For real-time news on business, politics and economic development in the South, go to www.RandleReport.com. For all of the South’s announced projects, go to www.SB-D.com.
Nissan to invest $170 million to upgrade Tennessee and Mississippi plants
Nashville-based Nissan North America plans to invest $170 million at its two plants in the Southern Auto Corridor. The upgrades are being done to support the Nissan Altima model that is built at both facilities.
Manufacturer setting up shop near Honda’s Alabama plant
Lohr North America, a maker of car carriers, is converting an existing building in Lincoln, Ala., for a new plant. The French company will hire 140 workers in the deal.
France-based auto supplier to locate new operation in Middle Tennessee
Faurecia Interior Systems announced it will locate a $30 million plant in Maury County, Tenn. The plant will house 143 workers.
Michelin to reopen Earthmover tire production plant in South Carolina
A Michelin plant that was built in 2012 and idled in 2016, is expected to be back up running soon in Starr, S.C. The tire maker is expected to hire 100 workers for the reopening.
Auto parts supplier adding jobs in Kentucky
Webasto, a sunroof manufacturer, announced in August it will invest $15 million in its panorama roof systems line at its plant in Lexington, Ky. The deal will create 183 jobs.
Daimler delivers 50,000th Freightliner from North Carolina plant
Germany-based Daimler AG, the company that assembles the Freightliner Cascadia, has delivered the 50,000th model of the truck since production began 19 months ago at its plant in Rowan County, N.C. Daimler Trucks North America has garnered about 40 percent of the market share of Class 6 and Class 8 long-haul trucks.
Toyota’s Kentucky plant unveils next generation 2019 Lexus ES 350
Toyota Motor Manufacturing Kentucky unveiled the next generation Lexus ES 350 sedan model that is built at the Japanese automaker’s plant in Georgetown. Over 150,000 hours of training was done to build the new ES 350 that included sensory training that teaches workers on the assembly line to feel for defections that could be as small as a strand of hair. The plant will also build the F Sport high-performance model. The Kentucky plant is the only place in the world outside of Japan where Lexus models are produced.
South Carolina-made BMWs now cost more for Chinese buyers
China is a popular destination for South Carolina-made BMW SUVs. However, in the wake of China’s 40 percent tax on U.S. car imports (in a retaliatory move, China added a 25 percent tariff on American vehicles), BMW will raise the price of its vehicles by up to seven percent.
Auto parts distributor to expand operations in Tennessee
Revel Enterprises will invest $2.3 million to expand its auto parts distribution facility in Paris, Tenn. The deal will create 64 jobs.
Auto and truck parts manufacturer hiring in Mississippi
SMW Manufacturing, which opened in Oxford, Miss., in 2017, is expanding after starting the project with 50 jobs. Located in a former Caterpillar facility, the company makes parts for heavy truck, automotive and mining industrial markets. The $4 million deal will create 25 jobs.
For real-time news on business, politics and economic development in the South, go to www.RandleReport.com. For all economic development projects announced in the South, go to www.SB-D.com.
Honda opens $85 million logistics expansion in Alabama
Honda opened its latest expansion, a logistics operation that has added 400,000 square feet to its assembly plant in Lincoln, Ala. The new logistics facility will handle more than 4 million parts that arrive at the plant every day.
New megasite being rolled out in Crittenden County, Ark.
The city of Marion, in Crittenden County, Ark., was a bridesmaid to two Toyota assembly plants over the last 15 years. In 2003, Marion lost the Toyota plant that went to San Antonio and then again in 2007 it lost out to Mississippi for another Toyota plant. Now, Crittenden County and the cities of West Memphis and Marion are rolling out a new 1,830-acre megasite on Interstate 40 near Lehi, Ark. Crittenden County and Entergy Arkansas are working on certifying the site through the Select Site program.
Company expanding in Mississippi
SMW, a company that makes components for the heavy truck, construction and automotive markets, is expanding its plant in Lafayette County, Miss. The $4 million deal will create 25 jobs.
Auto parts supplier expands in Tennessee
U.S. Tsubaki, an auto parts manufacturer, is investing over $35 million to expand its facilities in Portland, Tenn. The company, which will create 70 new jobs, is a supplier of parts to Nissan, Ford, GM and Toyota.
