2nd Quarter 2012 Hotline
Southern Industrial Development
by Joe A. Hollingsworth, Jr.
Broadly speaking the American South is in the most ideal position for future job growth than ever before. Between 2000 and 2010 the U.S. lost roughly 3 million jobs that were sent off shore and a little over one half of those was from manufacturing. It is estimated the American South lost around 800,000 of the 1.5 million manufacturing jobs that was lost overseas.
From 2000 through today the American South’s manufacturers have been able to decrease labor cost per unit substantially. While the rest of the emerging markets, specifically China, are experiencing as much as a 20% annual wage growth per unit so, the gap has rapidly closed. Additionally, the productivity in the American South has surged over other competition. This, coupled with tsunami’s, logistics nightmares, and more need for “just in time” inventory controls has ideally situated the American South for the most dramatic job increase that it has ever had the capacity to achieve in the next 10 years. In fact, we estimate that between 1 and 1.2 million manufacturing jobs will be created in the American South during the next 10 years with this massive re-shoring of jobs and investment.
With the United States total GDP at 15 trillion dollars per year growing at 2.5% annually and China’s total GDP at 6 trillion growing at about 10% annually it becomes clear that China, by all projections, will overtake the U.S. within 12 years. However, this view is very deceiving because it relies on simple math. The proper approach is to view this equation by focusing on productivity per manufactured unit, which is where the real growth will be sourced from. This approach clearly demonstrates China is losing its advantage over the U.S.
While the south has traditionally come out of each recession proportionally much stronger than the rest of the U.S. this time it is going to benefit, not only from the migration of jobs to the south from other areas of the country, but the world also. This will be accented by the fact that the American South by and large has right to work laws in place that have been the backbone of its growth for years. These laws provide the security for foreign investors as well as domestic expansions.
So, who will benefit? Clearly communities which are prepared with available industrial parks and infrastructure that are located in a conducive business environment will get the first looks and by far the most growth. We have already seen this massive wave beginning to happen over the last three or four years in spite of the recession. But, the future numbers are so great that virtually all communities will benefit within the next decade. Those that market effectively in several venues and are prepared will lead the charge and will participate in this historic and wildly successful southern expansion.