Diego Francisco, 46, an upholsterer at Lexington Home Brands in High Point, North Carolina, learned about the brand-new Catawba Valley Furniture Academy from a coworker last year. He quickly registered with the two-year, certificate-granting program. When he graduated, Lexington welcomed him back with a $4.50 hourly raise plus a status change that could add up to $10 an hour to his paycheck.
“I’m very glad I did this,” says Francisco. “I’d definitely do it again.” The Academy, organized by Lexington and four much-larger manufacturers in the furniture-manufacturing hub, is housed at the local community college. Its faculty is comprised of craftsmen and technicians from the five companies who teach high-demand sewing, cutting, upholstering and spring-tying skills.
The program came about because regional manufacturers were struggling to attract and retain skilled workers, often raiding each others’ labor forces. Furniture companies “weren’t getting the trained workers we used to get,” explains Bill McBrayer, human resource manager at Lexington. “People believed there was no future making furniture in North Carolina. They stopped learning the skills. We had to change that perception.” Manufacturers like Lexington say they need skilled workers more than ever, as quality and efficiency drive revenues.
All 67 members of the first graduating class have found jobs. Increasingly, workforce development is the new face of economic development. Companies weighing incentive packages often tip their decisions in favor of deals that provide skill training and STEM-based (Science, Technology, Engineering and Math-based) education to workers.
In Tennessee, a government initiative known as Tennessee Promise pulled 4,000 students into the state’s post-secondary pipeline, helping high school grads start skill-based training programs. The program, administered through a nonprofit called tnArchieves, helps finance tuition for state residents who want two-year degrees. Another Tennessee education-promotion program, Drive to 55, primarily helps older students enroll and complete baccalaureate programs. Its name refers to the goal of increasing the population of Tennesseans with college degrees to 55 percent by 2025. Currently, about 28 percent of state residents have sheepskins; nationally, the rate is about 32 percent. Both programs are funded by state lottery revenues.
Last year, the number of freshmen enrolled full-time increased 10 percent at public four-year programs, 20 percent at technical colleges and 24 percent at community colleges. “Our statistics indicate that our students are graduating at a rate three times the state average,” says Krissy DeAlejandro, head of tnAchieves. “We definitely believe the program’s working.” “Workforce development is economic development,” says Randy Boyd, Tennessee Economic Development chief. “It’s that simple.”
Florida created or retained over 21,000 total jobs in the 12-month period starting May 2015, led by financial and professional services, headquarters, manufacturing, life sciences and logistics/distribution. Major recent announcements include NBCUniversal Telemundo’s $250 million headquarters, Blue Origin’s $200 million launch facility and OneWeb’s $85 million satellite-manufacturing plant. Renovation and expansion are underway at Orlando, Miami and Tampa airports. The state’s manufacturing sales tax exemption, set to expire next year, was made permanent earlier this year.
This past spring, legislators voted down Gov. Rick Scott’s $250 million economic-development funding request, eliminating the discretionary fund that in past years had financed many incentive packages. At Enterprise Florida, the corporate-recruitment agency chaired by Gov. Scott, board members signed off in July on a $6 million cost-saving/restructuring plan that will lay off some two dozen workers. Meanwhile the search continues to replace former CEO Bill Johnson. The organization continues to promote the state to employers; in June, it was managing 380 expansion and pipeline-relocation projects.
In South Florida, a strong dollar and weakening South American economies continue to vex Miami-Dade and Broward counties. Macquarie Group’s decision to put a 120-employee global services headquarters in Jacksonville could spur further FinTech investments in that city.
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.
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.
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.”
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.”
South Carolina’s robust growth this decade, which Wells Fargo economist Mark Vitner calls “an astonishing run of economic development” has begun to slow. Since 2010, “every year has been better than the year before; but in 2016, the acceleration tapered off,” says Joseph Von Nessen, a research associate at University of South Carolina’s Darla Moore School of Business.
Even so, nonfarm employment grew 3.3% last year, creating thousands of manufacturing jobs and landing scores of international companies. Nearly 8% of residents work for overseas entities, the nation’s second-highest rate. Tire manufacturing is now the Palmetto State’s biggest cluster; Giti Tire is building a $560 million manufacturing factory in Chester County, and Trelleborg opened a tire manufacturing plant in Spartanburg. Professional and business services have grown by nearly a third since 2010; leading sector growth; leisure and hospitality and manufacturing follow at 17.2% and 16.5% respectively. International trade keeps expanding; goods exports totaled $30 billion over the past year, up 11% from the 12 months ending in March 2015.
Charlotte’s charm and quality of life attract Millennials and empty-nesters. Jobs follow; one of every four payroll spots created between 2009 and 2014 was in metro Charlotte, three counties of which are in South Carolina. Addressing infrastructure, the Port of Charleston began a $509 million dredging project designed to make it the deepest harbor on the East Coast. The Myrtle Beach-Conway-North Myrtle Beach metro area, on the border of the two Carolinas, ranked second nationally in population growth.
Virginia doubled its pace of job creation last year, adding 83,000 new jobs during the 12-month period starting April 2015 versus 41,500 last year. Most were headquarter jobs, which outpaced manufacturing posts more than 2 to 1. Despite the surge, once-robust Virginia still trails the nation in payroll expansion. Real GDP grew a tepid 1.3% over the four quarters through Q3 2015, besting only Alaska (51st) and Mississippi (50th). Key projects included Bechtel’s $149 million Fairfax headquarters, Wells Fargo’s 500-job operation in Roanoke and ADP’s 1,800job project in Norfolk.