Auto industry would need $7.6 billion bailout to offset tariffs
A study by the U.S. Chamber of Commerce that came out this summer showed that the Trump administration would need to offer the auto industry $7.6 billion in taxpayer-funded aid to counter tariffs in the escalating trade conflict with China and the European Union. The bailout would be similar to the $12 billion in aid President Trump gave U.S. farmers as China, the EU, Mexico and Canada enacted retaliatory tariffs on farm products.
Honda announces another expansion of its Alabama plant
Honda is once again investing in its large assembly plant in Lincoln, Ala. The latest expansion by the automaker is a $54 million investment that will add 50,000 square feet of space at its second line operations. Honda employs more than 4,500 workers at its Alabama plant.
Truck maker Oshkosh plans new East Tennessee facility
Wisconsin-based Oshkosh, a manufacturer of firetrucks, concrete mixers and defense vehicles, announced plans to renovate the 500,000-square-foot former John Deere facility in Jefferson City, Tenn. The project will create 300 jobs. .
Big River Steel expanding Arkansas mill
Big River Steel is investing $1.2 billion in an expansion that will double the capacity of its hot-rolled steel facility in Osceola, Ark. The expansion will facilitate the company’s ability to produce even higher grades of electrical steel, demand for which is expected to increase with continued focus on energy efficiency and the increase in hybrid and electric vehicle sales.
DENSO expands Kentucky facility
DENSO Air Systems Michigan will double its footprint in Christian County, Ky. The company plans to invest more than $3.5 million and create 45 full-time jobs. The expansion will boost production of aluminum HVAC pipes, tubes and hose assemblies for the automotive industry.
Bowling Green Metalforming plans $14 million expansion
Bowling Green Metalforming, a Canadian-owned automotive parts manufacturer, plans its sixth expansion since 2004, a $14.2 million investment set to create 27 new jobs in Warren County, Ky.
Auto supplier to spend $40 million in Alabama expansion
Japan-based Unipres, an automotive supplier specializing in stamping technologies, plans to invest $40 million in an expansion that will create 70 additional jobs at its Alabama production facility. The project will enhance production of parts for Nissan’s luxury mid-size vehicle.
Steel Dynamics to invest more than $230 million In Columbus, Miss.
Fort Wayne, Indiana-based Steel Dynamics announced plans to invest $230 million to upgrade its northeast Mississippi steel mill, creating 45 jobs. Steel Dynamics says it has unmet demand for galvanized steel after it shifted some production at the Columbus mill from selling to pipe and tube makers to selling to more lucrative customers, including auto and appliance makers.
For real-time news on business, politics and economic development in the South, go to www.RandleReport.com. For all economic development projects announced in the South, go to www.SB-D.com.
Steel firm to invest $230 million in Columbus, Miss.
Steel Dynamics has announced plans to invest $230 million to upgrade its northeast Mississippi steel mill, creating 45 jobs. The company, based in Fort Wayne, Ind., is shifting production from selling to pipe and tube makers to more lucrative customers, including auto and appliance makers.
Japanese auto supplier expanding Alabama plant with $40 million investment
Unipres Alabama plans to invest $40 million in a new hot stamping process at its production facility in St. Clair County, Ala. The move will create 70 new jobs. The company supplies products for Nissan and Honda.
DENSO Air Systems plans $3.5 million expansion in Hopkinsville, Ky.
DENSO Air Systems Michigan will expand its presence in Christian County with a $3.5 million investment creating 45 full-time jobs. The automotive components manufacturer is headquartered in Japan.
BLG Logistics locates operations in Ladson, S.C.
Designed to support Mercedes-Benz Vans’ production operations, BLG Logistics is locating new operations in Charleston County, projected to create 28 new jobs.
Chemical company launches $11 million expansion of Alabama location
South Korea-based Lotte Chemical Alabama is investing $11.4 million in its Auburn facility. The company manufactures compounded polypropylene resin for plastic automotive and home appliance uses at the site.
Automotive supplier expands manufacturing in Mississippi
A German company that makes automotive parts is expanding in Tishomingo County — hago Automotive Corp. will add 60 jobs and invest $4 million for new equipment in Iuka. By doubling the size of its existing facility, hago Automotive will be able meet the needs of BMW in the U.S., China and South Africa.
Microporous breaks ground in Piney Flats, Tenn.
