While no area of the country can be completely immune from the turmoil in the national financial markets, most regions in Mississippi are managing to continue on an even keel and in some cases are making significant strides in economic development.
Industrial and aerospace
A continuing bright light for the state’s economy is the Columbus area, which is just beginning to see the positive boost from ancillary industries resulting from the new SeverCorr steel mill. Two facilities will begin construction either in the fourth quarter of 2008 or the first quarter of 2009, said Brenda Lathan, CEcD, vice president of economic development for the Columbus-Lowndes Development LINK.
“The aerospace industry is booming with a recent expansion by American Eurocopter ($40 million, 250 jobs) and the anticipated announcement of another aerospace-related industry in the next few weeks,” Lathan said. “The construction of a new promotional building is currently underway, and we expect to sell it before it is completed. Our goal is to sell a building and begin construction on another until the market dictates that we discontinue this process.”
Lathan described construction of the PACCAR diesel engine facility as “phenomenal.” The facility is on target and the company has begun hiring production employees.
Troubles in the financial markets have had an impact. Lathan said some of its large investors have seen closer scrutiny of their deals, causing longer delays in funding. But thus far, no deals have been scratched because of the current condition of the financial markets.
Most of the existing industries are doing quite well. SeverCorr has its second expansion underway representing a $500-million investment and an additional 300 jobs. To accommodate SeverCorr’s needs, one of its suppliers is expected to announce an expansion in the next few weeks.
“Aurora Flight Sciences recently completed a $14.5-million expansion that will include 200 additional jobs,” Lathan said. “Due to increased usage of the Tenn-Tom Waterway, Kinder Morgan, which operates the Lowndes County Port Authority’s west bank port, is currently expanding. This facility moved almost one million tons of product in August.”
Economic development activity also remains steady in Tupelo/Lee County after phenomenal growth in the last fiscal year (May 2007 to April 2008) when Tupelo/Lee County projects were launched that will create 1,861 new jobs (1,000 attributed to Toyota) and approximately $450 million in capital investment.
“Many of these jobs were created through the expansion of our existing industries, but the location of NEW Corporation’s 300-person call center, as well as a 400-employee Toyota Auto Body (APMM) facility in Baldwyn, made 2007-2008 a very successful year for new business locations,” said David P. Rumbarger, president and CEO of the Community Development Foundation (CDF) in Tupelo. “Current economic development activity in the area is varied according to specific locations, but the primary sector that continues to show increased growth in the region is the automotive and automotive components manufacturing sectors.”
Thus far, there have been seven suppliers to the Toyota plant announce locations across the northern portion of Mississippi. Some of these suppliers have located in adjoining counties, and two have located in communities along the I-55 corridor, approximately 70 miles from the plant site.
Besides the impact of additional major manufacturers locating to serve the plant, the community has seen some positive ripple effects. Many new restaurants, retail stores and service facilities have located in Tupelo/Lee County since the Toyota announcement in early 2007.
While it may be too early to tell, so far it appears that the national credit crisis has seemed to pass over the Tupelo area.
“No immediate or past developments have been impacted by the current economic situation, to our knowledge,” Rumbarger said. “As evidenced above, we had one of our most successful economic development years during the credit crisis. Our office continues to solicit several requests for information on the area’s housing conditions and capacity for expansion, and multitudes of real estate developers have visited the area in hopes of launching residential real estate developments. Area bankers have also indicated that the number of foreclosures is far below the trend of the nation, and that subprime loan originations were rare in the area prior to the credit crisis.”
He reports existing industries are doing well. In FY 2007-2008, 161 jobs were created from existing industries expanding operations. Currently, CDF is working with multiple companies on expansion projects at industries Hunter Douglas, HM Richards’s furniture and General Atomics. Rumbarger said there is some contraction in the furniture industry without replacement hiring in the region surrounding Tupelo, but few Lee County furniture industries have announced significant layoffs.
The Katrina effect?
The Gulf Coast, also, has been somewhat insulated from national turbulence because of the huge amount being spent on Katrina rebuilding. Brian Sanderson, president, Gulf Coast Business Council, said that three years after the worst national disaster in the history of the U.S., there has been much progress. But signs show that progress has now been slowed by the high cost of insurance impacting housing costs and availability.
