2014 Regional Report: The Southeast

Last year’s economic development coup—Airbus’s $600 million agreement to build an assembly plant in Mobile—has moved into hiring mode, with about 1,000 workers coming onto payroll. The state’s fast pace of industrialization leaves employers competing for qualified workers.

“The state doesn’t have enough people,” says Stringer. In Alabama, “the first thing you see is their pro-business attitude,” says Gregory Burkart. The Tax Foundation ranks Alabama 10th-lowest out of 50 states, and 21st in business tax climate. Alabama spends upwards of $277 million a year on incentives programs.

Kentucky (No. 25): Hampered by Hidden Costs
Closely associated with thoroughbred horseracing, bourbon distilleries and coal mining, Kentucky continues to diversify its economy through advanced manufacturing gains in the aerospace and automotive industries and growth in life sciences and healthcare. Major expansions and relocations this year include Bardstown Bourbon’s $150 million aluminum production facility in Bowling Green, Diageo’s $115 distillery in Shelby County and Ford’s $80 million upgrade in Frankfort.

Sometimes “hidden costs” catch execs unaware, says site selector Gigerich; “I don’t think people fully evaluate workers’ compensation structure in this state.” The Tax Foundation ranks Kentucky’s state and local tax burden 23rd out of 50 states, and 27th in business tax climate. Tax reform policies put forth by Gov. Steve Beshear earlier this year were derided as ill-conceived, and business leaders complain of gimmickry in budget-balancing policy. The Bluegrass State spends over $1.41 billion per year on incentive programs.

Mississippi (No. 37): Working on Recovery
Mississippi continues rebuilding from coastal devastation caused by hurricanes Katrina and Rita. While historically lagging Southern states, Mississippi’s economy is “expected to perform a little better” this year, according to JP Morgan Chase economists, who predicted real GDP will rise 3 percent, with job gains approaching 1 percent. Unfunded liabilities are a problem, and the gap between basic workforce skills and industry needs yawns wide.

Government remains the dominant employer, followed by real estate concerns, manufacturing and retailing. In July, BorgWarner announced a $43 million plant expansion in Water Valley; in February, Caterpillar announced a $14.8 million engine remanufacturing plant expansion in Corinth. The Tax Foundation ranks Mississippi’s state and local tax burden eleventh-lowest out of 50 states, and ranked its business tax climate 17th. The state spends more than $416 million a year on incentives.

Sidebar: Innovation Depot: Building in Birmingham

Sidebar: State-Provided Training Looms as Game Changer