Why Establish a Manufacturing Operation in the Southeast?
Why manufacturers who have expanded or relocated to the Southeast are now thriving, and how SGR assists such companies.
Trust the Leaders: Why has the Southeast become such a strong manufacturing hub?
Tom Hong: Building on its historic roots as one of the country’s strongest manufacturing centers, businesses that relocated to the region before the recession or during the recovery are beginning to see a notable return on their investment – and the word is getting out.
Recently, domestic and international companies have either moved or established significant manufacturing centers in the Southeast. For example, Kia Motors opened a major Georgia production facility on 2,200 acres of land in 2010, while BMW’s largest production plant in the world is in South Carolina. In addition, Honda and Hyundai both have major operations in Alabama, and Porsche is building its new North American headquarters in Atlanta.
It’s not just the automotive industry that is attracted to the Southeast. Lenovo, the world’s leading PC vendor, opened its first U.S. manufacturing plant in North Carolina last year. Starbucks even roasts its coffee beans in South Carolina.
TTL: Why are companies drawn to the Southeast?
TH: One of the many reasons is that the Southeast is great for businesses across many industries, not just manufacturing. Some of the reasons for this are the region’s highly skilled work force, its moderate cost of living, abundant land and pro-business laws. Georgia, in particular, has shown tremendous growth and was recently ranked No.1 in the country in CNBC’s “Top States for Business.” Manufacturers located in the Southeast have a Southern states are leaders in pro-business legislation and tax incentives for business development and job creation.
Manufacturers located in the Southeast have a ready and capable work force. Every southern state is a right-to-work state, which correlates to consistently low union membership. For instance, North Carolina has the lowest overall rate of union membership of any state, at three percent, while Georgia has the third lowest manufacturing union rate. The public university systems in North Carolina and Georgia are among the best in the country, and provide businesses throughout the South with a highly educated work force.
TTL: How is the infrastructure for manufacturers in the Southeast?
TH: The infrastructure in the Southeast is constantly improving. The Savannah Port Harbor, already the third-busiest port in the U.S., is increasing the size and depth of the harbor. Atlanta’s Hartsfield-Jackson Airport continues to expand and is once again the busiest airport in the world, with 75 international destinations in 50 countries. The ability to reach 80 percent of the U.S. population within two hours is certainly an asset for any company located here. Interstates and extensive railway lines connect all of the southern states, and the states in the region control major harbors along the Atlantic and the Gulf Coast. Manufacturers in the South can also travel quickly and efficiently by air, sea, road and rail. The Southeast, and particularly Georgia, has become a strategic business location. Consider, for example, logistics-related businesses such as Delta, UPS, SAIA and Manhattan Associates, all of which are headquartered in Georgia.
TTL: What advantages do manufacturing operations in the Southeast enjoy over those in other regions in the country?
TH: Quite simply, the costs of running a business are lower in the Southeast. Forbes recently ranked four cities in North Carolina among the 15 U.S. cities with the lowest cost of business. In 2014, CNBC ranked Kentucky the least expensive state in which to live. State governments in the Southeast are especially hospitable to manufacturers. Earlier this year, for instance, Florida eliminated its manufacturing and equipment sales tax. Southern states are leaders in pro-business legislation and tax incentives for business development and job creation. States are competing for corporations to relocate in the U.S., in general, and particularly in the Southeast. Finally, land is inexpensive here, and there is still plenty of it.
TTL: What advice would you give a manufacturer considering opening or buying a manufacturing plant in the Southeast?
TH: My advice would be to take your time, do your research and work with a team of capable advisors who understand your needs and goals, and who can deliver the best possible legal and financial transactions. Most importantly, you need advisors with the experience and resources to help you achieve your businesses goals in a timely manner. Whether you are looking to acquire an existing facility or start a “greenfield” project, working with advisors who have an accurate pulse on the market and understand the local business and legal environment is critical.
TTL: What sets your group at SGR apart from other manufacturing practices?
TH: In a nutshell, experience. Manufacturing businesses are our bread and butter. We have represented domestic and foreign manufacturers for over a century. We have a deep understanding of the industries we serve, and we leverage that knowledge and experience for our clients’ benefit. We also appreciate the myriad issues and challenges faced by manufacturers and we pride ourselves on helping our clients mitigate risk, with an emphasis on efficient and practical counsel. Whether defending a products liability claim, advising on corporate governance and employment matters, evaluating intellectual property rights or counseling on tax incentives, we are a full-service firm and draw upon the skills and experience of our multidisciplinary manufacturing team.
TTL: Can you describe your role as chair of SGR’s Manufacturing Practice?
TH: I am but one of many members of SGR’s Manufacturing Practice who advise our clients on a day-to-day role allows me to interface with industry leaders and referral sources and to coordinate our marketing efforts among team members.
TTL: How is SGR’s Manufacturing Practice involved with manufacturers migrating south?
TH: As a firm, we work hard to network with our domestic and international referral sources to get involved in the early stages of the M&A transaction or site selection process. We have found the earlier we get involved, the more streamlined and efficient the process will be – particularly in the site selection – and the better the incentives. In the site selection process, a healthy dose of competition among several jurisdictions is never a bad thing. Within the last couple of years we’ve assisted our clients in establishing new businesses that have resulted in thousands of new jobs throughout the Southeast and millions of dollars in local and state incentives for our clients.