An aerospace company opened a 122,000-square-foot facility in Huntsville this month.
Lockheed Martin (NYSE: LMT) unveiled its new $18 million engineering facility May 30, which has space for 500 employees.
Teams in the new facility will work on readiness and sustainment for the U.S. Army Black Hawk helicopter, a layered missile defense system and modeling and simulation framework for the Ballistic Missile Defense System.
Birmingham Business Journal
By Glenn McCullough, Jr.
Winning in the fiercely competitive economic development arena hinges on a number of critical success factors with one of the most important being energy.
Amazon Web Services recently decided to locate two data centers in Madison County, Mississippi. These two facilities represent a $10 billion capital investment. They’ll bring a potential demand for 1,000 megawatts of electricity and generate an annual payroll approaching $100 million, which is why Governor Tate Reeves, the Mississippi Development Authority, Madison County Economic Development Authority and local officials worked in concert with Entergy Mississippi to attract and win the deal.
The energy demand, 1,000 megawatts is a lot of electricity…enough to power 750,000 homes. Everything we do and everything we use requires energy.
Today, data centers in the U.S. require 21 gigawatts of electricity with that demand projected to exceed 50 gigawatts by 2030.
The U.S. is the world’s largest digitized economy followed by China. Energy security is national security.
Advanced nuclear, natural gas, hydro, solar, biomass, wind, small modular reactors and hydrogen along with batteries connected to a smart grid, are the planks in an energy security platform.
Energy policy that is needed should begin with the words, “More energy to keep the lights on, make the air, water and land cleaner and grow the economy at an affordable cost.”
Editor’s note: Glenn McCullough, Jr. is the former Chair, Tennessee Valley Authority; former Executive Director; Appalachian Regional Commission; Former Executive Director, Mississippi Development Authority; former Mayor of Tupelo, Miss., currently Board Member, GLM Associates.
Hello to our CEO and site consultant readers. There are all kinds of sales pitches out there to capture your next expansion, startup or relocation. Here are a few from outside the South:
New York (From Empire State Development): “New York State is committed to attracting and aiding in the expansion of businesses to help create jobs, especially leading-edge businesses and manufacturing companies looking to make significant capital investments.”
SB&D’s take: New York State is one of the state leaders in the reshoring of semiconductor companies and New York City remains the center of North America’s financial services industry.
However, net domestic migration has been negative every year for decades, peaking at lows in the early and late 1970s, and right after 9/11, to net migration record lows in 2020 and 2021. Census estimates that just since 2020, New York has lost nearly 1 million residents to other states.
If New Yorkers are leaving the state in such numbers, companies looking to locate their operations should certainly ask why. And in a period when labor has essentially vaporized, losing that many from the labor shed should cause an immediate concern to any company wishing to expand, start up or relocate to New York.
Here is what one politico in New York said about population loses in his state: Republican state Senator Jim Tedisco of the 44th district said if population losses continue unchecked, New York could lose three congressional seats in the 2030 Census, further eroding the state’s influence in Washington.
“We won’t be the Empire State anymore, we’ll be fast moving towards being called the empty state,” Tedisco said. “And we’re not only number one out-migration. Last year during the redistricting, and during the Census, we were one of seven states that lost another congressperson.”
Illinois: Illinois is home to many Fortune 500 headquarters, almost all of which are in the Chicago area. But, like New York State, name another city in Illinois that is an economic development dynamo other than Chicago?
SB&D’s take: Illinois is losing population and the losses are not waning. Not unlike New York State, the population losses are increasing with every two-year period. (See chart.) Again, if labor is leaving Illinois in droves and the exodus is multiplying each year, what are the issues that a growing company should be concerned about?
Was the lack of labor in Illinois the reason why Caterpillar relocated its headquarters to Irving, Texas? No, according to the publication “Illinois Policy:”
“Expenses were a major factor in Caterpillar’s decision (see Toyota below). The total cost of living in suburban Deerfield, Illinois is 26% higher than Irving, Texas. For example, Illinois commuters are paying the fifth–highest gas prices in the nation. Illinois residents also pay the nation’s highest combined state and local tax burden.”
I found over the years that Caterpillar still operating its Peoria, Ill. world headquarters as being a real reach at best. Caterpillar, after several strikes by its union members multiple times in the 1990s and beyond warned Illinois officials’ way back then. In fact, Caterpillar from the 1990s to today have essentially told unions to “drop dead” and several new, non-union plants started a major shift in Caterpillar’s strategy, which essentially was anti-union. Here is more from “Illinois Policy:”
An AI report from an unknown source told me exactly what I already knew. “Yes, Caterpillar has non-union plants, including some in the Southern United States. For example, Caterpillar’s engine remanufacturing facility in Corinth, Mississippi is not unionized.
“Caterpillar is a unionized company, but it has moved some production away from unionized sites in the Midwest. In 2023, Caterpillar and the United Auto Workers (UAW) union reached a tentative agreement that included a moratorium on closing union-represented plants.”
California: The largest state economy in the U.S. has a problem with retaining its citizens, even its legal and illegal immigrants. California is simply too expensive to operate a business, live or work, unless you must.
Remember, Toyota relocated its North American headquarters to the Dallas-Fort Worth area because housing costs in Southern California were out of sight when they made that announcement in 2014.
SB&D’s take: The South is home to lots of foreign automakers’ headquarters, including Toyota and Caterpillar in D/FW; Nissan in Nashville; Mercedes-Benz in Atlanta and VW in Virginia.
