Business Facilities' 2018 Metro Rankings Report

By Business Facilities Staff

From the July/August 2018 Issue

14th Annual Rankings: 2018 Metro Rankings Report

TWO SC FTZS ARE THE BUSIEST

Each year, the federal Foreign-Trade Zones Board (headed by the U.S. Sec. of Commerce and the U.S. Sec. of the Treasury) send an annual report to Congress summarizing FTZ activity in the United States, including the top 25 FTZs in terms of imports and exports.

According to the board’s 78th annual report, delivered in November, there were 195 FTZs active during the year (out of a total of 263 nationwide), with a total of 324 active production operations. Over 420,000 persons were employed at some 3,300 firms that used FTZs during the year. The value of shipments into zones totaled over $610 billion, compared with nearly $660 billion the previous year. About 63 percent of the shipments received at zones involved domestic status merchandise. The level of domestic status inputs used by FTZ operations indicates that FTZ activity tends to involve domestic operations that combine foreign inputs with significant domestic inputs.

Warehouse/distribution operations received over $224 billion in merchandise while production operations received over $386 billion (63 percent of zone activity). The largest industries accounting for zone production activity include the oil refining, automotive, electronics, pharmaceutical and machinery/equipment sectors.

Exports from facilities operating under FTZ procedures amounted to nearly $76 billion. [The export figures do not include certain indirect exports involving FTZ merchandise that undergoes further processing in the U.S. at non-FTZ sites prior to export.]

The three busiest FTZs for export activity, as reported in the board’s 78th annual report, were FTZ 21 (Dorchester County, SC), FTZ 62 (Brownsville, TX) and FTZ 281 (Miami-Dade County, FL), respectively. The three busiest FTZs for merchandise received were FTZ 38 (Spartanburg, SC), FTZ 124 (Gramercy, LA) and FTZ 202 (Los Angeles, CA).

The Foreign-Trade Zones Board also ranks the top 25 production operations within FTZs. Not surprisingly, the list is dominated by automakers, oil companies and pharmaceuticals makers, including Mercedes-Benz, ExxonMobil and AstraZeneca.

South Carolina FTZs are administered under the FTZ Board’s “Alternative Site Framework” (ASF). The South Carolina State Ports Authority (SCPA) is the administrator (grantee) for two Foreign-Trade Zones in SC: FTZ 21 along the coast and FTZ 38 in the Upstate. SCPA works closely with the Richland-Lexington Airport District/Columbia Metropolitan Airport, the administrator (grantee) for FTZ 127 in the Midlands region of the Palmetto State.

The ASF greatly expedites and streamlines the process required of all South Carolina importers to access the benefits provided by FTZ status. The ASF lowers costs and facilitates more rapid entry into the FTZ program for participating companies doing business in SC, saving them considerable time and resources by eliminating much of the required application and subsequent approvals process. Warehousing and distribution companies can expect to receive FTZ designation in 30 days, and manufacturing and production companies can expect to receive the designation in 120 days. Companies located in counties not included in the approved service areas are eligible to apply for FTZ status under a different framework as a subzone.

A major driver of FTZ activity in South Carolina is BMW, which has its North American assembly plant in Greer, SC near Spartanburg. BMW vehicles and automotive suppliers account for more than 90 percent of all goods passing through the duty-free zones administered by the SCPA.

HOUSTON TOPS IN GROWTH POTENTIAL

If the first thing that comes to mind when you think of Houston, TX is Big Oil, you should widen your perspective. To begin with, the largest city in Texas gets most of its electricity from renewable energy. But today’s Houston is much more than an energy hub. The nation’s fourth-largest city has a dynamic, diversified economy that is brimming with innovation, technology and entrepreneurship. This and much more has made Houston our top-ranked metro for Economic Growth Potential.

Headquarters to NASA’s manned space program and the global energy industry, Houston has long been at the leading edge of innovation, particularly at the corporate and institutional levels. The Houston region is home to more 140 high-growth startup tech companies with total venture funding of $1.3 billion. Business accelerators such as Houston Exponential work to facilitate innovation and entrepreneurship in the area. The region’s concentration of STEM workers gives Houston the knowledge base necessary to sustain tech-focused industries.

The Houston region is one of the most important industrial bases in the world and ranks No. 2 in manufacturing GDP in the U.S. Houston also is home to the largest medical complex in the world, the Texas Medical Center, which provides clinical health care, research and education at its 58 institutions. Houston has more than 1,760 life sciences and biotechnology companies, cutting-edge hospitals, health facilities and research institutions; 17,400 physicians region-wide; and some of the country’s top research facilities. WalletHub named the city the most favorable in the nation for STEM workers. Houston is the birthplace of nanotechnology and ranks as one of the top ten metro areas handling significant research and commercialization.