“The slowing national economy has also become a factor, inhibiting progress as the national credit market tightens, making it difficult to finance new projects,” Sanderson said. “While fuel prices have retreated in recent weeks, the cost of materials is still high, and many businesses have seen recent slowdowns as the economic stimulus package of 2008 comes to an end and consumers have slowed spending.”
Sanderson said while economists argue about whether the national economy is in a recession — stating the economy technically is expanding even though there is rising inflation, unemployment and a struggling housing market — there is little doubt that business has slowed on the Mississippi Coast.
The Coast economy is a mixed bag. Sanderson said some areas of the Gulf Coast are doing well while others struggle.
“There are both positive and negatives spins in play,” Sanderson said. “Within a week of Future Pipe announcing that it would be leaving and taking about 150 jobs, Day & Zimmerman announced their plans for 300 new jobs in Moss Point. Chevron soon followed announcing an expansion plan of its own.”
Sanderson said while the overall economy on the Mississippi Gulf Coast has slowed in 2008, it operates at a clip greater than pre-Katrina. Overall spending, led by construction, remains higher than it was three years ago. Some areas of the economy that have seen growth in the past year include construction, food and beverage, miscellaneous retail and miscellaneous services.
“The economy of the Mississippi Gulf Coast is in a holding pattern, and the direction that it ends up going will depend on what happens in the next several months,” Sanderson said. “There are several factors that will influence the ultimate direction that the Mississippi Coast economy takes. Among them are the overall national economy, the outlook for insurance on the Coast, fuel costs, the ability to obtain credit and housing.”
Tourism has remained a bright spot for the Coast, especially considering the contractions seen in gaming markets in the top two venues in the country, Las Vegas and Atlantic City. Gaming revenues have remained steady compared to a record set in 2007.
“While Margaritaville recently announced that it was slowing down the construction of its $700-million project, another group, RW Development, is working with the State Gaming Commission for approval on its $1-billion project,” Sanderson said.
While the Greater Jackson area has been less susceptible to swings in the national economy in the past, the present challenges facing our entire country is making an impact on economic development here in Central Mississippi, said Duane O’Neill, executive director of the Greater Jackson Chamber Partnership.
“Our most active prospect activity normally comes from the industry sectors of automotive, distribution/logistic operations, data/call centers and healthcare-related businesses,” O’Neill said. “We have seen a decrease in overall prospect activity in most of these sectors during the past six months. Obviously, it is a slow time for the automotive industry and other big-ticket consumer products. Fortunately, our regional economy is very diverse.”
Examples he gives are activity in healthcare and biosciences. Some of the biosciences and biotech activity is being driven by the area’s status as a strong contender as the site for the National Bio and Agro-Defense Facility. This Department of Homeland Security project is expected to select a location later this year. Flora in Madison County is one of five finalists in this competitive process.
“Even beyond that decision, the growth of the healthcare facilities in our community is very substantial,” O’Neill said. “Being recognized as a premier regional healthcare destination will continue to be an economic driver for many years to come.
“Also, commercial and retail activity development has been strong in the metro area over the past six months. This includes downtown Jackson, as well as Madison and Rankin counties. Even the local housing market has fared better than the national scene. Nevertheless, it is still how national leaders handle the turmoil and the uncertainty in our financial markets, which will have the greatest impact on our local economy.”
The Delta has long been the most economically challenged area of the state, so it should come as no surprise that the downturn in the national economy is having an impact.
The downturn in the economy is hitting the Delta very hard, said Ed Johnson, CEO, The Delta Economic Development Center of Washington County. The unemployment rate in the Delta is almost twice the national average. According to the latest Mississippi Department of Employment Security labor data, the unemployment rates for the following counties are: Washington, 11.9%; Sunflower, 11.3%; Yazoo, 10%; Leflore, 10.2%; and, Bolivar, 9.7%. That compares to a national average of 6.1%, and a Mississippi average of 7.7% (the third-highest rate in the country).
“We are attempting to diversify our economic base for future economic surges and hoping to minimize future economic downturns,” Johnson said. “We are working on major infrastructure improvements to enhance the Delta’s ability to accommodate future business growth. Not to be overlooked are key educational improvements. We are working hard to improve grade school and high school test scores to improve the Delta’s workforce readiness and skills.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info