Big win for Laurens County, SC, which is about 30 minutes south of Greenville, SC, with the ZF Group announcing a $350 million plant where the German manufacturer will produce auto transmissions. One of the company's largest customers, BMW, has a facility nearby in Spartanburg.
One of the most interesting aspects of this new plant is the level of employment it will support per capital dollar invested. It's expected to create 900 jobs once it's fully up and running, or one job for every $390,000 of capital invested. This is fairly labor-intensive for modern manufacturing, and quite a bit lower than the $650,000 of capital Toyota will spend for every job it creates at its new Corolla and Prius plant in Blue Springs, Mississippi. It's also far more jobs per capital dollar than the Dow Kokam battery plant in Midland, Michigan, which Joe Biden and Jennifer Granholm have been treating like an economic savior, yet will only create one operational job for every $1 million of capital invested. The ZF plant will need more than 2.5x as many workers per dollar invested than that heavily publicized battery plant.
South Carolina, which has struggled during the recession, has also stayed focused. There haven't been any silly "cool cities" campaigns in Columbia, Greenville, or Charleston, and it's continued to recruit manufacturers, and not fallen for any of the creative city Richard Florida hype. In addition, it's now putting together supply chains of one producer selling to another, which is far more sustainable economically than creating yet another "urban artists neighborhood".
How Technology Advances Transform Places
Showing posts with label Cities of the South. Show all posts
Showing posts with label Cities of the South. Show all posts
Monday, July 26, 2010
Monday, June 28, 2010
New Chattanooga Factory to Create Massive Turbines, but Few Jobs
GE competitor Alstom is building a plant in Chattanooga that will manufacture large, 700-1800 Megawatt, steam and gas turbines for electric power plants. The facility will require 350 full-time workers once it goes in service, as well as $300 million in capital investment, or about $850,000 per job. This is about 30% higher than the state-of-the-art auto factory Toyota's building in Blue Springs, Mississippi, but reflects the trend in manufacturing of spending more and more on construction, and needing fewer people once the plant is in service.
In a future post, I'll lay this out in detail, but the capital cost per job created in most manufacturing sectors is rising much faster than inflation, which means if you recruit manufacturing facilities, much of the economic impact is front-loaded. It also means you need a limited supply of skilled labor, because even with an existing presence in the Chattanooga area, this plant won't be enough to put Alstom in the top 15 employers in that city, which is attractive to turbine makers because of the large Tennessee Valley Authority facility there.
The usual chants about educated labor and multiplier effects came up with the plant's announcement, but with just 350 people, it's not like they'll need an army of electrical or mechanical engineers. And with Alstom being a foreign company, many of the profits will be going to France, not recirculated in the region. In all, the plant's certainly a good thing for Chattanooga, but the economic impact is likely to be far less than many are hoping.
In a future post, I'll lay this out in detail, but the capital cost per job created in most manufacturing sectors is rising much faster than inflation, which means if you recruit manufacturing facilities, much of the economic impact is front-loaded. It also means you need a limited supply of skilled labor, because even with an existing presence in the Chattanooga area, this plant won't be enough to put Alstom in the top 15 employers in that city, which is attractive to turbine makers because of the large Tennessee Valley Authority facility there.
The usual chants about educated labor and multiplier effects came up with the plant's announcement, but with just 350 people, it's not like they'll need an army of electrical or mechanical engineers. And with Alstom being a foreign company, many of the profits will be going to France, not recirculated in the region. In all, the plant's certainly a good thing for Chattanooga, but the economic impact is likely to be far less than many are hoping.
Thursday, June 24, 2010
Nashville - Below Average in Patents, Above Average in Income Growth
Encouraging signs coming out of the Music City. Specifically, it's avoiding the temptation to join the PhD or patent rat race, and is instead trying to build on its unique characteristics. Moreover, the city is playing down the buzzword industries that many other places are desperately chasing after. This is so basic it shouldn't be news, but it is when everything in economic development right now is a blur of biotech/greentech sameness.
I mention patents and PhDs specifically, because Nashville has very few of them. In the research done with Market Street consultants to update its economic development plan, the city found it had just 1.5 patents per 10,000 employees. Not only was this way below Austin, which has 27.2 per 10,000 employees, its below the national average of 6.4 per 10,000. Yet at the same time, the city's wage growth and per capita income growth rates have soared past national averages, as well as past cities like Austin, even when factoring out the recessionary impacts of the last year.
Nashville still looks likely to bump into a few of the same life sciences, green jobs roadblocks that have stopped other cities from defining distinct messages. However, its plan to focus on existing health care, manufacturing, and music industries show a much stronger willingness to build on its own strengths than the follow-the-fad strategies being pursued by so many other cities.
I mention patents and PhDs specifically, because Nashville has very few of them. In the research done with Market Street consultants to update its economic development plan, the city found it had just 1.5 patents per 10,000 employees. Not only was this way below Austin, which has 27.2 per 10,000 employees, its below the national average of 6.4 per 10,000. Yet at the same time, the city's wage growth and per capita income growth rates have soared past national averages, as well as past cities like Austin, even when factoring out the recessionary impacts of the last year.
Nashville still looks likely to bump into a few of the same life sciences, green jobs roadblocks that have stopped other cities from defining distinct messages. However, its plan to focus on existing health care, manufacturing, and music industries show a much stronger willingness to build on its own strengths than the follow-the-fad strategies being pursued by so many other cities.
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