2018 SB&D 100: How did they finish?

The South continues to beat the odds with four years of unprecedented economic development success. See which states and cities win, place and show. . .

By Michael Randle

Job fairs are happening everywhere as recent research shows that 77 percent of CEOs are concerned that their companies’ growth will be adversely impacted by the ongoing shortage of key skills such as leadership, adaptability and problem solving. In addition, U.S. employers are reporting difficulty hiring skilled trades people, technicians, engineers and medical talent, among others.

The South continued its decades-long run as the economic engine of the world’s largest economy. In 2017, almost 1 million of the 2.2 million jobs created in the U.S. were captured by states in the South. The West came in second place with a net plus of 669,000 jobs, followed by the Northeast (320,000) and Midwest (281,000) last year.

At 92 months (as of May), the U.S. is in the longest stretch of consecutive monthly job gains in history. Yet, jobs are not the issue anymore; people are. Workers are hard to find, which is slowing the economy down a little. It’s not much yet, but the consecutive monthly streak of job gains has to end at some point, and if workers don’t magically emerge from somewhere, we are closer to that happening than at any time in eight years.

Fortunately for the South, it is the No. 1 region for in-migration from other U.S. regions and has been for decades. Over 1.2 million people migrated to the South from July 2016 to July 2017 from other regions, mostly from the Northeast. The South is by far the largest in-migration region of the country.

To give you a comparison, while over 1.2 million people migrated to the 15-state American South, only 111,221 migrated to the Northeast during the same period. So, if your market is a destination for those looking for better jobs and a lower cost of living, you are somewhat insulated from the lack of labor.

Regardless, labor constraints have become the No. 1 issue in this economy. The situation in the South and elsewhere is no longer about a skills gap. All the folks with skills are working. What we have today is a “body gap.” Currently, there are a record 6.6 million jobs available in the U.S., with an employable pool of an estimated 1.4 million workers by most economists’ accounts. I know, crazy! It wasn’t too long ago that over 15 million able workers were unemployed in the U.S. and that was deemed the “new normal.”

Since the 2014 recovery peak of 250,000 jobs created per month on average, the average monthly job gains have fallen every year. The theory that there are plenty of folks outside the labor force and employable is completely flawed. The U.S. set a new record low in April for weekly unemployment insurance claims. In fact, the record low is unprecedented. The last time we saw a low of 200,000 unemployment insurance (UI) payments filed was during a week in December 1969. Why is it unprecedented? In
1969, the U.S. had a labor force of 82 million people. Today, it’s double that at 162 million. In other words, new UI claims just reached a 49-year low with a labor force almost twice as large as it was 49 years ago. What does that mean? It means there’s hardly anyone left that is employable.

And while there are few workers available, some of our lawmakers are trying hard to cut legal immigration in addition to illegal immigration. Let’s emphasize that: some lawmakers want to cut legal immigration. That seems to me to be the opposite of what this nation needs right now as it relates to economic realities. Sure, we’ve all heard about the aforementioned “skills gap,” but that is not the most pressing issue. Unskilled workers are the center of the real labor shortage, as farmers, seafood processors and construction companies are in need of tens of thousands of workers that are simply not there for hire.

Another way to look at U.S. labor availability, or lack thereof, is this nifty chart (see Chart 2) that FiveThirtyEight put together from numbers provided by the Bureau of Labor Statistics. As of April 2018, this is the employment status among every 500 Americans. Remember, labor participation or total workforce is defined as anyone age 16 to 64. Not counted are those in the military, in prison, in long-term care or are otherwise institutionalized.

So, as you can see, only 12 out of 500 people in this country are unemployed and seeking a job. That’s about 2.3 percent of the eligible workers in the country who are unemployed, want a job and are actively looking. That’s a tiny pool of workers left who want a job.

The second largest pool in the chart are those who are unemployed who don’t want a job. That could be any number of types of individuals aged 16 to 64, including the retired, disabled, drug addicted, mentally ill, student and family caretaker. Remember, there are an estimated 2 million people in this country who are addicted to opioids and cannot pass a drug test.

