The South’s economy has never been better

By Michael Randle, Editor

In 2016, the 15-state American South contributed a record $6.12 trillion (that’s with a “T”) to the United States’ economy, which saw a GDP totaling $18.57 trillion. The West contributed $4.61 trillion, which was more than any other region. Take California out of the West, and its GDP totals a mere $2 trillion.

In fact, the U.S. economy remains the largest in the world by a wide margin. China, the second largest economy on the planet, generated a GDP of $11.2 trillion in 2016 in U.S. dollars, according to the World Bank, and that means something. Last year, 64 percent of all transactions world-wide were traded in dollars. Still, the dollar reigns supreme of all known central bank foreign exchange reserves.

No other country’s currency — even multi-country currencies — comes close in transactions (the Euro is second at 19.7 percent.) Which means that although we may not be the best savers — as a nation and as citizens — no international body in its right mind would challenge U.S. debt. Not now, anyway.

The new “gross regional product” numbers for 2016 mean that the South’s economy is more than half the size of China’s. Pretty dang impressive.

There are several ways the South has accomplished this incredible feat seen 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 world’s largest economy to live and operate a business.

Furthermore, the South is unlike any of the other three regions in demography. No U.S. region has the number of mid-major markets the South has — Austin, San Antonio, Raleigh, Charlotte, Nashville, Orlando, New Orleans, Richmond, Birmingham, Louisville, Greenville and so many others. Sure, we are 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? Florida and Texas have 10 mid-majors each.

So, here is a new trophy earned by the American South. New data from the World Bank shows that the region’s 2016 GRP has forced us to make a change to our masthead. The South is no longer the fourth largest economy in the world. GDP and GRP data shows that the American South is now the third largest economy in the world with $6.12 trillion in GDP churned in 2016. For almost two decades, our masthead read, “Economic Development in the World’s Fourth Largest Economy.” Not anymore. The South is No. 3 in the world!

Here are the top 10 economies in the world, with regions of the U.S. factored in when it comes to GDP in 2016. The values are based on U.S. dollars:

Source: World Bank

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I’ll believe North Carolina will land the Toyota-Mazda Big Kahuna when they write the check

By Michael Randle, EDITOR

Some are saying that North Carolina is the front-runner for Toyota and Mazda’s proposed $1.6 billion, 4,000-employee plant that the Japanese automakers are shopping around the U.S. The advantages are numerous for the Tar Heel State, sources say. They cite four excellent megasites in the state — two in Chatham County near the Research Triangle, one in Randolph County near Greensboro and another in Edgecombe County near Rocky Mount. North Carolina also has one of the largest workforces in the South in an age of very tight labor.

Also weighing in North Carolina’s favor, some sources say, is the fact that the state is not currently home to what we call a “Big Kahuna,” or a major  automotive assembly plant. Plain and simple, automotive plants are the Big Kahuna in economic development. No projects have the economic effect that an automotive plant has on a state, multi-county region or a city. Simply put, they are the largest drivers of wages in the South. In 22 of the last 23 years, the automotive industry has led all sectors in the region — services or manufacturing — in large projects of 200 jobs or more.

Arkansas, Florida, Louisiana, North Carolina, Oklahoma and Virginia are the only states left in the South that are not home to at least one major automotive assembly plant. Louisiana and Oklahoma were home to GM plants, but those closed in the last 12 years.

Of those states void of a major automotive assembly plant, North Carolina and Virginia would be ranked No. 1 and No. 2 in the prospect of landing one in the Southern Automotive Corridor. After all, North Carolina was a finalist for the Toyota plant that ended up in Blue Springs, Miss., in 2007. The state was also a finalist for the Mercedes-Benz plant that announced in Alabama in 1993. In both cases, North Carolina was outbid badly by Mississippi and Alabama when it came to the incentive packages offered.

Just like those two projects, North Carolina will have to pony up for the Toyota and Mazda joint venture, unlike it has ever done for a large job generating deal. The largest incentive package I can recall that North Carolina has doled out over the last 25 years was to Dell when it opened a computer factory in Winston-Salem in 2005. That package totaled over $200 million. However, Dell didn’t even get a whiff of a large portion of that $200-plus million. The plant closed four years after opening and most of the incentives paid to Dell were returned to state and local agencies via claw back provisions.

North Carolina has written into its state budgets this year and next up to $50 million in incentives toward a “transformative” project. According to the provision, that amount could be offered by the state for a project of $4 billion in capital investment and a 5,000-employee commitment. Let me tell you, it’s going to take a lot more than $50 million to land this latest Big Kahuna. In fact, it might take $500 million to land the project, which will be the most efficient automotive factory in the world using artificial intelligence and connectivity to build automobiles. Toyota will most likely make electric Corolla models and Mazda will make electric SUVs at the proposed plant.

Other than the aforementioned sites in North Carolina, we’ve heard Toyota officials have already looked at the Glendale Megasite in Hardin County, Ky; the Huntsville Megasite in Limestone County, Ala.; and the Memphis Megasite in Haywood County, Tenn. It should be noted that in addition to Toyota’s plant in Mississippi, the automaker has an engine plant in Huntsville, Ala., and its largest U.S. plant in Georgetown, Ky. Again, in an age of very tight labor, let’s not forget there are thousands of out-of-work coal miners in Eastern Kentucky.

There have been nine new foreign-owned automotive plants built in the Southern Automotive Corridor since Mercedes announced it was building its Alabama plant in 1993. Right up to the day before that transformational Alabama project, The Wall Street Journal had picked a site in Mebane, N.C., as the site for the German automaker.

After decades of being the bridesmaid in auto assembly announcements, this Toyota-Mazda site search could actually end up in North Carolina. But I will believe it when I see North Carolina write the check for this latest Big Kahuna.

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