Microporous held a groundbreaking ceremony recently for its $20 million expansion that will create 35 jobs. The company manufactures separators for batteries that are used in automotive and nuclear products.
JW Aluminum investing $255 million in South Carolina
JW Aluminum, a manufacturer of flat-rolled aluminum products, will invest $255 million in an expansion of its existing Berkeley County operations. The facility’s growth is expected to lead to the creation of 50 new jobs.
Lear Corp. to hire 500 in Alabama
Mercedes-Benz supplier Lear Corp. is hiring 500 people to manufacture seat assemblies for Mercedes-Benz’s Vance plant.
Corvac Composites plans $6.1 million investment in Morgantown, Ky.
Automotive supplier Corvac Composites will expand production in Morgantown, Ky., with a $6.1 million investment expected to create 30 full-time jobs. Corvac makes automotive underbody systems.
Koops expands South Carolina operations
Koops, a manufacturer of automation systems, is growing its existing Greenville County production operations by moving into a larger building Mauldin, S.C. The company’s $2.2 million investment is projected to create 20 new jobs.
Online retailer promises 77 new jobs for Ocala, Fla.
RealTruck, an online retailer of pickup truck parts and accessories, is seeking $385,000 from the city, county and state to establish its national headquarters in Ocala. The company plans to create 77 new jobs.
Southern Business & Development is celebrating its 25th anniversary over the next year (four issues). The second feature attributed to that theme is this pictorial titled, “The Way Too Early Guide to Toyota-Mazda Parts Supplier Locations.”Based on our data, we have chosen the 25 best counties in the South for suppliers to the Toyota-Mazda plant that is being built in Huntsville, Ala. The MTMUS facility is expected to be fully operational in 2021 and will house 4,000 workers
Cullman County, Ala.
Cullman County is rich in automotive suppliers, most of which are foreign-owned. Located on Interstate 65, 48 miles south of the Toyota-Mazda site that is also located on I-65, Cullman has consistently been named among the top Micropolitans in the South by Southern Business & Development in project activity. Wallace State Community College in nearby Hanceville, Ala., is considered one of the best, if not the best, community college for workforce training in the state.
Cullman has a thriving downtown, local leaders supportive of growth, and an exceptional school system. The high quality education system is matched by excellent healthcare options.
Jackson County, Ala.
If you don’t want to compete with Toyota-Mazda’s workforce, you might want to take a look at Jackson County, Ala. Located adjacent to Madison County in the far northeast corner of the state, Jackson County is about 55 miles from the Toyota-Mazda site. Its county seat, Scottsboro, is 73 miles from the site. In March, Google officially broke ground on a $600 million data center in Jackson County.
Most of the industrial parks in Jackson County are rail-served and the population within a 50-mile radius of Jackson (including parts of Huntsville) is nearly 250,000. School systems in Jackson County rank in the top 20 percent in the state of Alabama. The Earnest Pruett Center for Technology (EPCOT) is the No. 1 high school technical program in Alabama. EPCOT is located adjacent to Jackson County Industrial Park.
Lauderdale County, Ala.
Florence, the county seat of Lauderdale County, Ala., is 43 miles from the Toyota-Mazda site in Huntsville and 96 miles from the Toyota assembly plant in Blue Springs, Miss. So, logistically, a supplier building a plant in Lauderdale County or any counties in the Shoals region of Northwest Alabama can serve both facilities.
The Shoals Economic Development Authority (SEDA) works to capture projects in the Northwest Alabama region, including Lauderdale and Colbert Counties. SEDA currently owns and operates four industrial parks in Northwest Alabama with a combined acreage of 3,792 acres. Of that acreage, approximately 1,100 acres are available for prospective industry. Another 1,850 acres are available for industrial use at eight other parks and sites. Automotive supplier North American Lighting operates a large plant in the Shoals region, where it employs over 1,600 workers.
Limestone County, Ala.
Even though the Toyota-Mazda site is in the city of Huntsville (which is in Madison County), the site is technically in Limestone County, just off I-65. Limestone County is ground zero for the Toyota-Mazda plant. The county is growing rapidly, with a 10-year growth rate of 26 percent. With the arrival of Toyota-Mazda, that growth will expand exponentially.
There’s been no news on whether Toyota-Mazda will build a supplier park near or at the site of the new plant. Regardless, Limestone County is home to an abundant number of industrial sites, ranging from 100 acres to a 2,000-acre megasite.