Launched this spring, the Virginia Growth and Opportunity Board—call it Go Virginia—aims to depoliticize corporate recruitment and training programs while encouraging collaboration between regional business, education and community leaders. Its initial budget is $35 million. In July, a new $12.5 million state-financed training program was set to begin credentialing tech workers. This summer, the state began funding a $29 million IT program to commercialize research at public institutions. In infrastructure improvement, a $350 million bond package was passed to fund expansion of the Port of Virginia.
Alabama continues struggling to regain pre-Recession job growth and salary levels. Since February 2010, the national low point for private-sector employment, the Yellowhammer State added over 114,000 jobs for a 7.7% increase, well below the national 13.6% average. Due to weak employment growth, nearly one quarter of the state’s work force is underemployed, according to the University of Alabama’s Center for Business and Employment Research. That figure rises to 28 percent in the Montgomery area.
Business and professional services pace job creation, but lower-paying jobs in restaurants and bars came in second. Auto manufacturing, the muscle in the state’s economy, ranked third. Workforce development and education infrastructure remain “concerns of almost every company,” says Jim Searcy, executive director of the Economic Development Association of Alabama. Business leaders call for more alignment between school curricula and employer needs.
One positive economic development sign was the passage last year of a new incentive package designed to attract manufacturers; the program is “making a difference” in recruiting manufacturing companies, says Betty McIntosh, Atlanta-based senior managing director of Cushman & Wakefield’s Business Incentives practice.
Led by a booming manufacturing sector expanding at three times the national rate, Kentucky continues to create jobs. Toyota’s decision to open a new Lexus line in Georgetown enhanced the state’s auto-building appeal. About 56% of new jobs are in the Louisville and Lexington areas, the Bluegrass State’s two largest metros. The economic corridor linking the cities, jumpstarted by the Bluegrass Economic Advancement Movement, or BEAM, seeks to leverage the momentum of such multinationals as Toyota, Ford, Raytheon, Lexmark, GE and Lockheed Martin.
Professional services, education and healthcare sectors are thriving; manufacturing and housing are also doing well. The income divide between cities and rural areas continues to grow, while farming and coal mining decline. The state budget passed in April reduced serious pension underfunding, but it did so largely by slashing higher-education monies 4.5%.
Hammered by the soft global energy market, coal-producing West Virginia continues to lag national job-creation rates. Businesses have shed more than 5,800 jobs in the 12-month period beginning April 2015, nearly double the previous year’s rate. Real GDP slipped 2.15 in the four quarters; ending with Q3 2015; the national GDP growth rate was 2%. With tax revenues declining, this spring’s lack of consensus over how to balance the budget raised fears of furloughing state workers.
The coal country in the state’s southwest is hurting; but counties in the northwest, where one out of five residents work for the government, have been spared the brunt of economic turbulence. The Mountain State owns the lowest workforce participation rate in the country and leads in disability payments. Atlanta-based Jones Lang LaSalle site selector Gary Yates sees growth on the state’s eastern edge, driven by distribution centers.
In February, West Virginia became the 26th state in the country to adopt right-to-work legislation, a development that “will make a real difference” in attracting relocating companies, says incentives advisor McIntosh.
Louisiana, like every other U.S. energy producing state, has been hammered by fuel prices. In January, the lifting of the decades-long fuel export ban bolstered the Bayou State’s economy. By February, Cheniere’s Sabine Pass Terminal had exported its first liquefied natural gas shipment, triggering what state economic-development officials hope will be a much-needed capital infusion into the state. In May, Louisiana’s largest pipeline project—the Bosco Pumping Station in Ouachita Parish, connecting with the Gulf of Mexico—came online.
Louisiana Economic Development has announced several major chemical and petrochemical projects, creating nearly 5,500 direct jobs and over 35,000 supplier jobs, with investments surpassing $44 billion. Significant investment comes from overseas; since 2003, Louisiana has led the U.S. in per capita Foreign Direct Investment (FDI), and it ranks second for total FDI in that period, attracting over $30 billion, according to FDI Markets. Recent projects include Japan’s $1.4 billion ethylene expansion by Shintech, the $1 billion Australia-financed Aqua Ammonia plant under construction in Jefferson Parish outside New Orleans and the Netherland’s Shell Chemical’s $717 million expansion in Ascension Parish.
Mississippi grew by 1% last year, bettering its rate in 2014. And some economists are projecting a 2.2% growth or better in 2016, which would quintuple the decade’s annual average growth rate.
Moreover, with unemployment falling by half a percentage point in 2015 over 2014, professional and business sector employment growth is leading job creation, expanding at about 18.5%; leisure and hospitality grew 12% and information services growth reached 9%.
In February, global giant Continental announced a $1.4 billion investment in a new tire-manufacturing plant near Jackson to service its North American market. The project will employ 2,500 in this job-hungry state. In March, addressing a major employer concern, Mississippi allocated $55 million for workforce training programs.
Passage of controversial religious-freedom legislation generated pullouts and cancellations from entertainment-industry businesses and high-profile performers and state governments, while business leaders called for the bill’s repeal.
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