The New, Global South
SOUTHEASTERN STATES ARE EXERCISING THEIR ECONOMIC MIGHT WITH SURGING EXPORTS
Exports by companies in the seven Southern and Southeastern states are not only expanding—reaching more than $200 billion in 2012, according to Brookings Institution figures—their character is changing from such raw materials as timber, agriculture and other farm products to autos, aerospace, finished furniture, gourmet foods and perfume. Many of these items are high-end consumer products.
New autos—BMWs, Toyotas, Nissans and Volkswagens—are being exported from states in which they now are produced: South Carolina, Tennessee, Mississippi. Vehicles modified for sport drivers by MCM Custom Vehicles in Trussville, Alabama, are finding markets around the globe; and restored used trucks and autos, purchased at major auctions in Orlando, Florida, are being shipped via Port Canaveral to Central America and the Dominican Republic.
“BMW has become one of the biggest exporters in the country,” says Brad McDearman, director of an export-assistance project at Washington, D.C.-based Brookings Institution.
One of BMW’s models is only manufactured in South Carolina and from there is shipped to more than 130 other countries.
At its plant in Athens, Georgia, Caterpillar produces small hydraulic excavators and tractors for its customers in Canada, South America and Europe, as well as the U.S. General Electric exports gas turbines made at its Greenville, South Carolina, facility and aviation components made at its Durham, North Carolina, facility.
In addition, Continental Tires the Americas, LLC and Michelin North America Inc., each with manufacturing plants in South Carolina, are exporting much of their production out of the state’s Port of Charleston, with Michelin being one of the port’s largest customers, according to a State Ports Authority official.
Autos and auto parts now account for the largest segment of all export categories for the Southeast, according to a report written by The Economist Intelligence Unit for banking giant HSBC. South Carolina ranks first among all 50 states in exports of autos and tires.
Aerospace and aviation products also now are being produced not only in Florida, home of Cape Canaveral, but in Georgia, Alabama, South Carolina and Mississippi.
“Florida has a significant amount of exports in the aerospace/aviation sector. We have GE and Boeing and others,” says Gray Swoope, Florida’s Secretary of Commerce and president and CEO of Florida’s principal economic development organization, Enterprise Florida, a public-private non-profit partnership. “And we have a lot of suppliers; component manufacturers like Pratt-Whitney engines.”
Furniture, once a fixture of North Carolina and other Southern states only to be replaced by inexpensive imports, not only is seeing a revival in the Tar Heel state and Mississippi but is finding markets in Asia and the Middle East.
“Exports of furniture as finished products are increasing,” says Bill Martin, director of the Franklin Furniture Institute at Mississippi State University, which even has an export resource service for that state’s many furniture manufacturers.
Klaussner Home Furnishings, headquartered in Asheboro, North Carolina, is 50 years old, but the company only made occasional foreign sales during its first 40 years.
“International buyers would come in our showroom at the High Point [North Carolina] Furniture Market and we’d sell to them,” explains Len Burke, the company’s vice president. “We developed relationships at the Furniture Market. We developed a relationship with Saudi Arabia without going over there. Today we have a team that goes to the Middle East, and now we’re developing the Chinese market.
“We started assembling an international team in the last 10 years, expanding our international sales force to 20 persons. We sell to about 15 countries. Twenty percent of our volume leaves the country.”
As for the attraction of American-made furniture to foreign buyers, Burke says it is simple: “They like what we like. They want that Western [hemisphere] look.”
The six-day, twice-a-year High Point Market, the largest furnishings industry trade show in the world, with more than 2,000 exhibitors, attracts some 85,000 attendees from more than 100 countries. North Carolina even has its Furniture Export Office, a division of the state’s Department of Commerce.
The manufacture of yarns and fabrics is also making a comeback, mostly due to the export of niche and specialty items such as Mount Airy, North Carolina-based Nester Hosiery, which makes specialty socks for firefighters, mountaineers and others. The North Carolina location of the College of Textiles, a leading institution for textile education and research, helps boost that state’s textile industry.
And then there are medical devices and electronics, some new and some used.
“Used medical equipment like x-ray machines are refurbished and exported to South America,” says Sandro Murtas, Atlanta-based regional manager of the Small Business Administration’s Office of International Trade, who notes that exports have gone from commodities to consumer goods.
Large investments have been made in medical research at universities, especially in North Carolina and Florida, resulting in new companies.
“We have a significant presence of medical device companies in the state,” notes Swoope, the Florida commerce secretary and Enterprise Florida CEO. “It’s well over 240. The medical device sector is our fastest growing sector. In the past decade, the state and our universities have made significant investments in research. North Carolina also has had significant growth in the past decade, but we have had greater percentage growth.”
Even such gourmet food items as fruit preserves, sauces and snacks are finding overseas markets.
“A lot of [cooking] personalities have come out of the South. That says something,” says Lois Judy, co-founder of Savannah, Georgia-based Candy Craft Creations, in explaining the export success of Southern gourmet food items, including her own which now go to buyers in a dozen countries. “We’re located in a port city,” adds Judy, whose company is also known as Fondarific, “and are only two miles from the Port of Savannah, which lets us easily ship our fondants internationally.”
Flathau’s Fine Foods sends its award-winning gourmet cookies and other snacks from Petal, Mississippi, to half a dozen Caribbean and Latin American counties. “We’re building a solid network of distributors outside the U.S.,” says owner and founder, Jeff Flathau.
With 18 ports on the Atlantic Ocean and Gulf of Mexico coasts, these states have long handled export products from other states but are now becoming the home for more exporting companies, often with the help of expanding state assistance programs and other efforts.
“What you’re seeing now is a significant amount of those products are being made here,” Swoope points out. “Florida now has almost 60,000 businesses that export. Only California has a higher number. ”
The Southeastern states, especially Florida, have long had relationships with Latin American and Caribbean nations. These countries have become emerging markets, creating increased export opportunities, says Swoope—and states are taking advantage of this.
Rather than continuing to attract companies with incentives, explains the Brookings Institution’s McDearman, Southern states are “helping open up [foreign] markets for products they already have. You don’t have to have incentives for that. You just need to invest more in exporting.”
These Southern and Southeastern states also have foreign-based trade offices to promote exports, many of them in Latin America, as well as export assistance programs at home. Georgia has 10 foreign offices; North Carolina has five; South Carolina has three; Florida has 15, nine of which are full-service offices; Tennessee and Mississippi each have four; and Alabama has one, which is in Tokyo.
The states also regularly lead trade delegations or missions to foreign trade shows and specially arranged overseas meetings.
It’s certainly a globally oriented New South.