EconSouth (Second Quarter 2001)

THE STATE OF THE STATES
Recent events and trends from the six states of the Sixth Federal Reserve District
Alabama Alabama
The surge in the energy industry is benefiting the state’s shipbuilding industry. Austal U.S.A., Mobile’s newest shipbuilder, won a contract for aluminum vessels that will deliver crew and supplies to oil and gas rigs in the Gulf of Mexico.
Layoffs at high-tech firms continue. SCI Systems, an electronics manufacturer, will shut down one of its largest plants in Arab, Ala., eliminating 330 jobs because of lagging computer sales. The Sony plant in Dothan, which makes magnetic products used to back up computer data, announced it will lay off at least 40 workers.
New investment in the Southeast’s vehicle sector remains on track. Honda’s new $440 million plant in Lincoln is 70 percent complete. The plant will be able to produce 120,000 vehicles and engines a year and plans to hire 1,500 workers.

 
  Florida
Miami contacts expect another solid tourist season. While there is some concern that high fuel prices may slow summer tourism, current booking numbers are encouraging. According to analysts, cruise lines operating out of Miami may be experiencing some excess capacity problems.
Motorola, Sunbeam, Pratt & Whitney, and Daleen Technologies have reported layoffs in the Palm Beach area during 2001. In addition, SBC Telecommunications is shutting down its Tampa operations because of the slowing economy, putting 400 people out of work. Tampa’s Jabil Circuit, an electronics manufacturer, plans to cut approximately 300 jobs. In Orlando, Disney World announced plans to cut over 1,200 jobs to reduce costs as the theme park expects slower attendance growth this year.
Vehicle shipments continue to boost traffic and revenues at the Port of Jacksonville, which closely trails the Port of New York as the nation’s leading car import facility.
Florida
Georgia Georgia
Solectron, a printed circuit board producer for telecommunications, medical and retail industries, is closing its Suwanee plant, affecting over 1,000 workers.
About 360 people lost jobs at the end of March when Sony closed its cassette production factory in Carrollton because of declining sales. According to a company spokesman, cassette production is no longer competitive versus CDs and DVDs, which are produced at Sony plants in Indiana, Oregon and New Jersey.
Pirelli Tires is moving its tire production operations and U.S. headquarters to a location near Rome, Ga. The move from Connecticut and California represents a $141 million investment, creating over 300 jobs in northwest Georgia.
Despite declining revenues in recent months, Georgia projects a solid budget surplus for this fiscal year. The Georgia House approved a $15.5 billion budget for the next fiscal year, which begins July 1.
 
  Louisiana
Harrah’s New Orleans casino avoided bankruptcy recently as the Louisiana legislature approved a tax cut for the troubled facility. Approval was also granted for the casino to operate a hotel and open a restaurant.
The number of active rigs in Louisiana remained at the highest level in over a decade. The average rig count in April was 226 compared with 176 in April 2000. The U.S. rig count was 1,206 in April compared with 805 a year earlier. Industry experts expect oil and gas field service firms to expand through at least year-end
Chemical and steel producers continue to experience difficulty. Occidental Chemical, an ammonia producer in Convent, halted production because of high-energy costs and sluggish demand. Bayou Steel temporarily laid off 100 workers at its LaPlace mill, blaming a “glut of cheap imports” in the domestic steel market.
Louisiana
Mississippi Mississippi
The state’s shipbuilding industry continues to expand. Halter Marine won a contract worth $400 million to build four patrol ships for the Egyptian navy, a project that will create 200 jobs at its Mississippi shipyards. Construction was scheduled to begin in the second quarter of 2001. Halter employs about 2,500 people in Pascagoula and Moss Point.
The gaming industry continues to be an important engine for Mississippi’s economy. The latest casino gaming revenue numbers remain at historically high levels even though gross gaming revenues increased by only 0.7 percent in the first quarter of 2001 versus the first quarter of 2000.
Low prices continue to plague the local lumber industry. Georgia-Pacific recently closed a plywood plant in Louisville, Miss., affecting 350 workers. The plant was built in 1966 and had the capacity to produce nearly 300 million square feet of plywood a year.
 
  Tennessee
Auto suppliers continue to locate in the state despite a slowdown in vehicle sales. Toyo Seat U.S.A. recently broke ground for a new plant in Pelham, located close to the Saturn manufacturing plant in Spring Hill and the Nissan plant in Smyrna. The new facility will employ about 200 people.
Slowing demand for outboard motor boats has forced Outboard Marine to close its Murfreesboro plant, affecting approximately 270 workers. The plant opened in 1988 and recently employed about 430 people before scaling back operations. The company has filed for Chapter 11 bankruptcy protection.
Sluggish markets for apparel and textiles forced DuPont Co. to scale back production and lay off over 200 workers at its Chattanooga facility. The company makes polyester and nylon at this plant, which currently employs nearly 2,000 workers.
Tennessee
Compiled by the regional section of the Atlanta Fed’s research department

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