The South Atlantic States have carefully cultivated a business-friendly environment that goes well beyond simple Southern hospitality. A lot of time, effort, and money have gone into creating that pro-business atmosphere that includes a myriad of assets including the tax structure, regulatory environment, and work force development and incentive programs.
That investment is paying big dividends in attracting companies across industries ranging from agribusiness and advanced manufacturing to 3D imaging and biotech.
“There is a lot of activity in that area of the country, because number one, there is a good business climate,” says Larry Gigerich, managing director at Ginovus, an Indianapolis-based site selection firm.
A Competitive Business Climate
In particular, Georgia, South Carolina, and North Carolina were all ranked in the top five by the location consultants in Area Development’s most recent “Top States for Doing Business
” survey. The region also leverages key strengths such as a strong transportation infrastructure — with exceptional interstate, rail, and port access — and a growing population base. The I-95 prime transportation corridor runs all the way from the Northeast to Florida. And ports in Virginia, the Carolinas, Florida, and Georgia have helped to attract international firms to the region.
According to Kathy Mussio, a managing partner at Atlas Insight, a national site selection firm based in Bucks County, Pa., there are a number of reasons driving growth in the South Atlantic region. One of the contributing factors is a shift in activity from union states to non-union or right-to-work states where companies can find lower-cost, qualified labor. “So, when you look at the growth trend over the last 10 years, the growth has really been, for the most part, in those non-union states where businesses are looking to expand,” Mussio says.
Additionally, the South Atlantic States are often tweaking incentives to adapt to industry changes and competitive pressures from neighboring states. For example, Georgia passed new legislation last year that added another $111.8 million to the state’s discretionary “deal closing” funds, including the OneGeorgia Edge Fund and Georgia’s REBA fund. The state also eliminated local and state sales and use tax on energy used in manufacturing.
Population and Job Growth
The region’s job growth goes hand-in-hand with population growth. Four of the six states in the South Atlantic ranked among the top 10 states in the country for population growth between 2001 and 2011. North Carolina ranked sixth with an increase of 18 percent, followed by Georgia at 17.1 percent, Florida at 16.2 percent, and South Carolina at 15.2 percent, according to the U.S. Census Bureau. “Those states do have good in-migration, because that’s where a lot of the jobs are growing,” says Mussio.
The South Atlantic states also have excelled in training those workers. On the human capital side, the Carolinas and Georgia have been leaders in the country for their work force development initiatives. Georgia, for example, has its Quick Start program, which provides customized work force training free to qualifying businesses. Although that program has been around for more than 45 years, what the state has done well is continue to make enhancements to that program, notes Gigerich. For instance, Quick Start has created certifications for specific industries, such as a certified warehouse worker to assist in hiring for logistics/distribution firms.
“They do have competitive economic development incentives, which at the end of the process has become more important. But, clearly, the focus on work force development and great infrastructure has served that area well,” adds Gigerich.
Manufacturing Remains Key
Traditionally, the South Atlantic States thrived on industries such as textiles, energy, paper, and furniture. Many of these states struggled as those manufacturing businesses declined or moved offshore. These days, the region is once again gaining momentum in not only capturing new manufacturing businesses, but also “going up the pyramid” to attract new industries such as life sciences, aerospace, and more advanced manufacturing, says Andy Mace, managing director of Global Business Consulting, Supply Chain Solutions at Cushman & Wakefield in York, Pa.
Advanced manufacturing continues to be a staple industry for the South Atlantic, and the region is benefiting from the rebound in the automotive sector. Automakers are expected to build more than 16 million light vehicles in North America this year, which is the highest output since 2002, according to a an industry forecast from IHS Automotive
. “What you have seen is auto OEMs, and even the auto manufacturers themselves, doing more of the expansions in the Southeast because they can get an ample, willing, and qualified work force — and have the added benefit of expanding in a right-to-work state,” says Mussio.
Most notably, Georgia is home to a major manufacturing plant for Kia, while BMW and Daimler have operations in South Carolina. South Korea-based Hyundai Dymos announced in September that it would open a new manufacturing plant in West Point, Ga.
, to supply Kia Motors Manufacturing Georgia. The new facility involves a $35 million investment and will create 350 manufacturing jobs.
South Carolina has continued to expand and advance its presence in the automotive sector ever since BMW first started operating in the state in the early-1990s. The state has invested time and energy in its education resources to improve training, as well as create centers of excellence specific to automotive. Those efforts are creating strong tailwinds for the state in attracting new business in other sectors, notes Mace.
South Carolina recently made the short list to land a new manufacturing facility for Boeing’s new 777X aircraft
. Boeing, which already has a significant manufacturing presence in Charleston, is one of more than 100 aviation and aerospace-related companies that have operations in South Carolina. Boeing is expected to announce its final decision on the location of its new plant in early 2014.
Diversity Continues to Grow
Although the South Atlantic is noted for key clusters such as automotive, aerospace, distribution, IT, and manufacturing, the list of core industries is long and continues to grow. North Carolina is known for its Research Triangle and has created a very strong life sciences cluster. The state consistently ranks among the top five states for bioscience development. In fact, North Carolina’s biotech industry now spans some 500 bioscience companies that employ more than 58,000 people.
Georgia, on its own, has a large economy and a pro-active economic development arm that has helped it land a number of major national and international projects. One of the most notable examples is the announcement last year that Baxter International Inc. would spend up to $1 billion to open a new production center near Atlanta that will employ more than 1,500 workers
. More recently, the Israeli firm Caesarstone selected Richmond Hill, Ga., for its new U.S.-based manufacturing plant
. The company, which makes high-quality engineered quartz surfaces, is expected to invest between $70 million and $100 million in a facility that will create 180 jobs.
The South Atlantic has also succeeded in winning major headquarters locations in the past year. “Companies can still get the work force that they need, but they can do it at a lower cost than if they were in say Boston or New York or Chicago, with an overall operating cost savings,” says Mussio.
The Hertz Corp. announced earlier this spring that it plans to relocate its headquarters from Park Ridge, N.J. to Estero, Fla.
The company established a temporary headquarters in Naples, Fla., while its new facility is under construction. The move is expected to bring 700 new jobs, with approximately 300 existing employees relocating to Florida and the creation of 400 new jobs.
The Carolinas, Georgia, and Florida have shown the most momentum in the region. However, Virginia and West Virginia have their own strengths. Although known more for its energy industry, West Virginia has succeeded in attracting a variety of industries, including automotive suppliers, thanks to their ability to serve automakers both in the Midwest and Southeast. And despite sequestration and the focus on trimming government spending, federal contractors continue to choose to locate in Virginia to be close to Washington, D.C.