August 26, 2013 Beast of the Southeast

Volume 16 | Issue 7

Officials say they remember the days when South Carolina was a champion at making textiles and not much else. How times have changed. From a

Bobby Hitt recalls a time, not too long ago, when South Carolina was masterful in manufacturing textiles – and not a whole lot more.

However, fast-forward a few chapters on the handheld clicker and you will see that much has changed in the Palmetto State over the last couple of decades.

“I would say, if you ask most people on the street what our calling card is now, it would be various sectors in the automotive and aerospace industries,” Hitt, South Carolina’s Secretary of Commerce, tells Industry Today. “We are also very strong in the energy sector. We have a great utility system in the state, which keeps manufacturers’ costs low. That’s obviously a big attractor.”

Manufacturing, he says, has spearheaded the bulk of the state’s economic growth since the turn of the decade – and recent statistics by the U.S. Commerce Department’s Bureau of Economic Analysis back his claim.

In a recent report, federal officials listed South Carolina’s economy as the 12th fastest growing in the U.S., tied with neighboring North Carolina as the fastest on the East Coast.

In particular, the state’s Real GDP growth rate of 2.7 percent, according to the South Carolina Department of Commerce, is above the national average of 2.5 percent and the southeastern regional average of 2.1 percent. Gross domestic product is the market value of final goods and services produced within a region.

Even better, South Carolina was mentioned as having the fastest growing manufacturing GDP on the East Coast.

“As we have come out of the recession – this economic depression, really – over the last few years, the growth we have sustained in South Carolina has been led by manufacturing,” Hitt says. “We have had three straight years of high manufacturing growth.”

He adds that despite the turbulent economic winds of the last half decade, the state now specializes in an assortment of other industries in addition to textiles.

“We have a rather substantial biomedical and bioscience sector here as well, while various regions in the state specialize in information technology, software development, and homegrown insurance firms,” he says. “I come from manufacturing myself, and I have the strong belief that it is a very strong fit here in South Carolina. We have a very long history of being good at making things.”

Compare and Contrast
According to Gov. Nikki Haley, the latest findings are of no particular great surprise, especially taking into account South Carolina’s 2012 Real GDP growth rate, which compares favorably with the rate from the previous year, which was 2.2 percent.

“South Carolina is outpacing the region and nation in GDP growth metrics,” she says. “This tells me that our strategy is working: grow manufacturing, grow jobs. The race is on.”

Hitt says South Carolina, with its manufacturing GDP growing 8.5 percent last year compared to the U.S. rate of 7.8 percent, remains one of the ringleaders in the well-reported industrial renaissance sweeping the mainland. Since January 2011, the state has recruited more than $9 billion in capital investment and more than 23,000 jobs in the manufacturing sector.

“I think this shows that South Carolina is outrunning our peers in manufacturing and that we’re successfully growing the manufacturing economy within our state,” he says.

And not to begrudge the other states ranked high by the U.S. Commerce Department, but South Carolina continues to impress despite not having some of the God-given resources other states have.

“What I mean by that is that they (other states) either have an abundant supply of shale oil or a large amount of natural gas or elements of that nature,” Hitt explains. “However, what we have here is a dynamic workforce that we believe is second to none. Our work productivity is up, and being able to show businesses outside of the state how well we work has helped recruit new and better businesses investment.”

Take, for instance, Boeing, who, according to Hitt, is investing an additional $1.1 billion, on top of the more than $1 billion already invested, to up their capacity in South Carolina, bring with them some 2,000 jobs. BMW, meanwhile, makes over 1,100 cars daily in South Carolina, employing somewhere over 7,000 people, about 20,000 more if you include the upscale auto manufacturer’s suppliers, Hitt says.

“We have been able to transform this state,” Hitt explains. “We have been successful in attracting some great manufacturers and have spent the last couple of years working with the tire industry. Now, we are on the doorstep of becoming the largest tire producing state in the U.S.”

Exporting Satisfaction
Federal officials are not the only ones who give South Carolina’s manufacturing landscape thumbs-up approval. So, too, do those internationally – so much so, the Department of Commerce says, that the state’s exports totaled a record $25.3 billion in goods sold to 197 countries around the world last year.

It also ranked first among U.S. states in tire exports, holding nearly 30 percent of the share of U.S. made exported tires for the second consecutive year.