The baby bust: So many less people entering the workforce

As mentioned in previous cover stories, we are facing a double whammy to the labor market — today’s tight immigration policies and birth rates that have been declining for more than 15 years. It isn’t too surprising that job growth is beginning to slow considering the unemployment rate, 3.9 percent, is beyond full employment.

As a result of the lower birth rates seen since 2002, the U.S. population today provides anywhere from 60,000 to 75,000 people entering the job market per month (turning age 16). For decades, the U.S. could count on about 175,000 to 225,000 people entering the job market per month. But with a declining labor force, population and immigration, combined with full employment and a record number of people aging out of the workforce, job growth will most certainly keep falling. Yet, declining job growth is not such a bad thing when you have achieved full employment. Full employment is the goal of any economy.

It should be noted that just about every developed country in the world is in the same tight labor and low fertility rate boat as the U.S. The problem is that the U.S. is not doing anything about it. In fact, the U.S. is doing the exact opposite of what it should do in a tight labor market. Japan is suffering not from a skills gap, but a body gap as well. What Japan is experiencing is the same as in the U.S. — a severe shortage of people.

In May, officials in Japan announced a new program to recruit foreign workers to solve its labor situation. Like the U.S. today, Japan has long resisted immigrant labor. This summer, a new program will be launched in Japan that will accept foreigners with certain skill sets. The accepted individuals will work in Japan for as long as five years as “trainees.” They will work in fields such as agriculture, construction and home care.

Void of a recession, the U.S. will be forced to take up a similar foreign worker program as Japan’s within 18 months, maybe sooner. With this baby bust, site consultants are unable to prove to employers that locations in the South and elsewhere in the U.S. can backfill labor 20 years out. It’s not politics, it’s demographics.

The 2018 SB&D 100: So, how did project activity in the South fare in President Trump’s first year in office?

Distribution leader Amazon currently has more facilities in Kentucky than any other state in the South. It was widely thought that the company had even gotten in to the horse-racing biz, sponsoring Audible, a favorite in this year’s Kentucky Derby. Such was not the case, but Amazon did take advantage of the publicity.Given the labor constraints, how did President Trump’s first year in office fare in economic development project activity in the South, the world’s third largest economy? The methodology of the Southern Business & Development 100 can be found on page 60 in the 2018 Top Deals and Hot Markets report. The short version of the methodology of this ranking is this: we document every publicly announced project in the South made the previous calendar year that meets or exceeds $30 million in investment and/or 200 jobs. Why $30 million and/or 200 jobs? Well, back in the day, if the project didn’t meet one or both of those thresholds, many states wouldn’t let the local economic developer use the state plane for site visits.

We rank and publish on page 56 the top 100 job announcements from calendar year 2017, and on page 58 are the top 100 investment announcements from last year. But those are simply the top 100 projects for each sector. This, the 24th annual SB&D 100, saw 680 projects meet or exceed 200 jobs and/or $30 million in investment, the third best total in the ranking’s history. Only the 2016 SB&D 100 with a record 730 projects (projects from calendar year 2015) and the 2017 SB&D 100 (projects from calendar year 2016) topped this year’s total.

The last four years have been the most successful in SB&D 100 history (see Chart 3). In the first 20 years of this ranking, the yearly average of big deals announced in the 15-state American South was 520 projects. Reaching 500 projects meeting our thresholds represented the benchmark for an outstanding year for the first 20 years of the SB&D 100. Not anymore. In the last three years, we’ve seen 730 projects (2015), 695 projects (2016) and 680 big deals in calendar year 2017. That’s a three-year average of 702 projects, obliterating the annual average of the first 20 years of the “100.”

So, while Trump’s first year couldn’t quite beat President Obama’s last two years in large project activity, it is close enough to not make a real difference. So, yes, if you base the health of an economy on corporate and industrial project activity, this four-year period in the South is indeed as good at it gets. We have been in rare air and the last four years may represent the best we’ve got for years to come. 