Madison County, Ala.
Huntsville, the county seat of Madison County, was recently ranked by U.S. News & World Report as the seventh best place to live in the U.S. That ranking topped Nashville and Raleigh-Durham, among other outstanding places to live. Madison County has a flourishing job market and it’s where most of the 4,000 workers for the Toyota-Mazda plant will be drawn from.
Huntsville was almost picked by Volkswagen in 2008 for its plant that went to Chattanooga. With the addition of Toyota-Mazda to the city, the Huntsville region is without question one of the most diversified economies in the South. Military, space, telecommunications and biotechnology all thrive in Madison County. Madison County has an estimated population of 365,000.
Marshall County, Ala.
Parts of Marshall County are only about 40 miles from the site of the Toyota-Mazda plant. Guntersville, the county seat, is roughly equidistant (60 to 90 minutes) from both the Honda assembly plant in Talladega County and the Toyota-Mazda site in Limestone County. Both are Japanese automakers, so if your company supplies Honda’s plant and plans on supplying the Toyota-Mazda plant when built, Marshall County would be a good fit.
Residents of Marshall County enjoy a lower cost of living and have access to many recreational opportunities, including water activities on and around the Tennessee River and Lake Guntersville. The schools in Marshall County are consistently ranked above average in statewide tests.
Morgan County, Ala.
Located about 15 miles from the site of Toyota-Mazda is Decatur and Morgan County. Also on Interstate 65, Morgan County is supported by a diverse industry base, including automotive, aerospace, food processing, steel processing and chemicals.
Morgan County is also home to the Robotics Technology Park. Workforce training in robotics is more active in this part of North Alabama than any other part of the state. It is also home to the Mallard-Fox Creek Port on the Tennessee River. The port is served by Norfolk Southern and there is industrial land available at the port.
Walker County, Ala.
With the completion of Interstate 22 from Birmingham to Memphis, Walker County has seen a significant increase in project activity. Jasper, the county seat, is located about 75 miles from the Toyota-Mazda site. Walker County is also about 72 miles from the Mercedes-Benz plant in Tuscaloosa County, 80 miles from the Honda assembly plant in Talladega County and 105 miles from Toyota’s plant in Blue Springs, Miss.
Recently, Japanese parts supplier Yorozu opened a large facility in Walker County. Yorozu already supplies Toyota and Mazda, so it’s highly probable the new plant in Walker County will supply the new Toyota-Mazda plant when it opens in three years.
Hardin County, Ky.
Elizabethtown and Hardin County, Ky., are about 200 miles from the Toyota-Mazda site in North Alabama. Both are on Interstate 65. Hardin County has plenty of Toyota suppliers now because it is located just 90 miles from Toyota’s largest North American assembly plant in Georgetown, Ky. Hardin County is also 40 miles from Ford’s two assembly plants in Louisville and 75 miles from GM’s Corvette plant in Bowling Green.
Hardin County has a thriving manufacturing sector, with many industries manufacturing components for the automotive sector. Hardin County is centrally located to assembly plants in Kentucky, Tennessee, Alabama and the Midwest. The county is poised for significant additional growth in advanced manufacturing with the 1,551-acre Glendale Megasite. The site is certified by CSX Railroad and is located on Interstate 65 and a CSX mainline.
Jefferson County, Ky.
From Louisville and Jefferson County, parts suppliers can serve both the Toyota assembly plant in Georgetown, Ky., and the Toyota-Mazda plant in Huntsville, Ala. Manufacturing is thriving in Louisville as Forbes has called the metro a manufacturing “boomtown” two years in a row. Louisville is also an outstanding place to live with a vibrant central business district.
The Louisville region’s labor productivity is 50 percent higher than the national average and the metro’s manufacturing employment is 20 percent greater than the national average. There are 14 major automotive OEMs within 250 miles of Louisville, and when the Toyota-Mazda plant is built, that will make it 15.
Nelson County, Ky.
Bardstown is the county seat of Nelson County. Bardstown continues to be included in the list of the “Top 10 Best Small Towns in America.” Bardstown was also named the “Most Beautiful Small Town in America” by RandMcNally and USA Today.
