BUSINESS REPORT: Mississippi Looks To Energy Sector To Fuel Statewide Growth
By Ed Feldman
From the July/August 2013 issue
Since taking office in January 2012, Gov. Phil Bryant’s goal has been to build a stronger, more competitive Mississippi. Through Bryant’s leadership, the state’s economic development strategy has yielded significant returns in both new global business investment and existing industry expansions. Job creation has resulted across Mississippi’s targeted growth sectors including energy, aerospace, automotive, agribusiness and healthcare.
Energy production is one of the largest economic engines in Mississippi, providing 28,000 jobs. Ranked as the world’s most attractive spot for oil and gas investment in a 2011 report by The Fraser Institute, Mississippi is well positioned to become a global leader in energy-related growth.
In May 2013, the governor signed into law landmark legislation that positions Mississippi as a leading destination for energy-related economic development. The legislation includes sales tax exemptions on energy costs for manufacturing, drastic reductions on severance tax for new horizontally drilled wells, and a 25 percent rebate on energy research and development costs for companies.
Mississippi’s prime location, well-integrated transportation network and welcoming business climate are garnering notice globally. The state has announced several major economic development projects in the first two quarters of 2013.
In April 2013, Gov. Bryant and Yokohama Tire Corporation executives announced in the location of a $300 million commercial tire plant in West Point, MS, and the creation of 500 new jobs in phase one of a multiple phase project. Future phases estimate total employment to reach 2,000 jobs, and corporate investment to exceed $1 billion.
Yokohama’s facility, which is expected to produce one million tires starting in 2015, will have an initial capital investment of $300 million and potential plant expansions could reach up to four times the original employment and investment levels.
“This is a historic day for Yokohama,” said Hikomitsu Noji, president and representative director of The Yokohama Rubber Co., Ltd., YTC’s parent company in Japan. “Since our entry into the U.S. market over 40 years ago, along with the subsequent acquisition of our plant in Salem, VA in the 1980s, Yokohama has been on a continual growth. Now we will build a factory in the United States for the first time. I’d like to thank Gov. Phil Bryant and the State of Mississippi for their dedication in bringing this to fruition. I’d like to thank Mississippi as well for a very warm welcome.”
“I am honored Yokohama has selected our state for its newest U.S. tire manufacturing facility,” said Gov. Bryant. “This new plant will have a tremendous impact on the Golden Triangle region and on our state as a whole, and I welcome this highly respected company to Mississippi and look forward to our partnership in the years to come.”
“Yokohama’s decision to locate in West Point is a testament to our eager and hard-working community,” said Joe Higgins, Chief Executive Officer for the Golden Triangle Development LINK. “We’re thrilled to welcome them to the Golden Triangle and look forward to a long, successful relationship.”
“West Point and Mississippi offer the optimal mix of cost and operating conditions advantages that Yokohama is seeking to achieve,” said Darin Buelow, principal, Deloitte Consulting LLP and leader of Deloitte’s Real Estate & Location Strategy practice.
The West Point plant is Yokohama’s first U.S. facility to be built from the ground up.
GENERAL DYNAMICS GROWS BUSINESS IN HATTIESBURG
General Dynamics Information Technology, a business unit of General Dynamics, made two separate project announcements in Hattiesburg, an area hit in early 2013 by an EF4 tornado. In February, the company announced it was opening a Federal Student Aid Information Center, a project that is expected to create 250 new jobs by spring 2014.
In May, GDIT announced plans to expand its newly formed Hattiesburg operations with installation of a new Customer Support Center, a project that will create 1,000 new jobs. The new center will support General Dynamics’ contracts with the U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid.
Helen of Troy, a designer and marketer of brand-name household, personal care and healthcare/home environment products, announced plans in early January to construct a 1.3 million-square-foot distribution facility in north Mississippi. The company will move operations from its Memphis, TN, facility to the new Olive Branch location.
The project represents a $37 million company investment and will create 300 new jobs. Helen of Troy also operates a 1.2 million-square-foot distribution facility in nearby Southaven, Miss.
In the state’s growing aerospace sector, Aurora Flight Sciences announced its third Mississippi expansion in seven years. A leader in the design and production of specialized unmanned aircraft and other advanced aerospace vehicles, Aurora Flight Sciences’ expansion at their Columbus, MS, facility is the company’s first step into automated equipment that will create precise, high-volume manufacturing.
This latest expansion, which will create 250 new jobs, includes more than 64,000-square-feet of manufacturing space for expanded design and engineering capacity.
A BURST OF ENERGY: NEW ACTION IN MS
- SB 2564: Provides an energy infrastructure Revolving Loan Fund to give Mississippi communities the ability to help finance energy infrastructure for companies that invest more than $50 million in an economic development project.
- HB 841: Provides a sales tax reduction on electricity to 1.5 percent for oil and gas produced in the State using carbon dioxide as a method of enhanced oil recovery (EOR).
- HB 1281: Increases the energy code standard for commercial buildings to meet the American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) 90.1-2010 standard.
- HB 1266: Requires all major facility projects overseen by the Department of Finance and Administration (DFA) for State-owned buildings to be constructed to the ASHRAE 90.1-2010 standard.
In January, von Drehle officials announced the company was locating manufacturing operations in Natchez. The company, which provides paper products to commercial and industrial customers nationwide, will create at least 100 new jobs and make investments in additional conversion equipment
CertainTeed announced in early July that the company plans to restart its ceiling tile manufacturing operations in Meridian. The company had ceased production in the midst of the construction market downturn in 2009 but now will invest $24 million in the Meridian facility and create 110 new jobs by 2016. Once operational, the plant will produce a wide range of ceiling tiles and acoustical wall panels.
MS TARGETS BIOMASS, HEALTHCARE SECTORS FOR FUTURE GROWTH
Sustainable energy—especially biomass—is an emerging industry for Mississippi with high growth potential. The state is rich in biomass resources, largely derived from the wood products and paper industries.
Leading private-sector firms continue to invest in biomass research and development in Mississippi. Most recently, Green Circle Bio Energy announced the company will locate a wood pellet manufacturing facility in southeast Mississippi. The project represents a company investment of $115 million and will create 126 jobs.
Green Circle Bio Energy’s new George County facility is expected to be operational by spring 2015 and will produce wood pellets for shipment from the Port of Pascagoula on the Mississippi Gulf Coast to European markets. Initially, the plant will have the capacity to manufacture 500,000 tons of wood pellets annually.
The healthcare industry is another sector that Mississippi is targeting for growth. In 2012, state lawmakers passed the Mississippi Health Care Industry Zone Act, which encourages health care-related businesses to locate within qualified Health Care Zones and receive attractive incentives.
Mississippi’s impressive list of job creation announcements in 2013 signifies the state’s ability not only to compete but to win major business investments. The state’s aggressive growth strategy positions it well for future development in several key industries. It is evident that Mississippi’s infrastructure, legislative reform, low energy costs, and highly motivated workforce combine to create a competitive advantage for industries to thrive.