The only year that can even remotely compare to the last four years was in 1997 when 636 big deals made the big board. But even the go-go 1990s can’t compare with the average of 701 big deals seen the last three years. From 1995 to 2000 — formerly the best stretch in total projects until this four-year string — the yearly average of SB&D 100 projects was 566. Of course, the low point in the last 24 years was the recession year of 2009 when only 367 deals met or exceeded our thresholds, meaning project activity found in each year’s SB&D 100 directly correlates with an expanding or contracting economy. So, again, we are in the sweet spot historically when it comes to project activity in the American South. There has never been a better period of economic development success than the last four years in the South.

Breaking down the 2018 SB&D 100

One of 2017’s big food and beverage projects had Tennessee crowing. Tyson Foods will build a new chicken production complex in Humboldt, Tenn., 75 miles northeast of Memphis, that will employ 1,500 people. The $300 million project is to begin operations in late 2019 to meet what Tyson described in a release as “strong consumer demand for its chicken.”For the fourth consecutive year, both manufacturing and services had outstanding years. If you study Chart 3, you will notice that is rarely the case. With 384 projects meeting or exceeding 200 jobs and/or $30 million in investment, manufacturing had its second best year ever.

The manufacturing sector in the South has now been on a 10-year hot streak (not including the recession year of 2009). The region has simply become one of the most competitive on a cost basis as any region or country in the world. The proliferation of low-cost natural gas has helped manufacturing stop the loss of jobs and now the sector is a job generator. About 1.2 million manufacturing jobs have been added in the U.S. since the collapse of the industry in 2009. Almost half of those 1.2 million manufacturing jobs have been created in the 15-state American South.

When manufacturing was cratering from the early 1990s to 2006, many years saw the service sector totals were double the number of manufacturing deals meeting our thresholds. For the last 10 years, however, manufacturing has beaten services each year in large job generating projects. Yes, the age of reshoring, onshoring, nearshoring, make it where you sell it — whatever you want to call this manufacturing renaissance — has been driving the South’s economy for more than a decade now.

Of all aspects of the South’s economy, the success of the manufacturing sector is without a doubt the greatest comeback story. The industry was so down from 1994 to 2006 that the South only averaged 214 large manufacturing announcements each year. From 2007 to 2017, that annual average has risen to 358 large projects, a very significant and healthy comeback.

On the services side, the region saw 296 projects announced of 200 jobs or more. That is 46 deals less than last year, but still an outstanding number. So, this was the fourth consecutive year where manufacturing and services performed well in the same year.

Industry sector performances

For only the second time in 24 years, the automotive industry was not the No. 1 sector in projects meeting or exceeding 200 jobs and/or $30 million in investment. Reigning supreme this year is the distribution sector with 74 big deals. (See Chart 4.)

It’s amazing how distribution in the South is evolving. Home to FedEx, UPS and DHL’s main U.S. hubs, the distribution sector, in what is probably the best consumer economy in years, is lighting up the big deal board. For example, in 2013, there were only 26 projects of 200 jobs or more from the distribution sector. That total has now almost tripled in four years. 

There were all kinds of distribution centers announced in 2017 from Walmart to Dollar Tree to Chewy.com. But, leading the way with 14 massive distribution/fulfillment centers in this year’s SB&D 100 is Amazon. The proliferation of Amazon distribution centers clearly indicates the nation’s changing buying habits.


Notable Distribution Projects

  Jobs $Inv  Location
Amazon 2,700 $1,400 Hebron, Ky.
Amazon 2,500 N/A Jacksonville, Fla.
Amazon 1,500 N/A Jacksonville, Fla.
Amazon 1,500 $198 Orange Co., Fla.

( Investment in millions)


Another sign that consumerism has been unleashed is the fact that the food and beverage industry, with 73 big projects, came in second for the most projects meeting our thresholds. Food and beverage projects increased from 51 to 73 this year.


Notable Food and Beverage Projects

  Jobs $Inv Location
Tyson 1,500 $320 Humboldt, Tenn.
Simmons 1,500 $300 Benton Co., Ark.
Mission 1,000 N/A Dallas, Texas
Ruiz 704 $79 Florence, S.C.

