Georgia’s Recipe For U.S. Manufacturing Recovery
By: Joel Hans, Managing Editor
August 28, 2013
Georgia, among other southeastern U.S. states, has been receiving a lot of attention from manufacturers lately for its business-friendly climate and proximity to big-name players in advanced manufacturing — think Tyson, Kia, Caterpillar, Lockheed Martin and more. That success, while multifaceted, can be directly traced to the state’s economic development efforts, which are quite varied in structure and different from what a lot of other states, even in the region, are offering.
To get more information on the latest developments out of Georgia, and what the state is doing different and well-enough to garner so much attention, we spoke with Tom Croteau, the newly-minted deputy commissioner of global commerce at the Georgia Department of Economic Development. He’s been at the department for 17 years, and has seen the ups-and-downs of his region, and manufacturing as a whole.
A few those aforementioned major investments have been in advanced manufacturing, such as aerospace and automotive, with companies like Kia Motors, Mohawk, Toyota and Caterpillar all relocating or expanding into the area in the recent past. Croteau says that in addition to those big-name firms, the carpeting industry has seen a major resurgence. Engineered Floors added 2,000 jobs with a $450 million investment, and Mattex has added 200 jobs with a $60 million investment in northern Georgia. A lot of that is because of a recovery is housing, although some can be attributed to automotive carpeting as well, as more companies open U.S. assembly plants.
Croteau says “joke in the hallway over the last couple of months is that everything is cars and carpets.”
When it comes to what manufacturers are looking for in a region or state right now, Croteau says that low costs and low unionization are top on many lists — both of which, naturally, Georgia offers. He says, “Our legislature passed a sales tax exemption on energy for manufacturers, and that’s sales tax on all energy, not electricity. That was a real big boost for us.” For Europe-based manufacturers looking at American manufacturing, if only to be close to the customer, the growth of cheap shale gas has been a major boon.
Georgia is taking advantage of “clustering” around the automotive industry as well, which gives credence to the trend that OEMs will likely be seeking ever-shorter supply chains. Croteau says, “We have OEMs in South Carolina, Alabama, Tennessee and some other states, and it puts us in a sweet spot where a lot of the parts providers, when they’re working with us, say they don’t want to be too closely associated with one single OEM because they supply to multiple OEMs. We think we’ve benefited from that in some way.” Having a large port nearby — the second-largest on the East Coast — doesn’t hurt, either.
Anyone in manufacturing knows that “re-shoring” has taken the buzzword crown away from “green” or “sustainable,” but for Georgia, it’s been more than a trend. Caterpillar opened a very large plant in Athens, with a major investment, to manufacture machines that had once been made in Japan. Croteau says being close to the customer is one major advantage, and when companies add in some currency issues, it became a relatively simple equation.
Simply put, Georgia is on the leading edge of what many see as a bigger American manufacturing recovery. Their success, then, means that they must be doing a few things differently than the rest of the country, or even the region. Croteau says one of the biggest assets his state has is its Quick Start program, which provides free, strategic workforce training for new, expanding and existing companies. It’s been around for 40 years, Croteau says, and has been regularly ranked as the No. 1 state workforce training program. Quick Start works with Georgia’s technical college system to educate potential workers on the industries clustered nearest them.
That college system has 32 schools and numerous satellites — an attempt to meet the goal of having some educational facility within a 20-minute drive of any person in the state. The industries nearest each college help drive the curriculum, ensuring that people get marketable skills, and that companies have a wealth of potential local employees to pick from.
As a company begins to build a new facility, or expand an existing one, it can work ahead with Quick Start to ensure a good plant culture and get a lock on employees with the right skills. Quick Start associates often travel to a company’s most efficient plant and bring that synergy to the new facility in Georgia. And it works with companies directly to provide a custom training program. Croteau says, “Quick-Start becomes an extension of their own training programs. We’re not trying to create something different, or off-the-shelf, or out-of-the-box. We’re really doing exactly what the company wants to do and providing additional resources and personnel to do that.”
Naturally, Quick Start is being replicated in other states, but Croteau isn’t exactly worried — he says it’s not a formula that can be replicated in a few years.
In addition to the technical college system, a program called “Go Build Georgia” is built into high schools to, as its website states, “educate young people on the value of learning a trade, dispel their misconceptions about the skilled trade industry and inspire them to consider building a career as a skilled tradesman.” Croteau says his state needs more machinists, and is confident this program is already making a difference in that effort.
Working behind all of that is the Georgia Center of Innovation for Manufacturing, which brings together government, higher education and the private sector. Within the six centers, manufacturers can connect with university researchers, for example, to help attain research grants and discover new ways of making products. Private industry can, then, help drive some of the research conducted at educational institutions to increase competition on local and global levels.
For Croteau, his state’s competitiveness isn’t the result of any one asset, or even being in a certain region of the country. It’s the accumulation of many small benefits — appealing tax rates, a very large port nearby, low unionization and good workforce training — all working together. Georgia has to compete with all the other southeast states, from Texas up to Virginia, and it’s not an easy market. The best part about states actively competing to encourage manufacturing investment is that it creates more incentive around the country, and even from foreign firms looking to break into the U.S. market.
Croteau couldn’t speak in detail about some of the big investments in Georgia’s future, but it’s nearly certain each will be newsworthy in their own rights. It’s a formula, no doubt, that many other states will try to replicate as American manufacturing enters what some consider a “renaissance” of profitability and productivity.