EconSouth (Second Quarter 2006)

The State of the States

Recent events and trends from the six states of the Sixth Federal Reserve District

? Global Management Business Automotive USA, a Korean auto parts supplier, will build a plant in Auburn producing components for the Hyundai factory in Montgomery and the Kia plant planned for west Georgia. The $28.6 million plant will employ 200 when it begins operations in about two years.
? Birmingham’s industrial buildings were 96 percent occupied at the end of 2005, and leased industrial space finished the year at 89 percent, according to a report from Graham & Co., a Birmingham-based real estate firm. A company spokesman said the overall Birmingham market is tighter than it has been in the past four or five years.
? A Swedish medical services company, Gambro Renal Products, recently broke ground on a manufacturing plant in Opelika. The plant will bring 160 new jobs to the area. Gambro will invest more than $100 million in the project.

? AOL is closing its Jacksonville call center, laying off 780 employees there. A company spokesman attributed the layoffs to improved self-service tools that reduced demand for call center support. The spokesman said call volume to AOL overall has dropped by about 50 percent since 2004.
? Single-family existing home sales in Florida totaled 18,881 in March 2006, down 22 percent from March 2005, according to the Florida Association of Realtors. While industry analysts predict that home price growth will eventually cool, annual price appreciation currently remains in the double digits in many markets throughout the state.
? Smith Travel Research reported that Orlando hotel room occupancy rates were 80 percent, down nearly 8 percent from March 2005. March 2006 resort tax collections in Orange County, where Orlando is the county seat, fell about 2 percent compared with a year ago. Tourism officials attribute the weak March figures to Easter’s occurring in April this year, shifting some vacation spending out of March.

? Gulfstream Aerospace Corp., which employs 4,300 workers in Savannah, is planning a $300 million expansion. The project will add 1,100 jobs over the next seven years, according to company officials.
? Fruit of the Loom announced that it will close a yarn and textile plant in Rabun Gap in August. As a result, 930 people will lose jobs. In the announcement, a spokesman cited pressure from Chinese and other Asian imports.
? Mycoal Products Corp. is bringing 100 new jobs to Gwinnett County this summer. The Japan-based firm recently announced that it would locate its North American headquarters in Suwanee. The company manufactures a variety of products, including gloves and neck braces, that use chemical packages to warm the body.

? The Port of New Orleans has announced that it is ready for cruise ships again, and most cruise lines are expected to return by October. Construction is under way at the port’s new $37 million Erato Street Cruise Terminal, which is scheduled for completion by mid-September.
? Royal Dutch Shell announced that its Mars oil and natural gas extraction platform will resume normal production by late June. The platform, which accounts for about 5 percent of all Gulf of Mexico oil and natural gas production, was the largest one damaged by Hurricane Katrina.
? Six Flags New Orleans will not open for the 2006 season because of damage from the flooding caused by Hurricane Katrina, according to a company spokesman. The company did not provide information on the park’s status in 2007.

? The Beau Rivage casino is scheduled to reopen August 29. Also expected to resume operations this year under new ownership are what had been the Grand Casino in Gulfport and the Grand Casino in Biloxi. Casino Magic in Bay St. Louis, Boomtown Casino, and Treasure Bay (the latter two in Biloxi) are also expected to reopen this year. Collectively, these casinos will employ 6,500 employees.
? In March 2006, the three Gulf Coast casinos still operating took in $63.8 million in gross gaming revenues, compared with $117.8 million in March of 2005. This loss was partially offset by increased revenues—$159.7 million in March 2006 compared with $141.7 million in March 2005—generated by casinos in counties up the Mississippi River.
? Sales of large sport utility vehicles produced at the Nissan plant in Canton fell by double-digits in March compared with a year ago as consumers turned to more fuel-efficient vehicles, according to Nissan’s figures.

? Quebecor World Inc. will close its book printing plant in Kingsport, eliminating about 425 jobs. The closure should be completed by the third quarter of this year. Quebecor, one of the largest commercial printers in the world, prints products including magazines, books, and catalogs.
? In Cookeville, Russell Stover Candies laid off 475 employees and turned its 30-year-old candy factory into a warehouse. The move comes less than a year after the company laid off 400 people when it eliminated two of the plant’s three shifts. A company spokesman declined to specify causes of the cutbacks.
? A mix of new attractions and restaurants helped make 2005 a record year for Pigeon Forge’s tourism industry. Gross business receipts totaled more than $777 million last year, up 9 percent from 2004. A number of new attractions are debuting this year, including WonderWorks, an educational amusement park.
This information was compiled by Dave Avery, a senior economic analyst at the Atlanta Fed.
Illustrations by Jay Rogers

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