Nelson County is about 250 miles from the Toyota-Mazda site in North Alabama, but only 65 miles from Toyota’s Kentucky plant. There are several Toyota parts suppliers located in Nelson County, including Toyota Boshoku. Population growth in Nelson County has been in double digits of late and the county continues to be one of the fastest growing areas of the Commonwealth.
Simpson County, Ky.
This small county of about 18,000 people is a straight shot down Interstate 65 to the Toyota-Mazda site in North Alabama, 140 miles away. Why pick Simpson County for one of the best sites for parts suppliers to Toyota-Mazda? Well, the folks running the Franklin-Simpson Industrial Authority really know the practice of economic development. There seems to always be at least one spec building available in the county and there are over 400 acres of available industrial land. The county features high speed internet service, a state-of-the-art technical college and CSX Railway access.
Warren County, Ky.
Here is another county in Kentucky that sees high volumes of deal activity. Located to the north of Simpson County, the interstate that fronts the Toyota-Mazda site (I-65) runs right through Warren County and Bowling Green, Ky. Home to a GM plant, Warren County is approximately 155 miles north of the Toyota-Mazda site and 155 miles southwest of the Toyota plant in Georgetown, Ky. . .so equidistant to both plants.
Warren County is home to Western Kentucky University, and the South Central Kentucky region has grown by 22 percent in the past nine years. Interestingly, there are no local sales tax or production equipment taxes in Warren County. The Nashville International Airport is only one hour from Bowling Green.
Alcorn County, Miss.
I just visited Corinth, Miss., and Alcorn County. Great place with a dual rail — true dual rail — site. The 145-acre site (with another 160 acres available) is controlled by the Corinth Alliance, the local economic development agency.
Alcorn County and Corinth, Miss., are located in Northeast Mississippi, just 50 miles north of Toyota’s Corolla assembly plant in Blue Springs, Miss., and 100 miles from the new Toyota-Mazda site. Alcorn County is within 250 miles of 10 assembly plants in the Southern Automotive Corridor. The public schools in Corinth are first-rate and the Northeast Mississippi Community College in neighboring Prentiss County, with a satellite campus in Corinth, provides valuable services to business and industry through its Division of Workforce Training and Economic Development.
Itawamba County, Miss.
Itawamba County, Miss., is the first county you hit when driving on Interstate 22 from Birmingham to Memphis. The county seat is Fulton, which is 110 miles from the Toyota-Mazda site in Huntsville, Ala., and only 35 miles to the Toyota Corolla plant in Blue Springs, Miss. In fact, if there is lots of interaction between the two Toyota facilities, you must drive through Itawamba County to get to either plant.
Itawamba County’s population is just shy of 25,000. It’s a small county, but its location is perfect for Toyota-Mazda suppliers. The Itawamba County School District is the No. 10 school district in the state of Mississippi. Furthermore, Itawamba County is also home to Itawamba Community College, which has been rated as the No. 6 community college in the nation.
Lee County, Miss.
Tupelo and Lee County, Miss., have a rich history in the practice of economic development. Long the home of the furniture industry, the county was immersed into the automotive industry when Toyota opened a plant in neighboring Union County in the fall of 2011. That Union County plant builds the Corolla model, which will also be assembled at the Toyota-Mazda plant in Huntsville.
The Community Development Foundation (CDF), one of the first economic development agencies formed in the United States in the late 1940s, has made major contributions to Lee County with the development of nine industrial parks. CDF has been characterized by many as an organization that is at the center of innovation, as well as the most significant force in rural American economic and community development.
Lowndes County, Miss.
Here is another famous place that is home to a well-known, highly successful economic development agency, the Golden Triangle Development Link. You may have seen its CEO Joe Max Higgins on 60 Minutes recently.
The Golden Triangle references a region in North Mississippi encompassing Columbus, Starkville and West Point. The GTR LINK boasts a record of nearly $6 billion in investments and nearly 6,000 jobs created in just over a decade. The organization has secured many industrial sites, including the Prairie Belt Powersite and the Infinity Megasite. Lowndes County is located 80 miles from the Toyota plant in Blue Springs, Miss., and 150 miles from the Toyota-Mazda plant site.
Monroe County, Miss.
Monroe County is located just north of Lowndes County, just 35 minutes from Toyota’s Mississippi plant in Blue Springs. It is located about 125 miles from the Toyota-Mazda site in North Alabama.
