a site that large.”

MidAmerica Industrial Park
Pryor, Oklahoma
MidAmerica Industrial Park is located in northeast Oklahoma, about a half-hour’s drive from Tulsa. Spread out over 9,000 acres, which includes 3,500 available acres, MidAmerica is one of the nation’s largest industrial parks. It offers a talent-rich labor pool of nearly 1 million people within a 40-mile radius and employs more than 4,000 highly skilled workers. The Park is also a leading center for manufacturing, processing and distribution including 85 thriving companies featuring Fortune 500 giants such as Google, DuPont, Conoco/Phillips and Sysco to name a few.

In order to address the challenges of employers, MidAmerica has forged a workforce development program with innovative programs from a wide range of resource providers.

MidAmerica also possesses on-site air and rail connections, international air connections less than 40 minutes away, close proximity to major U.S. and Interstate highways, and three inland port connections only 30 minutes away.

Mississippi County River Site
Mississippi County, Arkansas

Mississippi County River Site in Arkansas

Located only 58 miles north of Memphis, this is one of the last great Greenfield sites available on the lower Mississippi River. Its 650-plus acres are located on the protected side of the Mississippi River levee but only a quarter-mile from porting facilities. The river is on the east side of the property; a mainline of the Burlington Northern is located on the west side. There is ample room for an occupant to install a rail staging area of whatever size might be needed.

Big water, sewer, natural gas and electricity are all either onsite or just a few hundred feet from the site. Interstate 55 is only six miles away.

An added bonus — this is one of the largest steel-producing areas in the world with economical and easy access to rolled steel from a variety of steelmakers — saving manufacturers incoming freight costs.

Paradise Regional Business Park
Muhlenberg County, Kentucky
The Paradise Regional Business Park offers a fully served 620-acre industrial park with flat, easy-to-develop sites to satisfy most any requirement. Sites ranging from 5 to 470 acres can be configured. Due to the ideal layout of the park, rectangular sites can be configured to accommodate large distribution or manufacturing requirements. Centrally located in the western Kentucky region, the park easily draws experienced employees from the immediate and surrounding counties. Its location adjacent to Exit 48 on the Western Kentucky Parkway provides easy access in and out, along with great visibility for companies desiring maximum highway exposure. Interstate access surrounds this site with the new I-69 nine miles to the west and I-24 and I-64 within a quick reach of the park.

Progress Center Site
Morristown, Tennessee
Located in the 800-acre East Tennessee Progress Center is a newly graded 50-acre site. It is Morristown’s latest graded pad, with others ranging in size from 5 to 50 acres. The 50-acre pad is the beginning of a 115-acre prepared site which has recently garnered significant interest from automotive-related industries. . . it is adjacent to Interstate 81, and in close proximity to Interstates 40, 26 and 75. Morristown is home to many auto suppliers such as MAHLE, Lear, Kawasaki, OTICS, San-Ei Seiko and others, making it a regional hub for automotive suppliers servicing the Southeast, as well as Detroit.

Punta Gorda Interstate Airport Park
Port Charlotte, Florida

With 4,300 acres ready for development, the Punta Gorda Interstate Airport Park represents impressive global opportunity, not only in access but in large-scale site selection and flexibility: site options range from 1 acre to more than 1,000 acres. Developed for high performance with superb water, power and telecommunications infrastructure, the Park enhances productivity with the cost-effective advantages of a designated Foreign Trade Zone. Productivity is accelerated from startup thanks to rapid permitting, shovel-ready certified sites, pre-permitted spec building plans and new roadway improvements that enhance circulation. Charlotte County’s Certified Site program allows buyers to proceed with ease and confidence.

This park enjoys strategic access to the Punta Gorda Airport and its three lighted runways, as well as a high-profile location offering frontage where daily traffic counts exceed 40,000.

South Alabama Megasite
Baldwin County, Alabama
Baldwin County’s 3,009-acre South Alabama Megasite has received the AdvantageSite designation from the Economic Development Partnership of Alabama, boosting its marketability to potential industrial partners. The Bay Minette megasite, which already earned a certified CSX megasite designation in 2011 from McCallum Sweeney Consulting, is located 32 miles from the Port of Mobile and boasts direct access to Interstate 65. The site is also less than 25 miles from Interstate 10, less than 90 minutes from four regional and municipal airports and offers direct CSX rail access, nestling it perfectly within Alabama’s automotive and aerospace corridors, according to Lee Lawson, president and CEO of the Baldwin County Economic Development Alliance. “This designation and the McCallum Sweeney certification communicates to site selection consultants and large original equipment manufacturers that the South Alabama Megasite is a key site along the Gulf Coast for large-scale industrial development,” Lawson said.

Mexico’s auto industry is surging, but we still rule

Mexico has captured 9 of the 11 new assembly plant announcements in North America since 2010. Pictured is Volkswagen’s plant in Puebla.

Amazingly, Mexico has captured nine out of the last 11 announced new automotive assembly plants in North America since 2010. The South landed the other two. The Center for Automotive Research (CAR) estimates that light vehicle production in Mexico will top 5 million units by the end of the decade. As late as 2013, Mexico produced only 1.7 million units, and last year about 3.5 million vehicles were assembled there. But the new factories in Mexico that are not operating as of yet — including plants by BMW, Nissan/Daimler, Kia, Toyota, Ford and Audi — are expected to boost vehicle production dramatically in the next few years.

