The South shall rise … still: outsiders are flocking to the Southeast for its low-cost living and skilled technology work force

Chief Executive, The, Nov, 2004 by Peter Galuszka

The South has grabbed more than its share of automotive sectors. French tire maker Michelin's U.S. headquarters is in South Carolina, while Bridgestone-Firestone is in Nashville and German and Japanese carmakers are located in Alabama, South Carolina, Tennessee and Kentucky. Interstate 65, running from Kentucky south, and I-81, running along the spine of the Appalachian Mountains, have spawned parts makers of all types, including customs control maker Teleflex in Lebanon, Va., and automotive parts maker Duramax Tokai Rubber Tennessee in Tazewell, Tenn.

Still, the manufacturing industry has seen its share of troubles recently. Textiles, for example, are the poster child for the dangers of old mill-style operations, and many have gone out of business. One way to deal with that is by focusing on retraining. While there's a limit to what can be done, given the enormity of lost jobs in sectors such as apparel, blue-collar training for higher-end manufacturing jobs is entirely possible. BMW, for instance, is building a new research center at Clemson University's Greenville, S.C., campus to advance methods and tools used in its car production in the Palmetto State where it has invested $2.5 billion and employs 4,700. Another German firm, equipment maker STIHL AG, boosted its training in the U.S. when it opened a production facility in Virginia Beach. "Within five years, we had Virginia workers who were on the same skill level as workers in Germany," says Hans Peter Stihl, former head of the STIHL AG advisory board.

[GRAPHIC OMITTED]

By-Product: Suburban Sprawl

While the South seems ahead of the curve in developing techsavvy work forces, it is in danger of spoiling other historically winning attractions. Quality of life, for example, is being threatened by traffic congestion, which has become a major issue in metropolitan Atlanta and along the stretch from Raleigh to Charlotte. The cause is unchecked suburban sprawl spurred by growth-hungry local officials who have overloaded the region with cookie-cutter subdivisions and strip malls. Some commuting times are approaching the levels of Los Angeles or New York--the very places some CEOs want to leave for their overcrowding.

While the region has many nationally ranked universities, its primary and secondary educational system lags. "The K-12 system doesn't stack up well against other states," acknowledges Jeff Humphries, director and economist at the Selig Center for Economic Growth at the University of Georgia's Terry College of Business. "We rank near the bottom and it's an attitude problem. Georgians haven't given it the priority they should."

Large areas of the South are still getting hammered economically. Some parts of the Appalachians continue to see double-digit unemployment as the coal industry downsizes further and call-center jobs, considered a major employment solution, are outsourced to low-wage countries. Coastal areas, while booming with real estate developments for retirees, have seen their manufacturing jobs move offshore and tobacco, a major cash crop from Virginia to Florida, is in decline. Things are so bad in eastern North Carolina, an area the size of New Jersey, that some have proposed creating an emergency Southeast Crescent Authority to drum up replacement jobs.