Monroe County is also located on the Tennessee Tombigbee Waterway, which connects the Port of Mobile to the Tennessee River. The BNSF mainline runs through the county halfway between Birmingham and Memphis. Monroe County is halfway between Tupelo (Lee County) and Columbus, Miss., (Lowndes County).
Prentiss County, Miss.
Prentiss County is located in extreme Northeast Mississippi, 115 miles west of the Toyota-Mazda site and 30 miles from Toyota’s plant in Blue Springs, Miss. This county is also on the Tennessee Tombigbee Waterway and it is served by KCS rail. Parker Hannifin, an automotive supplier, operates a large plant in Prentiss County.
The biggest draw to Prentiss County is that it is home to Northeast Mississippi Community College in Booneville. Industrial sites and buildings are readily available at several locations in the county. County and municipal governments are very cooperative in accommodating the needs of new and expanding businesses.
Tishomingo County, Miss.
Tishomingo County has captured some outstanding projects over the years, particularly in the steel industry. Located just across the border from Lauderdale and Colbert counties in Alabama, Tishomingo County is 60 miles from the Toyota plant in Blue Springs, Miss., and just 84 miles from the Toyota-Mazda site.
There might not be a rural county in the South that has more and larger industrial parks than you will find in Tishomingo County. The Tri-State Commerce Park features 3,500 acres with a rail yard, barge dock and 24/7 security. It also has a crane with capacity of 400 tons, dual feed electric power and an onsite fire department. There are also several more industrial parks in the county.
Union County, Miss.
Union County is home to Toyota’s Mississippi assembly plant. The county is located on Interstate 22, one hour from Memphis International Airport and 150 miles from the Toyota-Mazda site in Huntsville, Ala.
Northeast Mississippi Community College has a branch in New Albany and the two school systems are rated Level 5 or Level 4, the state’s highest ratings. Historically, Union County has been a manufacturing location as it is considered the birthplace of Northeast Mississippi’s furniture industry.
Giles County, Tenn.
Giles County has about 29,000 residents, and one of its largest employers is Magneti Marelli, a manufacturer of automotive lighting. In fact, several large automotive suppliers operate in Giles County.
Giles County is just across the state line from Limestone County, Ala., only 15 miles at its southern border from the Toyota-Mazda site. It is located 58 miles south of Nashville and 40 miles north of Huntsville, two of the South’s most progressive cities.
Lawrence County, Tenn.
Lawrence County and Lawrenceburg are located just across Tennessee’s border with Alabama, approximately 40 miles from the Toyota-Mazda site in Huntsville, Ala. Lawrence County has been fertile ground for companies like Dura Automotive, Modine, Graphic Packaging, Hughes Parker Industries, Bertolini, InMotion Robotics and 3D Systems.
The Lawrence County School System works closely with local industry to make sure its programs help prepare students for success in today’s job market. The county is also home to Columbia State Community College’s Lawrence Campus.
Lincoln County, Tenn.
Fayetteville and Lincoln County are located in southernmost Tennessee, 31 miles from Huntsville and 82 miles from Nashville. Fayetteville, the county seat, is located 45 miles from the Toyota-Mazda site.
There is a wealth of workforce training facilities in Lincoln County, including the Don Sundquist Center for Advanced Technologies, Motlow State Community College and the Tennessee College of Applied Technologies. Industrial sites in Lincoln County are numerous at the Bullington and Fayetteville-Lincoln County Industrial Parks.
Maury County, Tenn.
Maury County is home to a large General Motors assembly plant and is a hotbed for automotive suppliers. The county is in the heart of automotive manufacturing in the U.S. In fact, 14 OEMs are within 250 miles of Maury County. The county also has a wide selection of available sites and buildings, many with direct highway access or Interstate 65 access.
The southernmost border of Maury County is only about 50 miles from the Toyota-Mazda site. Maury County is part of the Nashville MSA.
Gross product output is very interesting to watch as the South’s is pulling away from all other regions. In 2016 (latest data available), the 15-state American South contributed a record $6.62 trillion (that’s with a “T”) to the United States’ economy, which saw a GDP totaling $18.57 trillion. The South’s figure represents well over a third of the nation’s output. The West contributed $4.61 trillion, which was more than any other region other than the South. Take California out of the West, and its GDP totals a mere $2 trillion.
