Economic Outlook n° 1187 | Special Report | The Reindustrialization of the United States
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Tennessee, and Texas. In recent times these states have launched into bidding wars to attract automa- kers, offering generous tax breaks and subsidies which reduce the positive economic impact of new factories.
A major cornerstone to the continued comparative advantage of the Southern states in the reindustria- lization process will be the development of the necessary workforce skills including more technical and vocational schooling rather than traditional four- year colleges. On the downside, it should be noted that durable goods manufacturing is particularly sen- sitive to the business cycle. As a result, the recession hit much of the South harder than the rest of the country, but it has also recovered somewhat faster.
▶ The Southern export routes revisited
Total U.S. exports have grown faster than the rest of the economy in twelve of the past thirteen quarters. In 2011 when nominal GDP grew 4.0% over the entire year, exports grew 13.5%. And in the Southeast, the export growth rate was even stronger, over 20%. According to the Federal Reserve, “Exports have become an increasingly significant part of the region’s economy. The Southeast’s globally inter- connected economy—with its fortuitous location and plentiful ports and coastline—is contributing to surging, if surprising, exports, such as the flood of international travelers whose Southeastern expendi- tures constitute a major export.” Commerce Depart- ment data showing the top exports and their markets from the Southeast are listed in Table 7 below. It would appear that the Southern strength in auto manufacturing for the domestic market has also contributed to strong exports for transportation equipment.
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Even though these new Southern employers pay well below average for the U.S. automotive industry, they still pay well above average for manufacturing jobs in the South. The story is similar for other capital-intensive industries, such as aerospace and pharmaceutical manufacturing. Looking beyond the current business cycle, prospects for manufacturing in the South appear promising. The transition to more advanced industrial growth in countries such as China and India is far from complete, so demand for the South’s more advanced manufactured goods is likely to continue for some time. New capital investments should continue to reduce costs and increase productivity…
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Jeffrey Lacker The Future of Manufacturing in the South
▶ Finally, in 2014 a planned expansion of the Panama Canal should be completed, allowing wider and deeper vessels to transit the canal. Currently, most goods from Asia are unloaded at the country’s two largest ports, Los Angeles and Long Beach, and are then shipped by rail or truck to the rest of the U.S. The expansion of the canal will establish an alternate competing route sending Asian goods through the Panama Canal to U.S. ports closer to the concentra- tion of U.S. population. In preparation, southeastern ports such as Savannah, GA, Gulfport, MS, and New Orleans, LA, among others, have undertaken large- scale projects to upgrade their facilities. These pre- parations are likely to continue to boost manufactu- ring in the South, while an increase in port activity from the new Panama Canal trade route, including both imports and exports, will contribute to even more economic activity.▣
G. Exports: top sector, top destinations
Top exports from the Southeast (2011) Transportation Equipment Chemicals
Petroleum & Coal Prods.
Computer and Electronic Prods. Agricultural Prods.
Top export markets for the Southeast ( 2011) Canada China