Jim Lentz, the North American CEO for Toyota in 2014, cited that he wanted the headquarters closer to the automaker’s manufacturing operations in Texas, Kentucky and Mississippi. He also said in an aside that Toyota headquarter workers who would move with the company to Texas (over 3,000) could buy two homes there with the money they make off their homes in California — a permanent home and a vacation home.
Population Losses of profiled and selected states
2018-2019 2019-2020 2021-2022 2022-2023
New York
-80,967 -126,355 -319,020 -102,000
Illinois
-57,668 -79,487 -104,437 -33,000
California
-53,502 -12,280 -398,295 -75,000
Source: Census
Population Gains – Selected Southern States
“The growth in the South was predominantly fueled by domestic migration, with more than 706,000 individuals relocating to the region, stretching from Texas to D.C. since 2020. Additionally, net international migration contributed nearly 500,000 new residents.
Texas stands out as the state with the highest population increase, welcoming over 473,000 people, followed closely by Florida with 365,000 new inhabitants. South Carolina and Florida emerge as the fastest-growing states. The South’s population grew by 1.4 million people in 2023, bringing the total population in the region to 130,125,290. This was the largest population gain since 2018.
So, when scouting a location, look carefully at population gains or losses. If working with a site consultant, ask them to run a 20-year population study. In other words, can the labor that you have be backfilled or replaced by future populations? The number of available jobs are sometimes double the number of unemployed in some states, look at things on the local level . . . you know, where your interests are.
According to the Census Bureau, the U.S. population grew by 1.6 million from the summer of 2022 to the summer of 2023. The South accounted for almost 87 percent of that population growth, or 1.4 million of the 1.6 million of gains in the entire country.
That is unheard of, or is it? Nope. The South has gone from a total population of 50 million people in 1960 to 135 million in 2023 and most likely 133 million by the end of 2025 at the current rate of growth.
U.S. Regional Populations
Region 1960 2022
South 50 million 128 million
West 26 million 74 million
Midwest 52 million 69 million
Northeast 50 million 57 million
Source: Census
Manufacturing in the South with billions being invested in EVs and reshoring happening at full strength AT THE SAME TIME has risen to heights never before seen, especially in Small Town South.
New manufacturing beachheads are emerging, such as the Savannah region, which was known somewhat as a manufacturing, region, but certainly more so now with what that region has captured in the last three years.
Here are other small markets in the South that are certainly both up-and-coming as well as traditional manufacturing clusters. These are the areas in the South that we are seeing the most manufacturing activity and consistent strength in the sector.
Historically, Austin, Texas, is one of the most active office markets in the South, as its tech scene has accelerated dramatically since the 1990s. However, since the pandemic, new office space has been a crap shoot as gobs of Class A space sits empty in so many major markets throughout the country.
For example, metro Atlanta set a record for its vast amount of empty and unwanted office space. It only took three months to break that record in the summer quarter. Nearly 31 percent of all office square footage in metro Atlanta was available for rent at the end of September, according to data from real estate services firm CBRE.
Austin is not immune from the vacancies. One 66-story behemoth known as “Sixth and Guadalupe” is nearing completion, and timing could not be worse. Tech giant Meta signed a lease for all 19 floors of office space as construction was underway in early 2022. When the building opens near the first of the year, all of that space Meta signed up for will be empty.
Meta has shelved its move-in plans and is now attempting to sublease nearly 600,000 square feet of space, 1,626 parking spots, 17 private balconies and a nice green space. As of November, there have been no takers.
In addition, the job search engine, Indeed, has moved into its namesake tower in Austin, however, it has placed 100,000 square feet of downtown office space on the sublease market. Currently, Austin has more space on the sublease market than ever before.
We have heard for decades the fable that 80 percent of all new jobs are created by existing industry. It is just untrue. It is a different percentage in the South in any given year. Look at our “Big Buffalo Awards” in this issue. Seventy-five percent of them are new projects. Yet, we are quite sure that 100 percent of lost jobs are created by existing industry.
That sadly happened in the fall quarter in Ardmore, Okla., in November and residents of the city were stunned. “No one saw it coming,” said Bill Murphy, CEO of the Ardmore Development Authority, when Michelin announced it is winding down tire production at the plant that houses 1,400 workers. Michelin is Ardmore’s largest employer and a manufacturing anchor for Southern Oklahoma’s economy.
The plant, which opened in 1970, will close by the end of 2025 or sooner. Michelin officials cited changes in the passenger vehicle market, including larger tires for SUVs and new designs for electric vehicles. The company made the decision to pass on modernizing the plant for next-generation tires. The rubber-making line at the plant will continue to operate to deliver product to other Michelin tire plants in the U.S.
Yet, new billion-dollar-plus greenfield manufacturing factories have planted their flags all over the South the last three years and most are electric vehicle-based projects. After decades of offshoring manufacturing capacity, new greenfield projects outnumber manufacturing plant expansions by three to one in the big buffalo category ($500 million-plus, 1,000 jobs-plus) during the last three years.
This remarkable surge in new plants is backed by larger-than-usual private and public investments that have doubled in value since 2021, from $100 billion to $200 billion in less than two years. This manufacturing expansion in the South is new territory for the largest manufacturing region in the U.S.
So, essentially, there is absolutely no chance that 80 percent of new jobs created in the South the last three years were generated by existing industry. If anything, it may be the other way around.
That statement, that myth, has proven to be so untrue here lately. Most of these monster deals are greenfield projects. The old adage that 80 percent of all new jobs are created by existing industry does not apply to the last three years in the South. Not even close. Of our “Big Buffalo Awards” found in this section, there are 68 new projects and only 23 expansions.
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