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Georgia: A Major Industrial Player

M Shade

 

 

by Michael Shade, IQS Editor

Flag of GeorgiaWhat’s the outlook for Georgia manufacturing? There’s good news and bad news. Let’s start with the bad news: October was not a good month for Georgia manufacturing. The Purchasing Managers Index, a monthly survey of manufacturing activity released by Markit Group and the Institute for Supply Management, indicated an index value drop of more than five points in Georgia for the month of October. This drop brought Georgia’s overall PMI to just above 43. Based on the PMI scoring system, any figure below 50 indicates contraction, and any figure above 50 indicates growth. This month’s loss is a continuation of a trend that began two months ago. “It’s not clear why Georgia manufacturing is operating substantially below the level of the national PMI,” noted Don Sabbarese of Kennesaw State University in an interview with the Atlanta Journal-Constitution. Mr. Sabbarese speculated that the causes for Georgia’s poor performance may be related to the weakness of the state’s economic recovery.

Georgia is not alone in this regard. After all, the nationwide PMI is currently at 50.8, which does indicate growth, albeit at a small pace and in small doses. Economic recovery has proven itself to be a stubborn problem, and the bearishness that has characterized dialogue amongst economists and even dinner table conversations ebbs and flows. Especially in recent months, general sentiment about our economy’s prospects seems quite tidal indeed – one day it recedes into oblivion, and the next day it comes roaring back with optimism. Certainly, there is uncertainty in industry and financial markets both here and globally. But the manic overreaction to each day’s news by analysts, traders and policymakers does nothing but contribute to this uncertainty, and the effects of that behavior are felt in places like Georgia.

What’s really there beneath the haze of that uncertainty? What tangible resources do places like Georgia have at their disposal to cook up a vigorous, lasting economic recovery? Let’s take a look. According the US Census Bureau’s Annual Survey of Manufacturers, there were 327,448 employees – the 11th highest number in the nation – on manufacturing payrolls in Georgia in 2009. Keep in mind that 2009 was the height of the recession. For reference, take a glance at the chart below:

Dow 2007-2009Dow Jones Industrial Average, 2007-2011
Source: Google Finance

During that same year, the total value of all manufacturing shipments from the state of Georgia was 12th in the nation, again despite recession conditions. Georgia’s current industrial makeup is quite diverse. Aircraft manufacturing, food and drink processing, chemical processing and a variety of other manufacturing operations have strong presences in Georgia. Also, since the establishment of a Kia Motors plant in West Point, Georgia has become more involved in the automotive manufacturing industry as well. A large number of some of the world’s largest corporations also have their headquarters in Georgia; a few examples include the Coca-Cola Company, Delta Air Lines and NCR Corporation. The state is also home to a large number of major military installations, including Fort Stewart, the largest military facility in the Eastern US.

So, Georgia’s industrial infrastructure includes a large manufacturing workforce and several of the country’s major manufacturing operations. Also, the US Military is a large consumer of advanced American manufactured products, and they have a strong presence in Georgia. And let’s not forget that some of the country’s most respected educational institutions, including Georgia Tech and the University of Georgia, can be found in Georgia. Several of these institutions have invested in programs to help improve the competitiveness of the state, particularly its manufacturing sector, and they supply the state with highly-trained, innovative workers. All of these resources are already developed, and they could be the pillars of Georgia’s economic recovery.

Still waiting for the good news? If it’s not already clear, the good news is that Georgia’s strength as a manufacturing center is not news at all. The problem is that Georgia’s potential to contribute the country’s economic revival isn’t being realized. The need for that realization should be obvious to Americans. Investment in manufacturing could reduce unemployment, new manufacturing R&D could contribute to the development of products that could allow our economy to continue growing without degrading the environment or contributing to the over-consumption of limited resources. Why can’t this happen in Georgia? It can. What is needed in Georgia and across the nation is an outlook that takes in the whole economic picture, which is a picture that includes both the reality of volatile economic conditions and the reality of the highly valuable industrial infrastructure at our states’ disposal. Time will tell if Georgia can bounce back from its current slump. With some effort, that possibility will become a reality.