( Investment in millions)

Volvo announced in 2015 it would build its then-bread-and-butter model, the S60 sedan,in South Carolina. In 2017, the automaker decided to add  the  revamped, hybrid XC90 to its  Low Country lineup. That addition will result in 1,900 more jobs and push the total investment to more than $1 billion.

While the automotive sector, for only the second time in 24 years, was not the No. 1 industry, it placed third with 72 big deals. Automotive has averaged 88 projects a year for 24 years, and to see it drop to 72 is a little concerning.


Notable Automotive Projects

  Jobs $Inv Location
Volvo 1,910 $620 Ridgeville, S.C.
Toyota 1,209 $1,330 Georgetown, Ky.
Denso 1,000 $1,000 Maryville, Tenn.
BMW 1,000 $600 Greer, S.C.

 ( Investment in millions)


Allstate racked up major points with its announced expansion that will create 2,250 jobs in a Charlotte project spanning three years. The insurer is expected to invest more than $22 million on its operations center. The move will add to the roughly 1,400 employees the company already has in the North Carolina city.

Also concerning is the fact that just two years ago, financial services racked up 69 projects, its second best year ever. This year it could only muster 38. We’ve seen over the years that when financial services deals begin to wane in the South, that indicates the economy is slowing. But 38 projects is a great total compared to financial services’ performance in the recession. It was the financial services industry that totally collapsed during the recession, dropping the service sector to record lows for several years. As late as 2011, when financials only put up nine big deals, the sector was still reeling. It really didn’t gain traction until 2013 when it posted 31 projects.


Notable Financial Services Projects

  Jobs $Inv Location
Allstate 2,250 $22 Charlotte, N.C.
USAA 1,500 $70 San Antonio, Texas
Navy Federal 1,400 $100 Frederick Co., Va.
Credit Suisse 1,200 $65 Morrisville, N.C.

 ( Investment in millions)


The Air Force chose Florida’s Tyndall Air Force Base as the site of a new MQ-9 Reaper Wing consisting of 1,600 new jobs and more than $250 million of military construction.

American Airlines is planning a new 1.8 million-square-foot headquarters campus in Fort Worth that will house more than 7,000 administrative employees. The construction is expected to cost at least $350 million.

After a record year in calendar year 2016 with 55 big deals, the aerospace industry had its second best year with 35 projects. This is the industry to watch. Last year for the first time, automotive and aerospace finished No. 1 and No. 2 in total deals on the manufacturing side. This year it was food and beverage and automotive.


Notable Aerospace Projects

  Jobs $Inv Location
Tyndall AFB 1,600 $250 Panama City, Fla.
Aerojet  805 $46 Huntsville, Ala.
Pratt & Whitney 510 $386 Columbus, Ga.
Blue Origin 342 $200 Huntsville, Ala.

( Investment in millions)


Global IT services giant NTT Data plans to relocate its North American headquarters into Plano’s Legacy West as part of a major consolidation after the company acquired Plano-based Dell Services for $3.1 billion. The move also means an additional 6,000 jobs.

A $3.8 billion methanol project — LC Methanol — will be built on about 70 acres along the Calcasieu Ship Channel.

Another industry that is certainly slowing is the petrochemical sector. In 2015, petrochemical activity, mostly in Louisiana and Texas, set a record with 70 projects, several of which were multi-billion dollar deals. That activity has slowed to 27 projects this year.


Notable Petrochemicals Projects

  Jobs $Inv Location
LC Methanol 200 $3,900 Lake Charles, La.
Wanhua Chemical N/A $1,123 St. James Parish, La.
Lotte Chemical N/A $1,100 Calcasieu Parish, La.
Agrium N/A $720 Borger, Texas

 ( Investment in millions)


With 33 deals, headquarter projects continued its strong run begun in 2014.

Notable Headquarters Projects

  Jobs $Inv  Location
American Airlines N/A $350 Fort Worth, Texas
CPS Energy N/A $145  San Antonio, Texas
Amazon Web 1,500 N/A Fairfax Co., Va.
Nestlé 748 $39 Arlington Co., Va.