Of the state’s top product sectors, the three experiencing the largest percentage increase were optical and medical equipment at a 19 percent increase, rubber products at more than an 8.6 percent increase and plastics at more than an 8.2 percent increase.

“Our state manufactures the things people and industries around the world want to buy, and our growing export numbers show it,” he says. “Canada, Germany, and China remain very important export markets for South Carolina.”

Canada surpassed Germany as South Carolina’s number one export market in 2012, posting a 5.37 percent increase from the year before while purchasing nearly $4 billion in products. Germany accounted for more than $3.7 billion in products, while third-ranked China bought about $3.2 billion.

Nevertheless, while South Carolina remains rich in exports – in both finished goods and agricultural products – Hitt acknowledges that increased competition from neighboring states means that his commerce department must remain innovative and groundbreaking if it is to remain ahead of the pack.

“I definitely feel the competition. I know my counterparts in other states, see them from time to time, and interact with them regularly,” he says. “Manufacturing is a small business in many ways, and there are only so many large-scale projects out there. We know who our competitors are.”

He adds, “And everybody is good at this now. Because of that, it is not easy to be a leader in economic development because everything is so transparent. Everyone knows exactly how to play. But we keep pulling ahead, winning each battle, and we will continue to do that.”

Southern Hospitality
Growing manufacturing is one thing. Keeping it there is another, says Hitt, adding that South Carolina’s greatest strength may be its noteworthy ability to keep businesses and manufacturers happy.

“We stay with our companies to make sure they are a success,” he explains. “We don’t just invite them, thank them, then move on. We stay in engaged with them.”

State officials, he says, extend this type of heartwarming hospitality to manufacturers domestically and internationally.

Part of South Carolina’s industrial expansion includes foreign correspondents staggered across Asia and Europe who regularly entice far-off manufacturers itching to move operations to pull the trigger. Using the state’s nearby proximity to the Panama Canal – and kindly reminding potential clients that South Carolina has the seventh most-used seaport in the nation in Charleston – the state has since successfully convinced a handful of industrialists to ditch Europe’s turbulent economic climate or Asia’s destabilization and head for South Carolina soil for growth, expansion, and development.

“We seem to have the right ingredients at the right time, and we really look at these manufacturers as our lifelong customers,” Hitt says, adding that he and a team of South Carolina officials held about 80 meetings with various aerospace manufacturers at the Paris Air Show in June. “South Carolina established a presence overseas about 40 years ago and it has paid off. The business relationships we develop get deeper and wider.”

It is easy to see why partnerships remain solid when you take a glance at South Carolina on a map. The state is geographically small – perhaps not in comparison to states in New England, but certainly small relative to numerous other states, particularly the so-called manufacturing giants in the Midwest.

As a result, the same general characteristics that blanket a traditionally small American suburb – everyone knows one other, word spreads fast, neighbors see each other on a recurring basis – applies to the manufacturing sector through South Carolina.

“We are a small, compact state with a fairly small power structure,” Hitt explains more clearly. “It’s one of those states where all the powerbrokers are familiar with one another and everyone sort of knows all of the major players.”

Consequently, he continues, problems are resolved far quicker than perhaps South Carolina’s larger state competitors.

“We have a great ability to solve problems,” Hitt says. “If we see a problem in the manufacturing area, we can quickly gather a small group of leaders and solve it in a timely fashion. We remain engaged because we’re small, and that smallness gives us the flexibility to solve problems fairly quickly.”

A classic example, he says, is Michelin, the renowned tire manufacturer who had operational facilities in South Carolina for more than four decades. “They embraced other tire companies when they came here,” Hitt says of Michelin. “Now, our universities are attuned to the tire industry. We have trained more than 5,000 tire employees in the last five years, and it’s one of our expanding industries.” According to officials, South Carolina ranked No. 1 last year among U.S. states in tire exports, holding nearly 30 percent of the share of American-made exported tires for a second straight year.

Hitt says Michelin, which has invested more than $1 billion in expansion throughout South Carolina over the last two years, could have “gone anywhere it wanted to.” Any state, he says, would have welcomed the company with open arms. But, not surprising to Hitt, Michelin stayed in South Carolina.

“The expertise is here, the state and local government support is here, and the private sector is strong,” Hitt says. “They have then become an attractor for other manufacturing firms, of all sectors and backgrounds, and they have embraced that.”

He adds, quite enthusiastically, “We all have, here in South Carolina.”

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