EconSouth (First Quarter 2002)

Recent events and trends from the six states of the Sixth Federal Reserve District
Alabama Alabama
The state’s apparel industry continues to struggle. Russell Corp. announced the elimination of 200 additional jobs. Last year the company closed several Alabama plants and eliminated about 800 jobs. One bright spot for some apparel firms has been the growth in military clothing contracts.
Toyota Motor Corp. recently began construction of its new V-8 engine plant in Huntsville. The first engines should roll off the production line in 2003.
Fibercore Inc. plans to build a $30 million fiber optic cable plant in Auburn, employing about 200 people.
Alabama’s primary metals industries eliminated some 2,000 jobs in 2001 after cutting more than 3,000 jobs over the prior three years. Steel prices firmed somewhat in February after having declined steeply through most of 2001.

Florida’s hospitality and tourism sector continued to recover from post-Sept. 11 lows, but hotel/motel and resort occupancies remained well below year-ago levels during the first two months of 2002. A key factor in south and central Florida has been the persistent decline in European traffic.
Central Florida’s commercial real estate market turned down significantly during 2001. The office market was affected by increasing vacancies and sublease space, and more recently the hotel market has come under considerable pressure. Reports suggest that occupancy rates at some Orlando hotels are at especially low levels. Orlando is Florida’s biggest lodging market.
Central Florida’s defense contractors have received several large contracts, including Lockheed’s Orlando-based missile division, Sparton Defense Electronics and Harris Corp.
Georgia Georgia
Weak market conditions have resulted in the closing of a Jonesboro plant that produced aluminum doors and frames for commercial buildings. The plant employed approximately 250 workers.
Hotel occupancy is down and several new hotel construction projects in metro Atlanta have been shelved. One factor has been the weakness in demand because of lower levels of business travel.
In Savannah, Ga., Gulfstream Corp. has been awarded several new contracts for specialized aircraft. Customers have included the Israeli Ministry of Defense, the Japanese Coast Guard and the National Center for Atmospheric Research.
Following signs of economic recovery, production cuts scheduled for March at Ford Motor Co.’s Hapeville plant have been postponed. An estimated 275 assembly jobs would have been lost.
The recent merger of oil giants Chevron Corp. and Texaco Inc. has added almost 180,000 square feet of office space to the sublease market. The addition of this space has significantly affected downtown New Orleans’ office market.
Both the U.S. and Louisiana rig counts declined for the seventh consecutive month in February. The Louisiana rig count in February was 164, down from the year-ago level of 221. The U.S. rig count declined to 825 in February from 1,136 a year ago.
Despite the decline in natural gas prices, weak market conditions continue to adversely affect the state’s chemical producers. Less demand for fertilizer, vinyl and PVC pipe has kept plants operating below capacity and has led to several layoffs.
Mississippi Mississippi
Apparel employment in Mississippi fell by 40 percent, or by nearly 8,000 jobs, from December 1998 through December 2001. The latest casualty, Burlington Industries Inc., plans to cut 850 jobs and cease operations at its Stonewall plant by the end of March of this year.
According to the state’s tax commission, gross revenues at the 30 state-regulated casinos rose 2 percent to $2.7 billion in 2001. Revenue in December 2001 was up some 17 percent at the 12 casinos on the Gulf Coast. Visitor numbers returned to near normal levels soon after Sept. 11, apparently because most of the casino’s patrons live within driving distance.
A second wave of suppliers, representing an additional $110 million of investment and 1,000 jobs, was announced recently as part of Canton’s $930 million Nissan automotive assembly plant project.
AdvancePCS will reportedly open a customer-service center near Knoxville. The center, set to open in July, will employ 400 people as part of the company’s prescription service.
Strong demand kept production lines busy at Nissan’s Smyrna automotive plant in 2001. Nissan assembled almost 150,000 Altimas in Smyrna last year. The plant employs about 6,700 people and expects to add 300 more next year, when the plant begins to produce the Maxima.
The planned closure of Federated Department Store’s Fingerhut retailing unit, the country’s largest direct marketer of retail goods, will cost about 1,300 jobs in Tennessee as the company shutters its call center and distribution operations there.
Black & Decker Corp. plans to close its Nashville operations, which currently employ 270 people, as part of the company’s decision to shift its manufacturing emphasis overseas.
Compiled by the regional section of the Atlanta Fed’s research department

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