EconSouth (Second Quarter 2003)

Recent events and trends from the six states of the Sixth Federal Reserve District
Alabama Alabama
Defense spending is boosting the state’s economy. An Alabama-based laptop computer maker, for instance, won a $19.5 million contract to supply the U.S. Army with 2,000 battlefield laptop computers and accessories. In addition, some components of a missile interceptor will be assembled at a Boeing Co. plant in Huntsville.
Although some of the states’ steel producers and fabricators continue to operate well below capacity, firms producing pipe used in oil fields in the Middle East anticipate increased orders in the coming months.
Venture Industries recently announced that it will construct a $100 million plant in Prattville to produce vehicle components for Hyundai Motor America. The facility, scheduled to open in June 2004, will eventually employ 600 workers.

Reports from the tourism sector have been mixed. In south Florida, a successful spring break season helped offset weakness in international travel. Central Florida theme parks are offering summer discounts and new attractions in an attempt to bring back tourists.
Favorable yields and stable prices should boost profitability for Florida’s sugarcane and vegetable farmers. International competition continued to squeeze citrus prices.
Miami’s exports to Brazil, Venezuela and Mexico are still off sharply from 2002 levels. However, apparel and textile-apparel machinery exports to Central American countries posted healthy gains.
Georgia Georgia
The Pentagon approved a $3 billion contract for Lockheed Martin to produce 20 more F/A-22 Raptor fighter jets. The planes are assembled in Marietta and account for about 1,700 jobs there. A sharp decline in business jet sales means that Savannah-based Gulfstream is likely to furlough some 1,000 workers in July.
The Atlanta office market weakened further during the first quarter. The vacancy rate reached a new high of almost 22 percent, and net absorption remained negative. Commercial construction levels were down sharply from last year.
Higher export and import volume has resulted in a 33 percent increase, a new record, in the number of autos handled by the Port of Brunswick during the fiscal year that ended in February.
Ford Motor Co. is considering building a new $1 billion factory in Georgia to assemble its next generation of midsized cars.
Higher oil and gas prices have not translated into increased drilling activity in Louisiana. ChevronTexaco, however, will reportedly hire additional staff in New Orleans for the Tahiti oil prospect, the firm’s largest deepwater find in the Gulf of Mexico.
Louisiana’s tourism and hospitality sector has reportedly softened. New Orleans’ Jazzfest attendance numbers were below expectations. The state’s riverboat casinos’ revenues fell almost 5 percent from a year earlier.
To cut costs, Hibernia National Bank recently laid off 120 workers, 70 of whom worked in the New Orleans area. The company reportedly expects to eventually lay off 5 percent of its 5,800-person workforce.
Mississippi Mississippi
Military contracts continue to stimulate the state’s economy. Northrop Grumman plans to spend $288 million to expand its shipbuilding operations in Pascagoula and Gulfport. The shipyards already have contracts to develop prototypes for the next generation of destroyers.
Local chemical companies report that high natural gas prices are adversely affecting their bottom lines and causing some production disruptions.
Gaming operators along the Mississippi Gulf Coast continue to post good numbers. Gross gaming revenues from casinos were up by about 6 percent in March from a year earlier. A new casino was recently announced for Biloxi. This casino, the first new gaming house in Mississippi since 1999, will employ 500 workers.
New auto parts manufacturing facilities were recently announced. Bridgestone will build an $11 million parts plant in Dickson to supply shock-absorbent pads and interior cushions for Honda, Toyota, and Nissan vehicles. Bodine Aluminum chose Jackson as the site for a new $124 million plant to build Toyota engine blocks.
With the state’s transportation budget reduced by some $65.8 million, the Tennessee Road Builders Association anticipates significant cuts in the state’s road construction employment.
Verizon announced plans for a new call center in Murfreesboro, scheduled to open this fall, that will initially employ 400 workers and could eventually employ more than 1,000.
Compiled by the regional section of the Atlanta Fed’s research department

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