EconSouth (Third Quarter 2000)

Recent events and trends from the six states of the Sixth Federal Reserve District
Alabama Alabama
A Boeing Co. decision to cut jobs in California will result in additional work for the company’s Delta rocket plant in Decatur. The Decatur rocket plant has 525 employees and is expected to employ 2,000 people by 2004.
Bender Shipbuilding and Repair of Mobile and Austal Limited of Perth, Australia, will develop a new shipyard on the Mobile River to produce aluminum ferries and other vessels. The shipyard could eventually employ as many as 1,000 workers.
Gulf States Steel is expected to shut down its Gadsden plant after union workers rejected the company’s final labor offer. A company spokesman noted that Gulf States will begin a gradual closure of the facility, which employs 1,800 people, with production to cease by October. The slow market for steel was one of several recent developments that negatively impacted the company.

Florida exports to key markets, including Brazil, Chile and the United Kingdom, are on the rise. Reduced exports to Colombia and Venezuela have offset some of these gains, however. Florida officials have high expectations for the state’s future trade outlook. State business leaders recently returned from a trade mission to Brazil that is expected to boost exports of high-tech products during the coming year.
Drought-related losses are estimated to total $314 million through mid-2000 in Florida. Most of the damage is being felt in the northern and western areas of the state. Citrus, vegetables, peanuts and cotton are the crops most seriously affected.
Federal funds to eradicate the citrus canker have been released. The government’s $56 million will be added to the $62 million approved by Florida’s legislature. While current losses are minimal, there is potential for widespread damage.
Georgia Georgia
Although Georgia’s apparel employment is down by 2,000 workers from 1999, the decline is more than offset by 2,600 job additions in carpet and rug manufacturing, mostly in north Georgia. Strength in residential construction and home refurbishment markets has resulted in strong demand for new carpet and rugs.
Savannah’s port is a focal point for the region’s surge in trade. Savannah has recently improved its ability to handle container cargo, becoming the nation’s ninth-busiest container port. The port has also attracted two large shipping lines that will increase container cargo through Savannah by 8 percent.
Recent volatility in the equity markets has not substantially affected the nation’s or region’s venture capital financing. Georgia led the region in start-up companies, raising $589 million in venture capital in the second quarter, down from $660 million in the first quarter.
The state’s oil industry is in the early stages of recovery. Oil companies have increased their exploration and production budgets; the number of offshore rigs in the Gulf of Mexico has reached its highest level in two years. Until recently, many energy companies have held off on new exploration because of skepticism about the sustainability of higher oil prices. The Louisiana average rig count grew to 207 in July from 187 in June; a year ago the count stood at 134.
New Orleans tourism officials are concerned that convention bookings were down from a year ago for July and August, but they are hopeful that the newly opened Jazzland theme park will help offset the summer lull. In June, Harrah’s New Orleans casino recorded its best revenue month since opening last November. Harrah’s Casino is a major local employer with about 3,000 workers.
Mississippi Mississippi
Gambling tax collections in Mississippi for the 1999–2000 fiscal year ending in June were up 12 percent from a year ago. Future casino revenue growth is expected to level off some, however, as new hotel and gambling facility construction has slowed.
Mississippi Chemical Corp., a manufacturer of solutions used in fertilizer, is reducing production because drought conditions have made Southeastern fields too dry to absorb the fertilizer.
Some furniture producers are being affected by rising interest rates as demand from the single-family residential home market slows. According to reports, rate increases and an oversupply of product are also adversely affecting Mississippi manufactured home producers.
Activity is increasing at the state port in Gulfport. Revenue was up over 7 percent in fiscal 2000 from 1999 and is expected to grow even faster next year as the banana and frozen chicken markets pick up.
In July, Nissan Motor Co. announced plans to spend $1 billion over the next four years to expand its engine manufacturing plant in Decherd and increase the output of its Smyrna assembly plant. The company expects to hire 2,000 new workers as a result of the expansion. Increasing production will also mean more work for Nissan’s suppliers in middle Tennessee and elsewhere.
A spokesman for a Nashville producer of trucks reports that the heavy-duty truck market is depressed. No improvement in demand is anticipated for at least six months. The company recently laid off 30 percent of its workforce, representing the firm’s first layoff since 1991.
Healthy convention business and special events are helping the Nashville tourism and hospitality industry. For the first time since 1997 hotel tax collections have increased for four consecutive months in Nashville.
Compiled by the regional section of the Atlanta Fed’s research department

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