California, by the way, is killing it right now. As always, when the national economy is humming, so does California’s. Who cares if it costs more than double any other state in the South to operate a business there, when you are making money hand over fist? California’s economy collapses during recessions. It always does simply because it is the most costly state to live, work and own a business in the U.S. When times get tough, California businesses ask, “Now, why are we spending so much money to live and operate here, when we can go to Texas for half the cost?”
Back to gross product. The complete blowout of the South’s gross product in 2016 means the region is no longer the fourth largest economy in the world. The South has been the fourth or fifth largest economy in the world based on GDP for more than 25 years. In 2016, the South blew past Japan and Germany with a gross product that is more than half the size of China’s.
Shown below are the top 10 economies in the world, with regions of the U.S. factored in when it comes to GDP in calendar year 2016. The values are based on U.S. dollars.
The last time we ran this story comparing the economies of the four U.S. regions, Boeing was not set up in South Carolina or Airbus in Alabama. In terms of adding to gross product and exports, aerospace is a huge player in the South. It is the largest export for most Southern states.
Also, the last time we ran this story we were in recession. The South’s automotive industry was in the tank, as was the region’s financial services industry. Today, those two huge Southern sectors are at the top of their game. So, it isn’t any wonder that total output in the South is at all-time highs at $6.6 trillion. Never before has any U.S. region reached the $6 trillion output threshold. The South is pushing for $7 trillion today.
There are several ways the South achieved its rise to third place in 2016. It has diversified its economic base like no time ever. Its in-migration from other U.S. regions is back to levels not seen since the 1980s, 1990s and before the Great Recession. Well-educated immigrants from other countries now want to live in the South as opposed to other regions because the South remains the least expensive place in the U.S. to live and operate a business.
Furthermore, the South is unlike any of the other three regions in this very important demographic: No U.S. region has the number of mid-major markets the South has — Austin, San Antonio, Raleigh, Charlotte, Nashville, Orlando, Memphis, Knoxville, Charleston, New Orleans, Richmond, Birmingham, Jacksonville, Louisville, Greenville and so many others. The region is home to mega-markets such as Atlanta, Dallas-Fort Worth, Houston, South Florida and D.C. But it is the vast number of mid-majors that solidify the South’s economy and help spread the wealth. Want proof? Name a major market in Illinois other than Chicago? Name one in New York? In contrast, Florida and Texas have 10 mid-majors each.
*Gross Domestic Product with U.S. Regions Included
In less than a lifetime, this critical site selection and labor shed factor has changed dramatically among the four U.S. regions. In fact, population variations in the West, South, Midwest and Northeast are most likely the most formidable demographic in American history.
When I was born in the mid-1950s, there were only about 30 million people who lived in the 13 states that make up the West region. Today, California alone is home to almost 40 million people. But you have to go all the way to the 13th and 14th most populated states (Washington and Arizona) to find other states that really contribute to the West region’s population, which today is 78.1 million. The West has grown more than two-and-a-half times in 60 years.
As for the Midwest, Northeast and the South, those three regions in 1957 all had about the same population — between 54 and 56 million. Today, the Northeast is home to 63.6 million people and the Midwest has grown from 55 million people in 1957 to 62 million today. But those figures pale in comparison to growth in the West and South.
As for the South, 60 years ago it was home to 54 million people. Today, the American South has an estimated 2018 population of 124 million people, or nearly 40 percent of the entire population of the country. So like the West, it has also grown about two-and-a-half times in less than a lifetime. That growth is at the expense of the Midwest and the Northeast since those two regions have barely grown at all, adding just 15 million residents in 60 years combined. That’s about 250,000 more residents per year in the Midwest and Northeast over the past 60 years. The Northeast and Midwest are made up of 22 states. Texas alone adds more jobs per year than the Northeast and Midwest add people.
In comparison, the American South has added 71 million people in 60 years, or almost 12 million new residents on average every 10 years. That’s about five times the cumulative growth of both the Midwest and Northeast totaled together. That’s an impressive 1.2 million people per year being added to the South’s population every year for 60 years on average.
The West, the nation’s second largest region, has added 48 million people in 60 years, or an average of 800,000 per year. In an age of extremely tight labor, it is clear that only two regions of the country are growing; the West and the South. In fact, 60 years ago, the South, Northeast and Midwest all had about the same population. Today, the South’s population is roughly that of the Northeast and Midwest combined.
