EconSouth (Third Quarter 2001)

Recent events and trends from the six states of the Sixth Federal Reserve District
Alabama Alabama
Sagging demand and foreign competition continue to cause problems for apparel manufacturers in the state. Russell Corp. plans to eliminate almost 800 jobs and close three Alabama plants.
The Sappi paper mill in Mobile has announced plans to shut down in the next few months, idling 500 workers. A company spokesperson said that high energy costs influenced the decision to close the mill.
Alabama’s aerospace industry is growing. Lockheed Martin plans to expand its Troy plant, adding about 150 workers to make high-altitude missiles. Mobile Aerospace Engineering will add 200 jobs with the completion of its expansion.
Honda is busy hiring 1,500 workers for its $440 million minivan plant in Lincoln, which is scheduled to open in the fall. Meanwhile, Toyota Motor Corp. recently broke ground on its $220 million V-8 engine plant in Huntsville.

Tourism activity in central and north Florida is slowing. Resort tax collections were down 9 percent in July from a year ago in central Florida. Theme park attendance has slumped and passenger traffic at Orlando International Airport was down from a year ago. In South Florida, though, the leisure travel segment has remained robust.
An expected decrease in the Brazilian citrus crop could help revive local citrus prices. Reduced imports of Brazilian orange juice are viewed as good news for local processors.
Boeing Co. will move around 300 engineering jobs in its space shuttle and international space shuttle divisions from Huntington Beach, Calif., to Florida. Boeing already has 2,500 employees at the Kennedy Space Center.
Florida’s housing markets show little signs of slowing, with home resales rising a reported 6 percent in the second quarter.
Georgia Georgia
Lucent Technologies recently announced further downsizing, with several hundred employees in metro Atlanta taking buyout offers. The company reached an agreement to sell its fiber optics unit to Furukawa Electric Co. of Japan and U.S. Corning. The future of the plant’s 3,000 workers remains unclear. Lucent has 4,000 other employees in metro Atlanta.
International Paper Corp. has cut back operations in Savannah, eliminating more than 400 jobs. The company will curb production in its containerboard and coated paper business because the strong dollar has eroded exports and increased imports.
Lockheed Martin Corp. has decided to proceed with initial production of the F-22 Raptor at its Marietta plant. The company will outsource some parts production work at the plant, a move that will result in elimination of 675 jobs. Officials at the plant say that the outsourcing will save $25 million a year.
The number of drilling rigs in operation in Louisiana continued to increase in July. Most of the drilling activities occurred in the onshore or inland shallow water areas.
Textron Marine and Land Systems landed contracts worth more than $100 million from the Japanese Defense Agency. Most of the work calls for Textron to build air-cushioned landing craft at its New Orleans plant.
Marathon Ashland Petroleum will spend $11 million to upgrade pollution control equipment at its Louisiana refinery as a part of a lawsuit settlement with federal and state governments.
Competition from China, Australia and India combined with relatively high natural gas prices has adversely affected the local chemical industry. Louisiana’s IMC Global, with 330 workers, will be shutting down its operations until current inventories of fertilizer are reduced. Ciba Chemicals is cutting back operations.
Mississippi Mississippi
Nissan plans to hire as many as 4,000 people before its truck and van plant near Canton begins production in 2003. Seven firms have announced plans to build facilities in the state to supply the plant, and they will likely hire about 1,000 additional workers.
Mississippi’s existing factory sector continues to be hit hard by slowing economic conditions. In July, statistics showed that manufacturing payrolls had contracted 7 percent from a year earlier. The state’s apparel industry lost about 2,100 workers over the year. The sector’s employment is down by 45 percent from 1997 levels. Much of this decline can be attributed to the movement of manufacturing plants overseas.
Mississippi’s gaming industry is also slowing. State tax revenues from gaming increased by 1.9 percent in fiscal year 2001 compared with an almost 12 percent gain a year earlier.
The state’s apparel and textile industries continue to shrink. Dyersburg Fabric has closed a plant, affecting more than 900 workers. Greenwood Mills Inc. plans to close its Cookeville denim operation in September, laying off 320 workers. In addition to its South Carolina plants, Greenwood Mills has a new plant in Mexico.
In July, union workers at Saturn’s Spring Hill plant voted for a four-day workweek and 10-hour days. The company will use rotating shifts to meet its six-day production schedule as Saturn prepares to launch its new sport utility vehicle. General Motors has invested around $1.5 billion to set up the plant for SUV production.
The unavailability of skilled labor remains a problem for many employers in Nashville. Bonuses, flexible schedules, and housing programs are just a few of the incentives hospitals are using to attract and retain nurses.
Compiled by the regional section of the Atlanta Fed’s research department

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