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Are Southern States Better Positioned for Technology Projects?

A skilled, available work force, a favorable cost environment, the necessary infrastructure, and generous financial support have created a near-perfect environment for technology companies to thrive in the South.

Southern Tech Sites 2008
Recession, economic slow-down, a stagnant economy - these are all terms that seem to permeate most of what we read, hear, or see in various media these days. While it is true that many indicators point toward economic distress in this country, it is also obvious that strategic business decision-makers continue to plan for life beyond 2008. In fact, through these challenging economic conditions, these decision-makers have been establishing and continue to locate and open critical business operations, creating significant jobs and investing billions of dollars in the U.S. economy.

 Many of those operations fall within what we define as technology or knowledge-based industries, including but not limited to information technology, biotech and life sciences, marine sciences, electronics, advanced manufacturing, energy, and material sciences. Activity statistics published by every state and regional economic development organization indicate that there continues to be positive economic activity, particularly in these technology sectors. However, those same statistics indicate that there may be some regions that are better positioned for success, both now and in the future. This article will focus specifically on the Southern region of the United States and examine a number of the factors that make it a competitive and attractive region for economic growth and expansion by technology firms.

One Size Does Not Fit All
First, it is important to note that a strategic business location decision is often complex and involves a number of critical "success" factors, including availability of an educated work force, competitive operating costs, availability of financial support, and a business-friendly environment. Different businesses have different needs, and there is not a "one size fits all" solution for technology-driven industries, especially defined as broadly as we have herein. Every project is unique, and every state has strengths and challenges that may or may not align with company business needs or "success" factors. Understanding those strengths is a key step in determining if the project might be a fit in a particular state, region, or city.

Secondly, evaluation criteria can vary significantly depending upon where the project or opportunity is in the product life cycle. The environment and factors for a "startup" or early-life-cycle project will likely be much different than for a project where commercialization or production on a large scale is required. Assessing the critical factors for the operation to be successful is another important component of the location decision process.

So why does economic activity for technology companies remain strong in the southern region of the United States?
A few years ago, Hollywood produced a movie starring George Clooney titled "The Perfect Storm." The movie recounted the tragic incidence of the alignment of multiple conditions creating a unique scenario described as "the perfect storm." Had one or more of those conditions been different or nonexistent, the perfect storm scenario would likely have failed to develop. In essence, this is what is occurring in the Southern states regarding economic development - only in a positive way.

Let's examine the primary conditions that have aligned to create this favorable environment for economic growth in the technology sectors:

Work Force Availability
Technology-sector industries are on the rise and will continue to be a major driver of the U.S. economy, creating a significant need for a more educated, knowledge-based work force. As demand increases, the work force pool and pipeline must be available to meet this need.

A review of the demographics in the Southern states suggests positive trends to support this growing demand. In the past decade, population migration patterns across the United States indicate significant shifts from the eastern Great Lakes, Northeast, and Great Plains regions to the Southeast and Southwest regions of the country, particularly in first-tier and second-tier cities. Projected population growth trends for these regions are consistent with these patterns, according to the U.S. Census Bureau. With annual U.S. population growth hovering at or slightly below 1 percent, a number of the first- and second-tier cities in the Southern states will be major winners at an annual population growth of 2 percent or greater. These cities include Atlanta, Austin, Charlotte, Nashville, Raleigh/Durham, and Orlando. Immigration patterns are similar, as Southern States are the beneficiaries of higher percentages of immigration growth (versus other regions of the country).

Additionally, the presence of large, leading-edge research universities across the Southern states continues to create environments for innovative and entrepreneurial activity, as well as pipelines for a knowledge work force including engineers, scientists, and technology professionals. Many Southern community college systems are highly regarded and nationally recognized. These systems are closely linked to economic development as resources for work force training and re-training as skill requirements change.

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