Regional Report: The Southeast

NORTH CAROLINA | #3 | GROWTH CONTINUES

North Carolina’s economy continues to outperform the nation’s. Real GDP growth was 3.4% in 2015 versus 2.2% nationally, and the labor force grew 3.2% versus 0.6% nationally. This year, state economists forecast 3.5% GDP growth versus 2.4% nationally; expansions and relocations will generate a projected 90,000 jobs. Overall, the Tar Heel State’s labor force grew five times faster than the national rate.

Last year’s big announcement: Novo Nordisk, the Danish pharmaceutical, announced a $1.8 billion investment in a new bio-manufacturing plant in Johnston County, generating 700 jobs. After years of decline, the furniture industry shows signs of revival. “I’m shocked at how well it’s doing,” says site selector Stringer. Lower-wage hospitality/leisure and personal services jobs will also expand. Growth favors urban centers: Charlotte, Greensboro/High Point and Durham enjoyed the fastest relative payroll growth in 2015, while Fayettesville and Hickory pared back.

HB2, the controversial transgender bathroom bill passed earlier this year, irked many area CEOs, including Salesforce CEO Marc Benioff and Bank of America boss Brian Moynihan. Citing the “discriminatory” legislation, PayPal CEO Dan Schulman canceled plans to open a 400-employee global operations center in Charlotte.

TENNESSEE | #4 | MANUFACTURING LEADS THE WAY

Economic growth in Tennessee has outpaced the nation in recent quarters. Private-sector employment grew nearly 15% from January through May, third-fastest in the Southeast. Manufacturing drove growth; for May 2015 and May 2016, Tennessee led the Southeast with a 3.3% manufacturing increase. Nonfarm jobs grew 2.5%—well above the 2.1% national rate. Last year, the Volunteer State incentivized 161 major expansions and corporate relocations, totaling $5.5 billion in investments and a promised 26,000 jobs. This year’s pace will add another 175 positions, though both investments and job creation will lag.

A new angel tax credit introduced this year may spur startups. The state is a darling of foreign investors, who financed more projects in Tennessee than in any other state save Georgia last year, adding 90,000 new jobs. Represented by Nissan, GM and Volkswagen, the automotive industry continues to dominate the manufacturing sector, bringing OEM and supplier jobs to center state. Greater Nashville, expanding faster than 9% a year, continues attracting jobs and well-educated newcomers to fill them. Vibrant healthcare and entertainment clusters attract new residents and contribute to the city’s hipster reputation.

WHY WE’RE HERE / NASHVILLE, TENNESSEE

WHO CURT STEVENS, CEO, LP BUILDING PRODUCTS

SITE HISTORY This manufacturer of building and lumber products was founded in 1973 as Louisiana-Pacific, spun off by Portland, Oregon-based Georgia-Pacific in an FTC-ordered divestment. The company originally occupied four floors in a downtown Class A office building. In 2004, LP relocated its headquarters to Nashville where it leases four-and-a-half floors in Class A space, housing nearly 300 employees.

WHY TENNESSEE? “With the closing down of federal timberland, we felt it was important to be more centrally located. We had operations in Charlotte, Chicago, Houston and Portland, and we consolidated in Nashville. We got some infrastructure grants for the building and for training and development.”

REASON FOR LOCATION Nashville “was convenient as, at the time, we had two corporate planes and [city officials] waived the use tax. Most importantly, it was the attitude of the business community that welcomed us here. Nashville is a tolerant community and has a diverse workforce. It turns out to be an easy place for recruiting; we have no difficulty asking people to relocate here.”

GEORGIA | #8 | JOBS GROWTH

Can the Peach State regain its economic mojo? After reporting some of the nation’s highest unemployment rates last summer and fall, Georgia improved to 37th rank by May. Over 335 major projects have moved forward since January, landing $4 billion in investments and more than 23,000 jobs. Key announcements came from Kaiser Permanente, KeySight Technologies, Equifax and Alcon. Overall, employers created 135,000 jobs in the 12-month period beginning May 2015—22% faster than last year and enough to pace job creation in the Southeast during that period.

Foreign capital is helping to drive growth. Georgia is the country’s premier Foreign Direct-Investment magnet by some measures. Generous incentives have attracted enough film and TV show makers for it to become the U.S.’s third-largest production center. Delta Airlines, Coca-Cola, GE Energy, ThyssenKrupp and Microsoft have all started R&D centers in metro Atlanta. The state’s decision to classify software coding as a foreign language that meets high school graduation requirements last year pleased employers. The development of the Appalachian Regional Port, an inland facility in Northwest Georgia capable of handling 50,000 shipping containers annually, is slated to open by 2018 and expected to reduce Atlanta truck traffic by 40,000 moves a year.

Overall, Georgia is a smart bet for many corporate relocation projects, says Scott Redabaugh, managing director at Jones Lang LaSalle’s Location Footprint Strategy in Washington DC. He says, “They make a strong case from infrastructure, workforce quality and some good education programs.”