EconSouth (First Quarter 2003)

Recent events and trends from the six states of the Sixth Federal Reserve District
Honda reports strong minivan sales (up 17 percent in 2002) at its Lincoln plant. The company expects production to increase from 108,000 minivans in 2002 to 150,000 in 2003.
Hyundai Mobis, a subsidiary of Hyundai Motor Co., has announced plans to build a $30 million plant in Montgomery to supply parts to the $1 billion Hyundai factory being built nearby. The new plant will employ 430 workers and will make instrument panels and front and rear chassis assemblies for the Santa Fe sport utility vehicle and the Sonata sedan.
Alabama State Docks will be closing its bulk-material handling plant by year-end. The closing will coincide with the handling of the final shipment of material from the soon-to-be-closed Kerr-McGee chemical plant.

The performance of Florida’s travel and tourism industry has not yet returned to 2000 levels but has improved. Hotel occupancies in Miami Beach increased by 30 percent in 2002 from 2001 levels but remained down by between 10 and 15 percent from 2000. Cruise traffic out of Miami stayed strong, up 5 percent during 2002.
Both Walt Disney World and Universal Studios are opening new attractions this year. In addition, SeaWorld plans to develop its lakefront in what is touted as the largest expansion in the park’s history.
Nursery crops are a fast-growing segment of Florida’s farm sector. Given strong national demand from residential landscapers and retail shops, the crop’s long-term outlook is bright. The closure of some retail outlets and higher transportation costs, however, make the near-term outlook less optimistic.
Newell Rubbermaid announced that it will move its corporate headquarters to Atlanta in 2004 and will probably occupy around 300,000 square feet of new construction. The headquarters will house about 60 staff initially.
Daimler-Chrysler confirmed in January that it will build its $754 million Sprinter van plant in Pooler, near Savannah. The plant, which is expected to directly employ 3,300 workers, is the state’s largest development project ever and is scheduled to be operational by 2006.
General Motors Corp. recently announced that it will invest $150 million in its Doraville plant to build four new minivans for the 2005 model year. The plant employs 3,600 workers.
Labor markets in Atlanta continued to show weakness with another spate of layoff announcements. Companies such as Coca-Cola, Kmart, Macy’s and JCPenney announced large staff reductions in early 2003.
The 2003 defense appropriation bill provides a big boost for the U.S. Navy ship construction program at Northrop Grumman’s Avondale shipyard in New Orleans. The bill included over $1 billion for two new ships. About 2,000 workers will build the ships.
Petrochemical companies have announced further job reductions in Louisiana, and industry payrolls have been reduced by about 8 percent since December 2001. The state’s ammonia plants have been especially hard hit.
New Orleans’ cruise ship industry is reportedly doing well. Analysts expect about 750,000 passengers to travel out of the city this year and about one-third more in 2004. Four cruise ships will regularly dock in New Orleans by year-end. The port will spend about $25 million to build a new cruise terminal and expand parking and baggage areas.
The durable goods manufacturing sector will get a boost this year as Northrop Grumman Corp.’s Ship Systems sector in Pascagoula will begin construction of the second of four Aegis guided missile destroyers. Additionally, the new Nissan plant in Canton is scheduled to begin production early this summer, and hiring is continuing at the plant and at associated parts suppliers.
From January 2000 through December 2002, Mississippi posted the largest percentage decline of manufacturing jobs in the Southeast. Nondurable job losses were concentrated in apparel and paper while durable job losses appeared in machinery, electronic equipment and transportation equipment.
Mississippi catfish farmers have cut production because of oversupply and low prices. The farms account for over 70 percent of all U.S. catfish ponds. The presence of foreign imports has been cited as causing a steep decline in prices.
The first Tennessee-made Maxima has rolled off Nissan’s assembly line at its Smyrna facility, reflecting the company’s growth in the state. Nissan has made a $1 billion investment in Tennessee since 2000 and employs 8,000.
Almost 800 jobs will be eliminated when Kmart Corp. closes nine stores in Tennessee. The stores are part of the retailer’s plan to emerge from bankruptcy. The chain closed five stores in Tennessee last year.
Nashville’s convention and meeting business is performing reasonably well. Hotel tax collections in the city are reportedly 2.4 percent above those of a year ago. In addition, eastern Tennessee theme parks reported heavy traffic as people chose closer drive-to markets over more expensive distant venues.
Compiled by the regional section of the Atlanta Fed’s research department

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