EconSouth (Second Quarter 2004)

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

Rising prices improved bottom lines and justified payroll expansions at some of the state’s steel producers. The price increases hit fabricators and suppliers, raising the price of goods that use steel as an input. Some fabricators are increasing steel inventories to avoid future price increases.
Plastech Engineered Products, an auto industry supplier, recently opened a $50 million plant in Jefferson that will produce plastic components for the nearby Mercedes-Benz plant and employ about 400.
The decline in Alabama’s manufactured home production reportedly has slowed. Last year, the state’s manufacturers produced two-thirds fewer homes than five years earlier. During those five years, the industry lost 5,000 jobs.
Continuing strong residential home sales are boosting profits for building material suppliers. A roofing product supplier’s plant is running at capacity, and employment is up in the state’s wood products sector.
Tourism-related automobile traffic should remain strong this summer despite predictions of record gasoline prices. Major central Florida theme parks’ hotel reservations are more than 10 percent higher than year-ago levels, and summer vacation bookings are up, industry representatives say. Orlando’s hotel occupancy rates have risen sharply from a year ago, hitting their highest level since 2000.
Cruise travel rebounded strongly from last year’s war-related slowdown, and firms are adding capacity. Bookings through March increased more than 50 percent from 2003 levels, a spokesman for a large cruise line said. Analysts predict 2004’s passenger traffic will increase nearly 12 percent from 2003.
Florida’s employment growth was among the Southeast’s fastest during the first quarter of 2004 as the state added more than 31,000 nonfarm payroll jobs. Professional and business services, educational and health services, and the leisure and hospitality industry saw most of the gains.
Occupancy rates rose at Atlanta hotels. The Atlanta Convention and Visitors Bureau says that bookings for 2004 are 20 percent ahead of rates this time last year. The number of events booked in Atlanta in 2004 is higher than in 2003, and the number of groups with more than 5,000 attendees is increasing, according to PKF Consulting Inc., which researches the hospitality industry.
Net absorption continued to improve for Atlanta’s office market during the first quarter. Vacancy rates declined slightly, the amount of available sublease space receded, and speculative construction was limited. But lease rates continued to decline, albeit at a slower pace than during the past few quarters.
In February, Georgia ports handled record tonnage of both imports and exports, 23 percent higher than year-ago levels. Import volumes continued to spur shipments, particularly those from China, the ports’ largest trading partner.
As NASA plans to end the space shuttle program by decade’s end, Lockheed Martin will cut jobs at the Michoud Assembly Facility in New Orleans, which employs 2,000.
A large producer of platforms for the oil industry plans to lay off more than 600 employees at its Louisiana fabrication yard as several projects are completed. The state’s oil and gas extraction sector employs 9,100 workers, about the same as year-ago levels.
High costs for raw materials and energy continue to batter Louisiana’s industrial chemical industry. BASF Corp., a large chemical producer currently employing about 1,400, announced plans to lay off as many as 500 workers by the end of 2005 to cut costs and improve efficiency.
Louisiana’s Economic Development Department, which provides seed money for business projects, awarded a grant to a New Orleans yacht builder to expand its shipyard and augment its labor force.
Casino gaming revenue along Mississippi’s Gulf Coast rose about 18 percent from year-ago levels. Monthly gaming revenues were at their highest level since July 2002 in part because of new gaming venues as well as increased customer traffic.
Nissan Motor Co.’s plant in Canton is keeping its Mississippi suppliers busy with overtime. The plant’s suppliers account for nearly 4,000 jobs, providing parts and components for the Quest minivan, the Titan pickup, the Armada sport utility vehicle, and the Infiniti QX56.
Northrop Grumman Corp., the largest producer of unmanned spy planes for the U.S. military, began construction on a plant in Moss Point in mid-April. The facility will produce unmanned air vehicles that can launch rockets, track targets, and fly for hours without refueling.
Foreign competition and sluggish demand continue to shrink the state’s apparel industry. At 10,700 jobs, industry employment is at about half of 2000 levels and slightly over 20 percent of 1995 levels.
Tennessee truckers reported strong freight volumes in early 2004, allowing some truckers to pass on higher fuel costs to shippers. Some contacts noted, however, that continued higher diesel prices could drive small independent truckers out of business.
At a leading upscale Nashville hotel, revenue per room grew by 18 percent from year-ago levels. The number of groups with 30–75 people holding meetings increased. Summer bookings are about 10 percent above year-ago levels.
Tennessee Valley Authority, the nation’s largest public electric utility, is reducing its workforce as part of cost reductions. TVA said 550 employees are leaving voluntarily, 281 contractor positions are being eliminated, and 106 employees will be laid off.
Compiled by the regional section of the Atlanta Fed’s research department
Illustrations by Jay Rogers


Return to Index