Last year, the U.S. (the Midwest and the South) produced about 12 million units. In Canada, where the automotive industry is declining, only a little more than 2 million cars were built in 2015.
According to CAR, the U.S. and the Southern Auto Corridor are not losing existing production to Mexico like some other countries. Major assembly plants announced in Mexico have come at the expense of plant closures in countries such as Germany and Japan. Yet, there is no question that the South has lost out on the economic growth of new assembly plants it would have captured had they not been built in Mexico.

The benefits of making cars in Mexico aren’t numerous. It costs about $1,200 a vehicle less overall to make an automobile in Mexico as opposed to the U.S., according to CAR. More importantly for automakers, Mexico has the export benefits of more than 40 different free trade agreements with other nations, more than double the free trade agreements the U.S. has with other countries. President Obama’s campaigns for FTAs with Europe and Asia are still pending. All the while, Mexico has tariff-free access to almost 50 percent of the global new vehicle market, by far the biggest attraction for automakers.

For automakers and suppliers, there are issues with operating in Mexico. The port system in the country is underdeveloped, and much of the steel produced in Mexico is not automotive grade, meaning about 90 percent of the steel the country uses for the production of automobiles each year is imported from the U.S.

Importing to and exporting from Mexico takes about twice as long as in the U.S., raising distribution costs roughly 40 percent higher. Also, the business costs of crime and corruption in Mexico are about 50 percent higher than in the U.S., but that has not reduced investments in the country from automakers. They simply add that cost into their budgets. Also, energy costs, specifically those tied to the cost of electricity loads at OEM and parts plants, is higher in Mexico.

There is no question that new OEM activity in Mexico the last five years has been much stronger than here in the Southern Auto Corridor. However, OEM expansions are actually more numerous here in the South than in Mexico. Since the end of the recession all but two of the 17 major assembly plants in the Southern Automotive Corridor have expanded, four facilities more than twice.

The auto parts supply chain is also much stronger in the U.S. than in Mexico. CAR estimates that vehicles produced in Mexico “may be comprised of up to 40 percent U.S. content.” Furthermore, according to Michigan-based CAR, parts makers invested $3.4 billion in the last 10 years in Mexico compared to over $44 billion invested in the U.S. during the same timeframe. In Canada, parts manufacturers invested just $580 million since 2006.

In total, from the end of the recession through 2015, the auto industry as a whole – including OEMs – invested $80.7 billion in U.S. operations compared to $25.8 billion in Mexico.

Automotive leads record-setting year for manufacturing in the South

Today, factories in the U.S. make twice as much product as they did in 1984. And they are doing it with one-third of the manufacturing workforce. In fact, the output of durable goods in 2015 was the highest in the nation’s history. So, we do have a strong manufacturing base, at least in the South, much of the Midwest and parts of the West, and it is getting stronger because on a cost-basis, we can compete with any major manufacturing nation in the world.

As for the manufacturing sector, 2015 was the year of the automotive industry. Ten of the 17 major automotive assembly plants in the Southern Automotive Corridor are currently expanding and that OEM activity has forced the supply chain to those plants to grow as well. Automotive has led all sectors in the number of large projects in the South 21 of the last 22 years. The only time automotive didn’t lead all sectors was a year in the late 1990s when call centers posted a ridiculous total of deals.

In a record-setting year, the automotive industry in the South announced 111 big projects of the manufacturing sector’s 424 deals in 2015. That’s more than one-quarter of all manufacturing projects meeting or exceeding 200 jobs and/or $30 million in investment coming from the auto sector. There is no question what the most important industry in the South is. It is the automotive industry, hands down.

As written, automotive was the No. 1 industry — service or manufacturing — by a large margin in 2015. The 111 projects meeting or exceeding our thresholds was also a 22-year record. At no point since 1994 has any industry topped 100 projects meeting or exceeding our thresholds. And why not, U.S. car sales in 2015 set a record, beating the record reached 15 years ago. Automakers sold 17.5 million cars and light trucks in 2015 and overall Americans spent about $570 billion on the new vehicles. Automotive sales are a prime indicator of how the economy is performing. Cheap gas and low interest rates were also factors in the car sales record.

Also in 2015, the Southern Automotive Corridor gained two plants, both in the Charleston, S.C. region. Volvo and Daimler Vans are the first two major automotive plants to announce new plants in the South since Volkswagen’s announcement in 2008 that it would build an assembly plant in Chattanooga, Tenn. And with more than half of the plants in expansion modes, with automakers spending billions on more space and equipment, the automotive industry in the Southern Auto Corridor has never been more active.

And it is not just manufacturing that the South is getting with the automotive industry. Mercedes-Benz is relocating its North American headquarters from New Jersey to the Atlanta metro. Toyota will be moving upwards of 4,000 people from mostly California as it relocates its North American headquarters to Plano in the Dallas-Fort Worth metro. Of course, Nissan relocated its headquarters to the Nashville metro several years ago. Those projects are huge for the Southern Auto Corridor in that they bring value-added automotive jobs in addition to the manufacturing base.