Manufacturing trends fueled growth in the Southeastern United States, especially advanced manufacturing in the automotive and aerospace sectors, has led to employment gains, higher wages, and a growing influx of workers into the region. Manufacturing giants like Chicago-based Boeing and Boston-based General Electric are increasingly doing advanced manufacturing in places like North Charleston, South Carolina (Boeing) and Pensacola, Florida (GE Wind). Well-known foreign manufacturers like Toyota, BMW, Siemens, Volkswagen, and Airbus are also producing all over the Southeast.
cities like Atlanta, Charlotte, and Nashville have become booming global business hubs
Why have global and U.S. manufacturers chosen to locate their production facilities in the Southeast? In some cases, it’s the region’s famously pro-business state and local governments. In other cases, it’s the great infrastructure of ports, railroads, and more. The Southeast also offers a great lifestyle, with warm weather and a relaxed culture, as well as reasonable labor and housing costs when compared to places like San Francisco, Boston and New York City. As a result of the Southeast’s growth, cities like Atlanta, Charlotte, and Nashville have become booming global business hubs.
Let’s look at a 4 of the major manufacturing trends impacting the Southeastern U.S. right now:
#1 An Automotive Boom
We tend to think of Detroit and the Midwest as centers of U.S. automobile manufacturing, but the automotive sector is booming in the Southeast, led by global auto firms like Toyota, Honda, Mercedes-Benz and BMW. For instance, Honda and Mercedes already have plants in Alabama, but Toyota-Mazda will be opening a new $1.6 billion plant in Huntsville, Alabama, creating 4,000 new jobs. The new plant will likely create additional jobs for auto parts manufacturers in Alabama.
The automobile manufacturing sector has become such a powerful economic engine in Alabama that the state’s low unemployment (it was 3.5% in November, 2017, far below the national average, according to Dun & Bradstreet’s First Research) has become a concern. Finding enough skilled workers for the new Huntsville automotive plant and its related supply cluster may be tough.
Other global carmakers are in the Southeast. Mercedes-Benz recently announced it will hire 1,300 more workers in its growing North Charleston, South Carolina plant. Toyota builds its Corollas in a $2 billion plant in Blue Springs, Mississippi, which employs 2,000 auto workers. Tennessee’s automobile industry is massive, employing more than 130,000 state residents and representing a quarter of the state’s exports. Volkswagen is in Chattanooga, GM manufactures in Spring Hill, and Nissan’s North American HQ is in Franklin.
#2 The Aerospace Industry is Booming Too
In 2017, Boeing had a record year in plane production and deliveries at its North Charleston, South Carolina manufacturing plant, where it employs more than 7,000 workers. Boeing moved some of its production from Washington state to South Carolina back in 2009 after a labor dispute with its unionized production workers there.
more and more Southeastern states are creating pro-business climates through their tax codes
Even Boeing's largest global competitor, European-based Airbus, has moved some of its production to the Southeast. They opened a $600 million production facility in Mobile, Alabama in 2015, where they employ some 300 advanced manufacturing workers. Airbus has plans to expand, and may create up to 2,000 new jobs related to that expansion. Indeed, Airbus’s move to Alabama has created a growing “aerospace cluster” in that state, creating high-tech and high-paying jobs. Other aerospace giants manufacturing in the Southeast include GE Aviation, which has a plant in North Carolina and Gulfstream Aerospace in Georgia. The sector continues to add new jobs in the Southeast.
#3 State and Local Governments Incentivizing Manufacturing
In the Southeast, state and local governments continue to be friendly to manufacturers in an efforts to attract jobs and companies to their states. According to USA Today, for example, South Carolina gave Boeing $900 million in tax breaks and other incentives, including providing state money to train workers for jobs at Boeing. North Carolina gave $250 million in incentives to Spirit AeroSystems to locate to Kinston, North Carolina.
More and more Southeastern states are creating pro-business climates through their tax codes and also boosting state training programs to prepare workers for jobs in advanced manufacturing.
Florida, for example, has no corporate income tax on limited partnerships, no personal state income tax, no state property tax, and even more tax advantages aimed at businesses. Southeastern states are becoming attractive destinations for manufacturers because of their pro-business state and local governments. In 2017, Forbes ranked the best states to do business in the United States. The top state? North Carolina, with Florida and Georgia also among the top 7.
#4 Manufacturing Employment is Booming in the Southeast, But Skills Shortages Loom
Southeastern states may soon find themselves a victim of their own success. In Alabama, for instance, companies in the booming automotive and aerospace industries are competing to hire a limited number of skilled workers. What has helped Alabama is an influx of population from other parts of the U.S. and abroad. Still, as unemployment in Alabama threatens to drop below 3%, the supply of available, qualified workers for advanced manufacturing jobs will present challenges.
Manufacturing is hot in the Southeast, making it harder to find qualified workers
Manufacturing job growth in South Carolina presents a similar problem. It was + 4.4% in 2017, according to data from Dun & Bradstreet’s First Research, which was more than triple the job growth across the nation (+1.4%). As in Alabama, advanced manufacturers in South Carolina may soon face skills shortages and/or be forced to invest more in training or salaries. Even Florida saw manufacturing jobs grow by 4% last year, according to First Research. Manufacturing is hot in the Southeast, making it harder to find qualified workers.
So while areas of the Southeast like Nashville (TN), Huntsville (AL), and Charlotte (NC) may be booming, that economic growth creates problems for manufacturers seeking to expand and hire qualified talent. It will take close partnerships among the private sector, public sector, and academia to effectively address some of these emerging problems of growth.
Manufacturing trends in Southeastern states have documented a resurgence in advanced manufacturing (automobiles and aerospace). The region’s pro-business state and local governments, as well as a growing (and increasingly diverse) population, will continue to support the growth of manufacturing in the region, though some areas (North Charleston, SC; Huntsville, AL; Nashville, TN) are perhaps reaching a saturation point.
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