Savannah Chamber

20 Prospects for Manufacturing in 2019 In the first decade of the new millennium, Georgia lost about 200 thousand – or four out of every ten – manufacturing jobs. The purge ended in early 2010. Over the last eight years, Georgia recovered 60,000 manufacturing jobs. About 63 percent of these jobs are probably due to the cyclical recovery of the U.S. economy, with Georgia's economic development prowess accounting for the remaining 37 percent. Due to many major economic development project announcements by manufacturers, manufacturing jobs are coming back in Georgia more rapidly than in the nation as a whole. Projects are bolstering growth in aircraft (e.g., Pratt & Whitney and Gulfstream), automobile (e.g., SK Innovation, Toyo Tire North America, Nisshinbo Automotive Manufacturing, Groupe PSA, Carcoustics, Sentury Tire, KIA & it's growing roster of in-state suppliers), flooring (e.g., Mannington Mills, Complete Flooring Supply Corp., SELIT North America, Mohawk Industries, Engineered Floors, Beaulieu International Group, Surya), lumber and building materials (e.g., Elixir Extrusions, Nichiha Corporation, Georgia Pacific, Elixir Extrusions, Sparta Industries, EdenCrete, Caesarstone, Linzer Products, Aspen Aerogels, Viracon), firearems (e.g., Taurus USA), and food processing (e.g., Purdue Farms, The Linde Group, Colorado Premium, Diana Food, Farmax, Star Snacks, Aviagen, Lake Foods, and Starbucks). Going forward, Georgia will see substantial increases in advanced manufacturing activity and employment. Recent project announcements include SK innovation, OFS, Corvaglin Group, Hanwha, Q CELLS Korea, Manus Bio Inc, Pratt & Whitney, SILON, Advanced Digital Cable Inc., and Rinnai. In 2018, Sentury Tire began construction on an advanced tire manufacturing and R&D center in LaGrange that will employ over 1,000. The plant should be ready to open sometime in 2019. The Sentury Tire announcement illustrates Georgia's growing economic ties with China and validates the establishment of the State of Georgia's two strategic economic development offices in China. In order, Canada, Mexico, and China are Georgia's top export markets. Cyclical economic recovery, effective economic development policies, low domestic natural gas prices, rising wages and production costs in China – and other overseas locations – are some of the factors behind recent and expected increases in Georgia's manufacturing activity. Concerns about product quality and management of the risks associated with increasingly complex – time-sensitive – supply chains also make manufacturing in Georgia more attractive than manufacturing overseas. Additional factors that will help Georgia attract manufacturers include a superior transportation, logistics, and distribution infrastructure, low costs of doing business relative to other highly developed economies, a favorable tax structure, highly ranked colleges and universities, excellent work-force training programs such as Quick Start, and very competitive economic development incentives. Manufacturers' contribution to Georgia's GDP will rise in 2019, but the incoming employment data imply that manufacturing jobs are not coming back too quickly. The state added 5,700 manufacturing jobs in 2011, 4,000 jobs in 2012, 3,000 jobs in 2013, 10,200 in 2014, 11,100 in 2015, 10,000 in 2016, 8,400 in 2017, and an estimated 6,000 in 2018. Manufacturing employment will rise by 3,200 jobs in 2019. That will sustain the cyclical recovery in manufacturing employment, but at that pace, it will take decades to replace the manufacturing jobs that Georgia lost. In terms of factory jobs, the talk of a manufacturing renaissance in Georgia is overdone, but the sector's output is growing much faster than its employment. Also, many of the jobs that were once done inside the factory are now outsourced to service providers, which therefore are not counted as manufacturing jobs, but are nonetheless jobs that would not otherwise exist in Georgia. The multiplier effects of factory jobs are typically much higher than jobs in most non- manufacturing industries. Many of Georgia's manufacturing industries also provide relatively high paying jobs partially because many low-pay manufacturing jobs have either been offshored or displaced by technological advances and machines. Another factor that contributes to the importance of Georgia's manufacturing base is that research and development jobs often locate near clusters of related manufacturers, especially in highly technical and innovative advanced manufacturing industries. In addition, those are often the manufacturing industries with the highest wages and the best potential for long-term growth. Unfortunately, Georgia's relatively weak culture for innovation limits the prospects for innovation-based manufacturing job growth in many areas of the state. To become a state where manufacturing activity – as well as factory jobs – truly concentrates Georgia will need to: (1) develop a better educated, more highly skilled, and more productive manufacturing workforce that can use the newest technologies; and (2) become a more fertile ground for developing and quickly adopting innovative productivity-

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