Savannah Chamber

13 2 Services businesses that either lower costs or provide necessities should do well. The outlook for health services is excellent. After all, the population of Georgians with multiple chronic health conditions that require medical care continues to burgeon, regardless of business cycle fluctuations or the uncertainties created by healthcare reforms. Recent and continuing increases in spending for new equipment and software will underpin higher demand for computer services for businesses. Upturns in residential and nonresidential development will spur demand for architects and engineers. Georgia's strong transportation and logistics infrastructure coupled with cyclical increases in economic activity will spur job growth in the logistics and distribution industry. Announcements over the last couple of years include Total Quality Logistics, United Arab Shipping Company, and distribution centers for Ollie's, Badcock, and Walmart. The growth of advanced manufacturing will create opportunities for firms that provide very specialized services such as the West Penn Testing Group. Prospects for Manufacturing Over the last five years there have been many major project announcements in Georgia, bolstering prospects for job growth in aircraft (e.g., Gulfstream), construction equipment (e.g., Caterpillar), flooring (Engineered Floors, Beaulieu International Group, Surya), food processing (Tyson Foods, National Beef, Trident Seafoods), and appliance (Keurig Green Mountain) manufacturing. Georgia also will see substantial increases in advanced manufacturing activity and employment. Cyclical economic recovery, more effective economic development policies, low domestic natural gas prices, rising production costs in China—and other overseas locations—are some of the factors behind recent and expected increases in manufacturing activity. Concerns about product quality and management of the risks associated with increasingly complex supply chains also make domestic manufacturing 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 regions, a favorable tax structure, and very competitive economic development incentives. Manufacturers' contribution to Georgia's GDP will rise, but the incoming employment data imply that manufacturing jobs are not coming back too quickly. Manufacturing employment will rise by 4,900 jobs in 2016, which is enough to sustain the cyclical recovery, but at this pace it will take over 30 years to replace the manufacturing jobs that Georgia lost. In terms of factory jobs, the talk of a manufacturing renaissance in Georgia is overblown, but the sector's output is growing much faster than its employment. In addition, the multiplier effects of factory jobs are typically much higher than jobs in most nonmanufacturing industries. To become a state where manufacturing activity—and factory jobs—truly concentrates, Georgia must develop a better educated, more highly skilled, and more productive manufacturing workforce that can use the newest technologies; and become a more fertile ground for developing and adopting new productivity-enhancing technologies. The Georgia BioScience Training Center, which supports training for Baxter International's new facility, is a good example of providing much needed skills to Georgia's workers while simultaneously incentivizing life sciences companies. Private Sector Restructuring Georgia got hit harder than the nation by the recession—and underperformed during the first three years of the recovery— because it depended heavily on real estate development and homebuilding as well as closely allied industries such as building materials manufacturing and real estate financing. Not enough of Georgia's economic growth was based on educating its own people, innovation, courting emerging high-tech industries, and promoting the growth of in-state capital markets. The financial crisis and the bursting of the housing bubble brought the inflows of people and businesses to an abrupt halt. The sudden drought of new construction and the dearth of new residents precipitated a large and painful restructuring of Georgia's economy. The financial crisis and the real estate bust severely damaged Georgia's financial activities sector. For example, the peak-to- trough drop in statewide employment in financial activities was 11.3 percent compared to a drop of 8.6 percent for the US. Georgia led the nation in the number of failed banks due to the outsized job losses in financial activities. The large number of bank failures also slowed the state's economic recovery because they reduced relationship -based lending to small businesses and entrepreneurs. In 2016, financial activities will see 1.4 percent job growth. Georgia's information industry is likely to see another year of modest job growth. The gains reflect several factors: surging demand for newer innovative wireless services and high-volume data applications; Atlanta's deep and broad pools of IT-savvy workers; and media jobs in film and television that reflect generous economic development incentives. Most of the growth of the film industry is taking place in the Atlanta and Savannah metro areas.

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