( Investment in millions)


Other Notable Projects

  Jobs $Inv Location
NTT Data 6,377 $28 Plano, Texas
DXC Technology 2,000 N/A New Orleans, La.
Nutri Biotech 1,600 $100 Garland, Texas
Jackson Healthcare 1,400 $100 Alpharetta, Ga.
UPS 1,400 $22 Arlington, Texas
ExxonMobil SABIC 600 $10,000 Portland, Texas
Braidy Industries 550 $1,300 South Shore, Ky.
Facebook 100 $1,000 Henrico Co., Va.
Ford 500 $900 Louisville, Ky.
Centene 1,000 $770 Clayton, Mo.
Samsung 950 $380 Newberry, S.C.
EnerBlu 875 $372 Pikeville, Ky.
Shandong Ruyi 800 $410 Forrest City, Ark.
Autocar 746 $120 Birmingham, Ala.
Mercedes-Benz 502 $281 Woodstock, Ala.

( Investment in millions)


Chart No. 1

U.S. Average Monthly Job Gains by Year

Year Jobs
2010 88,000
2011 174,000
2012 179,000
2013 191,000
2014 250,000
2015 226,000
2016 195,000
2017 182,000

Source: Bureau of Labor Statistics


Chart No. 2

Employment Status among Every 500 Americans

Employed Full Time 247
Employed Part Time 54
Unemployed, Don't Want Job 177
Unemployed, Want Job 12
Unemployed, Not Looking 10
Total 500

Source: Bureau of Labor Statistics


Chart No. 3

SB&D 100 1994-2017

Year  Mfg. Non-Mfg. Total Projects
2017 384   296   680
2016 353   342   695
2015 424   306   730
2014 375   293   668
2013 410   185   597    
2012 363   160   523
2011 350   189   539
2010 335   259   594
2009 227   140   367
2008 291   138   429
2007 301   209   510
2006 257   225   482
2005 219   370   589
2004 292   297   585
2003 189   277   466
2002 164   245   409
2001 165   282   447
2000 209   312   521
1999 194   346   540
1998 228   344   572
1997 229   407   636
1996 212   361   573
1995 310   243   553
1994 281   189   470

Totals are derived from all projects announced in the American South 1994-2017 calendar years meeting or exceeding 200 jobs and/or $30 million in investment. Source: SB&D


Chart No. 4

Top Industries Number of Projects   
  2017 2016 2015 2014 2013 2012
1. Distribution 74 66 54  51 26 39
2. Food 73 51 63   45 50 36
3. Automotive 72 85 111   81 83 81
4. Financial Services 38 47 69   42 31 19
5. Aviation/Aerospace 35 55 26 28 30 18
6. Petrochemicals 27 41 70   47 37 51
7. Headquarters 33 32 36 42 14 15
8. Oil & Gas 33 25 37 51 53 73
9. Call Centers 29 26 26 33 26 15
10. Healthcare 28 27 19 43 37 23
11. Paper & Packaging 24 10 12   5 4 6
12. IT 21 24 20 25 16 7
13. Communications 17 18 8 20 12 16
14. Metals 16 18 14 15 22 12
15. Building Materials 13 26 21 35 29 15
16. Electronics 12 13 6   6 18 15
17. Data Centers 12 12 14 16 15 7
18. Software 12 11   8 4 3
19. Textiles 11 8 11   7 13 4
20. Wood Products 8 11 7 12 10 13
21. Renewable Energy 7 19 19 12 15 8
22. Life Sciences 6 11 5   2 4 8
23. Pharmaceuticals 5 22 7   6 6 2
24. Apparel 5 8 5   8 6 9
25. Fossil Energy 6 7 7 19 8 5

Totals are derived from all projects announced in the American South 2012-2017 meeting or exceeding 200 jobs and/or $30 million in investment. Source: SB&D


latest magazine issue
randle report
auto corridor

Southern Business & Development
8086 Westchester Place
Montgomery AL 36117