Regional Review: FDI As Economic Engine for Growth in the South Atlantic States
The South Atlantic region is home to a notable list of international firms from countries ranging from Japan and South Korea to Finland and Israel. Announcements of new foreign direct investment continue to pour in from a myriad of industries and a wide spectrum of projects big and small.
Location USA / April 2013
For example, Norway-based Höegh Autoliners plans to relocate its U.S. headquarters to Jacksonville, Florida. One of the key factors in the decision was the firm’s desire to move its headquarters closer to the Port of Jacksonville, which is one of the world’s largest automotive ports. Florida’s prime location as a commercial gateway to Latin American and Caribbean markets has helped it attract companies looking to trade with those countries. More than $162 billion worth of goods flowed through Florida's airports and seaports in 2012.
A Growing Base of Foreign Companies
Georgia also has played a key role in setting the stage for the growing base of foreign companies expanding across the South Atlantic. The state has been nurturing international business expansion for four decades. The Georgia Department of Economic Development works closely with global companies looking to establish or expand business operations in the United States. Georgia's Foreign Direct Investment team has 10 international offices located in Europe, Asia, the Middle East, and the Americas.
"Foreign direct investment is a critical part of our work. Many of our project managers are multilingual and have extensive experience living and working abroad, which gives them a sense of the cultural nuances so important in doing business with other countries," says Gretchen Corbin, Deputy Commissioner of Global Commerce for the Georgia Department of Economic Development.
Those efforts are paying off. Foreign direct investment (FDI) throughout the state is steadily on the rise. In 2012, a total of 117 FDI projects created 6,566 jobs with a total capital investment of $2.82 billion. FDI projects accounted for 30 percent of Georgia’s located projects last year.
In fact, Georgia currently is home to more than 2,000 international companies that have set up operations or offices in the state. Recent announcements include South Korea-based global auto parts supplier Mando Corp.’s decision to build a new casting facility in Meriwether County, Georgia. The project includes an $80 million investment in a new 317,000-square-foot building that is expected to create 660 jobs by 2020.
Neighboring states are following Georgia's lead in the international arena by strengthening their marketing presence overseas. For example, West Virginia Governor Earl Ray Tomblin led a business mission to Japan last summer to attract new business investments to West Virginia and maintain ties with firms that already have a presence in the state, including Nisshin Steel, Hino Motors, and Nippon Thermostat.
Strong Industrial Corridor
Part of that growing international base stems from the burgeoning automotive corridor that runs from Alabama to South Carolina and up into Tennessee. That region’s strength as an automotive hub is continuing to attract new investment from firms such as Munich-based In-tech Automotive Engineering. In February, the firm announced that it would establish its North American facility at the Clemson University International Center for Automotive Research in Greenville, South Carolina. The company serves global automakers and system suppliers and manufacturers of electronic components for the automotive industry.
And it's not just auto. The South Atlantic has a broad appeal among domestic and internationally based companies across a wide variety of industries. The region's transportation infrastructure and accessibility by road, rail, water, and air continues to draw manufacturers in the aerospace, heavy equipment, and other sectors in addition to auto. "The region has good access, and being close to your supply and demand — regardless of all of the other attributes in site selection — really trumps everything else," says Shlaes. "So, being close to the market and having a great supply of labor continues to drive expansion activity."
Virginia, for example, has developed critical IT infrastructure that has helped to attract global companies such as Microsoft Corp. The global company built a data center campus in Mecklenburg County in 2010. In February, the company announced its plans to invest an additional $348 million to expand the campus with two additional buildings.
And North Carolina is pursuing growth across a variety of industries ranging from information technology and biotech to transportation and manufacturing. For example, Deere-Hitachi Construction Machinery Corp. announced last fall that it will expand its operations in Kernersville, N.C. The firm, which is one of the largest manufacturers and distributors of excavators in the Americas, will invest more than $97 million in the project, which is expected to create at least 340 jobs by the end of 2016. Deere-Hitachi is a joint venture between Tokyo-based Hitachi Construction Machinery Corp. and John Deere based in Moline, Ill.
A Combination of Assets
"The very first thing that all of these companies is looking for is quality and availability of labor," says Shlaes. The South Atlantic States' strong and diverse labor force runs the gamut from manufacturing and corporate headquarters to back office and IT workers. Virginia, in particular, is recognized as one of the most educated states in the country. More than 500,000 students are enrolled in over 90 in-state institutions of higher education. Virginia's education system also hosts 23 community colleges with transferable programs across the state. That strong education base has helped to foster growth in corporate headquarters and research and technology.
Additionally, the approval of right-to-work legislation in the South Atlantic States has been a draw for many manufacturers. South Carolina has seen its manufacturing sector barrel ahead at full-steam. "While we used to be known for textiles, we've become a major player in the automotive and aerospace clubs in the past few years," says South Carolina Secretary of Commerce Bobby Hitt.
In addition to attracting new business expansion, the South Atlantic region also has come out a winner in the wave of consolidations spawned by the recession. "We have precision manufacturing clients that have consolidated in the region. So, it is not so much identifying new locations as it is redirecting growth into the region, fueled by what they know — strong labor force, strong training programs, and the ability to serve their clients from a logistical standpoint," concludes Shlaes.