Green grass and high tides
By Mike Randle
The headline above is of a great song from the '70s. It was by The Outlaws and was recorded in 1975 (go straight to You Tube to listen to it and bring the entire staff into your C-suite and rock on). I was a student but more like the starting shortstop for the University of Tampa Spartans baseball team in 1975.
Like any student void of success at anything -- except baseball -- once I heard "Green grass and high tides" it gave me hope that I would turn out to be something -- anything -- and it also helped that The Outlaws were from Tampa. You don't have to be an expert on Southern rock to like the song. It still is one of the most played Southern rock songs on music sites such as Pandora and Grooveshark.
Now let's shift to the South's economy, which on paper -- our data -- is the best economy we’ve seen since 1997 or 1998. Yep, green grass and high tides are here in the American South.
Want proof? Our data of projects announced in the South stretches back to 1992. The only years that beat 2010 and 2011 in the total number of large job generating projects announced in the South was 1997 and 1998.
Let’s go outside the realm of economic development to provide more proof we are in green grass and high tides. The recently completed winter quarter was the best stock market rally in 14 years. That would be 1998. According to our data, manufacturing is adding jobs for the first time since … you guessed it; 1998.
But this is no ordinary recovery. Home prices are as low as they were in 1998. And there is plenty of debt to be paid back by just about everyone. That wasn’t the case in 1998.
But there’s real hope that this great economy can be sustained. There are two things working in our favor. No. 1, the recession helped the South’s workforce to become incredibly productive. Raise your hand if you are still doing the job of two of your former co-workers who lost their jobs in the recession. At first you didn’t think you could do the work. Now you are just used to it. Congratulations, you have helped the workforce in the South become the most productive in the world.
The other thing working in our favor is, according to the Boston Consulting Group’s report titled “Made in America, Again,” how competitive the South has become when it comes to the cost of doing business. In the report BCG writes, "When all costs are taken into account, certain U.S. states, such as South Carolina, Alabama, and Tennessee, will turn out to be among the least expensive production sites in the industrialized world.” That’s awesome!
Plenty has been written in the last year about re-shoring jobs to the South and Mexico as global manufacturers figure out that producing goods here as opposed to offshore is getting very attractive. In fact, I wrote a cover story on the subject in the last issue titled “A Defining Moment: How the American South is beating China at its own game.” I also have a presentation on the subject and I am working on a presentation titled, "Green grass and high tides."
While re-shoring jobs and production from China and elsewhere to the South and Mexico is a fact, one thing that isn't discussed in the ever climbing manufacturing project totals is this: are companies "outsourcing" production to the South and Mexico like they did to China for over 20 years? It sure looks like it because exports are going through the roof in the region. In fact, we haven’t seen export numbers like this since … yep, 1998.
Here are some facts: Since 2008, foreign direct investment to Germany, France, Japan and South Korea has all but stopped. In 2009, foreign direct investment in Europe dropped by 36 percent while it increased in the U.S. by 49 percent in 2010.
Exports from the South have grown by 17.68 percent from 2010 to 2011, compared to a national export growth rate of 10.8 percent. Manufactured goods accounted for 61 percent of U.S. exports, but in the South it was 72 percent.
That is an incredible rise and it is being driven by a lot of things, but natural gas production in West Virginia (39.6 percent increase in exports in just one year) and Louisiana (33.3 percent in increase in exports) stand out. Really, though, the increases in exports are across the board with each Southern state seeing healthy increases, if not setting all-time records. Mississippi saw an increase in exports in 2011 of 32.8 percent. The increases are unmatched by any year over the last 20 years except for 1997 and 1998, when we really were in green grass and high tides.