The chart shows population for each region, estimated growth in 2018, and the percentage each region holds of the total U.S. population. Note the estimated 2018 population growth for each region. Not a single region is growing by 1 percent or more. In fact, the U.S. as a whole hasn’t grown its population above 1 percent in any year since 2002. That statistic is a daunting economic development challenge that all of us will face in coming years. In fact, we are already facing the effects of slow population growth as it relates to economic development.
Sluggish population growth is a huge issue for developed countries worldwide, all of which are struggling with low fertility rates. Last year saw the lowest number of women giving birth in the nation’s history. According to data released by the Centers for Disease Control and Prevention, the fertility rate fell to 62 births per 1,000 women ages 15 to 44 in 2017.
The culprit is a significant drop in birth rates for those in their 20s in this country. Data also shows that while birth rates are significantly down for people in their 20s, they are slightly up for those in their 30s, meaning Millennials are most likely postponing having children. Yet, birth rates for those in their 30s are not making up for birth rate losses for those in their 20s.
The birth rate is incredibly important. It measures the demographic health of the country. If the birth rate drops too low, people aging out of the workforce cannot be replaced. It’s even more important considering how many baby boomers will leave the workforce over the next decade. Baby Boomers represent the largest generation in the nation’s history and millions will retire every year for the next 20 years.
The South’s economy, the third largest economy in the world, has been humming along nicely since 2010 when 594 projects were announced meeting or exceeding SB&D 100 thresholds. It was an awesome comeback year after the recession of 2009 cratered the “100” with just 367 projects, the lowest on record. In fact, the last four years are the best years in SB&D 100 history, averaging 693 projects announced in the South every year with at least 200 jobs and/or $30 million in investment.
Yes, we are in the second longest economic expansion in this nation’s history, and the longest consecutive monthly job gain period ever. Yet, as of the spring 2018 quarter, those economic streaks are now in jeopardy. Without Congressional approval, our president slapped tariffs on allies in Europe, Mexico and Canada. According to reports, he did it for “national security” reasons. What does that mean?
So why is this administration dismantling the global economic order that we — Republicans and Democrats — crafted over the last 75 years? Your guess is as good as mine because the president is really messing with a good thing. We are at full employment and there is nothing wrong with a trade deficit. We might not feel the initial effects of tariffs in the current economic expansion, but we will surely feel them when this expansion slows to a stop, aided by what are essentially taxes on goods made by our allies and others.
What we need are more free trade deals not less. For instance, over the last decade, the Southern Automotive Corridor has lost out on about 10 auto assembly plants to Mexico. The main reason being is Mexico has free trade agreements (FTAs) with 46 countries. We had FTAs with 20, but that is now down to about 12, maybe less. And those who we slap tariffs on will retaliate and then less is sold and what is sold costs more.
The last time we set protectionist policies was the passing of the Tariff Act of 1930, better known as Smoot-Hawley. Even then, 1,028 economists signed a petition asking President Herbert Hoover not to sign the bill. He signed it anyway. What happened? The value of global trade dropped from $4.9 billion in 1930 to $1.8 billion in 1933 and the U.S. fell into an extended depression.
But, the current protectionist policies could cause more harm than in 1930. The reason is our economy is so much more global than it was in 1930. Here is an example: The 787 Dreamliner is built in North Charleston, S.C. Its forward fuselage is made in Kansas and in Japan. Its center fuselage and stabilizers are made in Italy. Its wings are made in Japan. Its wingtips are made in South Korea. Its rear fuselage is made at its main plants in Washington and at the North Charleston site. Its engines are made in the U.K. and in the U.S. Its fairings are made in Canada. Its landing gears are made in France, as are its passenger doors. And its cargo doors are made in Sweden. If there is a better example of globalization than how the 787 is made, show it to me.
Now that the tariff threat is a reality, no country will be a winner and neither will you. Buckle up because your trip on the 787 Dreamliner assembled in North Charleston, S.C. is going to cost more as a result of these tariffs.
After setting the tariffs on June 1, President Trump said, “Time to get smart!” There is nothing smart about protectionist policies, Mr. President. In fact, it is dangerous foreign policy. Over the years, tariffs have led to recessions, depressions, even wars. Hopefully, this is one of Trump’s on, off, on hold decisions on trade. If not, this is the worst economic decision a president has made since Herbert Hoover made his.