Houston is home to 6,400 manufacturers who employ more than 240,000 skilled workers and produce $80 billion in goods annually. Houston has one of the largest concentrations of industrial space in the nation and the area has room to meet future demand. In addition, the region offers unparalleled access to sea, rail, truck/road and air transportation support with roughly 40 million consumers within a 300-mile radius. Some of the largest manufacturing operations in the southeast U.S. are here in Houston—from Daikin’s new $417 million air-conditioning plant to Mitsubishi Caterpillar Forklift America which employs more than 800 at its facility in west Houston.

Additionally, the Houston area ranks fourth in the nation for Fortune 500 headquarters. Twenty companies on the 2017 Fortune 500 list are headquartered in the Houston metro area.

From energy to health care, nanotechnology, aerospace and information technology, the Houston region offers a strong infrastructure to support these growing industries plus a highly trained and skilled workforce.

Houston has a distinctly favorable business climate. The region benefits from a skilled workforce, world-class infrastructure and transportation system, and a pro-business environment that stimulates rather than stifles business growth. The Greater Houston Partnership promotes trade, commerce, industry and economic growth in the Houston region.

ATLANTA: THRIVING TECH HUB

Our second-ranked city for Economic Growth Potential is aiming for the top: Atlanta, GA is a thriving tech center busy turning potential into reality.

The former chief operating officer for the U.S. Economic Development Administration, Brian McGowan, stated that all of the corporations establishing innovation hubs in Atlanta are “shining a big, bright light on the city” and helping the city become recognized as a “major innovation hub.” In June of 2017, the Atlanta Business Chronicle reported that Atlanta had been placed sixth on the list of the “top North American cities for corporate innovation and R&D activity.” The article indicated that the influential news outlet Innovation Leader conveyed that it only takes “one committed catalyst to get a reaction going” and that the Georgia Institute of Technology had likely been the catalyst that has helped Atlanta boom within the past couple of decades. This, coupled with the presence of other huge corporations located in Atlanta such as Coca-Cola and CNN, has helped the city’s “Tech Square” develop into a multi-block neighborhood with both established corporations as well as startups that are developing new, innovative resources.

Mercedes-Benz’s parent company, Daimler, has recently opened a new innovation hub in the city. The hub is named Lab1886 and it joins three other Daimler innovation hubs, two of which are located in Germany and one that is located in China. Lab1886 is located at WeWork’s Terminus 100 high-rise complex in the Buckhead suburb of Atlanta. WeWork, an operation that mainly provides workspaces to entrepreneurs and small businesses, signed an agreement with Daimler because the office space company is allegedly “now pursuing larger corporate clients,” according to Jarred Schenke of Bisnow Atlanta.

Other notable corporations leasing space in the building include Morgan Stanley and real estate service CBRE.

Mercedes-Benz released a statement indicating that Atlanta was chosen because of its proximity to the recently opened headquarters as well as the city’s growing reputation as a “hotspot for technology and digital enterprises.” Urvaksh Karkaria of Automotive News indicated on June 29, 2018 that Lab1886 “combines a big corporation’s know-how with the spirit of a startup.” Employees are encouraged to think outside of the box and generate new ideas that are later voted on and, if chosen, brought to market. The goal of Daimler’s new unit is to allow the “entire innovation process, from idea and incubation through to commercialization” to happen internally.

With Atlanta’s booming innovation scene, it is no surprise that other technological advances are making their way to “The Big Peach.” An article from The Verge published in March of 2018 reported that Waymo, Google’s self-driving car development company, would start using self-driving trucks to deliver freight to Google centers in Atlanta. Georgia was the third state that Waymo expanded operations to, following tech-giant California as well as Arizona. In addition, Atlanta’s Georgia Institute of Technology has also just received $1.6 million in grants from the Department of Energy for “testing materials used in producing nuclear energy.”

GREATER RICHMOND: RISING STAR

Our fourth-ranked large metro for Economic Growth Potential is a rising star that is well-positioned for sustainable growth for years to come.

The Greater Richmond, VA region is home to the headquarters for ten Fortune 1000 companies (Altria, Performance Food Group, CarMax, Dominion Energy, Owens and Minor, Genworth Financial, Markel Insurance, Brink’s, NewMarket and Universal) and major divisional headquarters (McKesson Medical-Surgical, CoStar, SunTrust Mortgage, UPS Freight, Allianz Worldwide Partners) or major operations (Capital One).

Companies are selecting MSAs like Greater Richmond over higher-cost, larger cities. Companies can easily hire or recruit equitable talent at a fraction of the cost, as salaries in Richmond are 20 percent less on average and real estate costs nearly one-third less than major metros in the Northeast.

