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Regional Review: South Atlantic Draws Firms From Around the Globe

Foreign direct investment is becoming a bigger economic engine for growth throughout the South Atlantic States.

Beth Mattson-Teig (August 2012)
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.

Case in point is MindTree Limited. The global IT and product engineering company recently selected Gainesville, Florida, as the site for its next U.S. expansion project. Over the next five years, the company plans to create 400 new jobs and make a $2.9 million capital investment in the heart of the city. According to MindTree President Scott Staples, Gainesville and the state of Florida offered the "perfect combination" of business climate and resources and close proximity to one of the region's leading engineering schools. MindTree is co-headquartered in Bangalore, India, and Warren, N.J. "There is a lot of follow-the-leader in site selection, and the South Atlantic States have done a very good job of recruiting these companies," says Noah Shlaes, senior managing director of Global Corporate Services at Newmark Grubb Knight Frank in Chicago. "Others that are looking to have a U.S. presence can simply look to the success of their peers to make them feel comfortable with a particular location. So a lot of the activity is due to the tracks having been laid by their peers."

Georgia 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 more than three 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.

Those efforts are paying off. Foreign direct investment (FDI) throughout the state is steadily on the rise. In 2011, a total of 88 FDI projects created 4,593 jobs with a total capital investment of $1.64 billion - more than double the $747 million that was generated from 72 new projects in 2010. "Last year, we saw 25 percent of our located projects coming from outside of the United States," says James Blair, director of Foreign Direct Investment for the Georgia Department of Economic Development.

In fact, Georgia currently is home to more than 2,000 international companies that have set up operations or offices in the state, he adds. Recent announcements include South Korea-based Mando Corporation's decision to build a $200 million facility in Meriwether County to produce electric power-steering gears and anti-lock brakes. The project is expected to create 426 new jobs.

Playing to Its Strengths
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 earlier this spring 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.

Part of that growing international base stems from the burgeoning automotive corridor that runs from Alabama to South Carolina and up into Tennessee. Porsche Cars North America, for example, recently announced plans for a $100 million headquarters complex in Atlanta, which will create approximately 100 jobs over the next three years.

But 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 ease of accessibility by road, rail, water, and air continues to draw manufacturers in the auto, aerospace, heavy equipment, and other sectors. In fact, Georgia is home to one of the world's busiest and most efficient passenger airports, two deepwater ports, and an extensive surface transportation network. "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 landed major fulfillment centers for both Amazon.com and BackCountry.com. Amazon.com plans to open two fulfillment centers in Virginia. The company will invest $85 million and create more than 1,000 jobs in Chesterfield County, and invest another $50 million in a second facility located in Dinwiddie County that will produce more than 350 jobs. Utah-based BackCountry.com, which is the largest online specialty retailer of premium outdoor gear, also will invest more than $20 million to establish a fulfillment center in Montgomery County that will create more than 200 new jobs.

Quality Labor Force
"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.

North Carolina is gaining a reputation for its growing information and communications technology (ICT) sector, which has helped the state foster growth among firms such as Red Hat. The company, which is a leading provider of Linux and open-source technology, will invest $109 million in a new headquarters building in Raleigh - adding more than 500 jobs over the next five years.

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.

South Carolina has announced several major economic development projects in the past year. Three of the larger projects have resulted in the state becoming the nation's top tire producer. Bridgestone Americas Tire Operations committed to invest more than $1.2 billion in expanding its operations and creating 850 new jobs in Aiken County; Continental Tire the Americas, LLC, is expected to open a new plant in Sumter County with a $500 million investment creating 1,620 jobs; and Michelin North America, Inc., plans an expansion of its South Carolina operations that will create 500 new jobs with a $750 million investment.

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," adds Shlaes.
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