Greater Richmond is a top spot for attracting Millennial workers. The region was named the No. 2 location that most Millennials are moving to, according to Time magazine. Zillow says Millennials can afford to live alone in Richmond more than any other U.S. city. They’re choosing to work at places like CoStar’s new Global Research Headquarters, AvePoint and ICMA-RC, where they’re able to bike and walk to work.

The Greater Richmond region is gaining 19,600 new residents annually with an average age of 26. This is bucking a decline in population growth elsewhere in Virginia. Nearly half (48 percent) are coming from these locations: Washington, DC, New York, Baltimore, Charlottesville, VA and Virginia Beach, VA.

International companies are finding success in Greater Richmond; the region was named the top city of its size in foreign direct investment by fDi Magazine. Recent international company investments include Polykon Manufacturing, Erodex Ltd and Pryor Marking Co., who have joined the likes of Allianz Worldwide Partners, Rolls-Royce and Sabra Dipping Company (which operates the largest hummus production facility in the world).

1717 Innovation Center, a six-story, 42,000-square-foot building, recently opened inside an extensively renovated former tobacco warehouse. The Capitol One-backed Innovation Center will serve as an incubator for as many as 50 startup businesses at a time, providing space along with mentoring, leadership programs and community events and conferences. Capital One, the Richmond Region’s largest private employer with more than 10,000 local workers, has invested in the incubator as part of its Future Edge initiative, a five-year, $150 million grant program aimed at supporting entrepreneurs, workforce training and financial education in the communities where the company has operations.

Prompted by strong employment and population growth, both companies and developers are lining up to invest in Greater Richmond. The Richmond Marine Terminal has seen an uptick in usage since the Port of Virginia took over operations. That agreement has prompted two significant developments: the construction of the Virginia I-95 Logistics Center and the redevelopment of Deepwater Industrial Park.

ORLANDO LEADS FIELD IN JOB GROWTH

The Orlando, FL MSA notched the fastest Job Growth rate among large metropolitan areas in the country for 2017. While not the largest in terms of total jobs, 3.8 percent employment growth means Orlando is outpacing Riverside, CA, San Antonio, Austin, Seattle and every other large MSA in America in terms of the number of jobs added this past year relative to their December 2016 starting points.

At the same time, Orlando has consistently maintained some of the lowest unemployment rates this past year—lower than both the state and national average. Orlando’s explosive employment growth and ability to maintain such low unemployment rates speaks to the region’s impressive ability to attract new talent from elsewhere in the U.S. and abroad. Unemployment in the U.S. currently is at the lowest it has been since before today’s high-schoolers were born. Orlando’s capacity to attract and retain talent will become even more important in 2018 as unemployment rates continue to drop and the labor market across the U.S. tightens. The unemployment rate in the Orlando metro was 3.3 percent in April.

Orlando’s fastest growing industries over the last year have been manufacturing, construction and financial services, growing at 13.1, 7.5 and 6.3 percent, respectively. Compared to national levels, Orlando is greatly outpacing the country: manufacturing employment grew at 1.6 percent, construction at 3.7 percent and financial services at 1.5 percent. The leisure and hospitality sector grew at 4.3 percent but added the most jobs of any single category (10,900), followed closely by professional and business services.

Orlando’s regional average wage in January 2017 was estimated to be $43,532. Local officials calculate that $2.2 billion in labor income generated from 43,400 new jobs during 2017 has increased the metro’s average wage to $51,019. This finding is supported by the fact that the Orlando regional average wage has been growing faster than the state and nation since Q3 of 2015.

Most important in terms of future growth, the Orlando-Kissimmee-Sanford MSA is also the top-ranked metro in our STEM Jobs Growth category.

In the last two years, according to numbers for the country’s 53 largest metros compiled by Praxis Strategy Group based on federal data and EMSI’s fourth-quarter 2017 data set, the STEM growth leader has been Orlando, at 8 percent—three times the national average. Rounding out the top three are San Francisco and Charlotte (each at 7 percent).

STEM careers fuel the growth of innovative new and existing companies in Florida. Florida will demand a total of 385,010 STEM jobs by 2018, up from 322,560 in 2008.

WHERE THE MOOLAH LIVES

Six of the counties with the Top Median Incomes in the U.S. are located in two states: Virginia and New Jersey.

Loudoun County, Fairfax County and Arlington County, all in Virginia, are ranked first, second and sixth, respectively, in median incomes. New Jersey’s Hunterdon County, Morris County and Somerset County rank fourth, seventh and ninth, respectively.

Median annual household income in Loudoun County is $115,574. The four Virginia counties in the top 10 are suburbs of Washington, DC, as is third-ranked Howard County, MD, which is equidistant between Washington and Baltimore.

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