Governor Perdue addresses Economic Outlook Luncheon. 4 December 2007
Economic Outlook4 December 2007
Each December this Economic Outlook luncheon gives us a chance to look forward, to prepare for the year to come. I’m slated to give a welcome today, but while I’m here, I’ll fill you in on some of the big issues facing our state.
Our country’s economy is perched in an interesting – some may say perilous – place. From California to New York, many states are facing tough budget times.
California has a $10 billion budget shortfall. And unless they want to deal with a $4.3 billion deficit, New Yorkers need to take a serious look at their checkbooks. Even Virginia, usually a soundly run state, is debating making withdrawals from its reserve to offset $400 million of their deficit. Economists in Florida are forecasting tax collections will be down by $2.5 billion over the next two years.
But the good news is: Georgia is in good shape! We pulled through those tough times a few years ago, fixed our hole in the budget, and have emerged with a strong, vibrant economy. We’ve worked hard to fill up our rainy day reserves – and they are holding strong at a billion and a half dollars.
Now, it’s not all roses and sunshine – several segments and industry sectors are facing serious financial woes, mainly due to the effects of the drought.
But overall, Georgia has the strength, the reserves and the stability to persevere and succeed. We have great economic development assets, like our business-friendly environment and our low tax burden. We also have a world-class ports system that continues to drive economic growth.
Though we have slowed that rapid rate of growth, Georgia’s economy continues to expand. Unemployment remains low. Job growth is above national levels. The Kauffman Foundation ranked us #3 in the country for entrepreneurial activity. Site Selection Magazine ranked us #2 for our business environment.
Our competitive and fair tax structure also helps attract businesses. KPMG recently conducted a study on the competitiveness of 20 states, including Georgia, which compete for jobs and investment. They found that Georgia has the single most competitive tax environment. Our low statutory tax rate, single-sales factor apportionment and job tax credit all help create that business-friendly tax environment.
In the last three months, I’ve announced ground breakings, attended ribbon cuttings and marked the expansion of companies in Jeffersonville, Soperton, Macon, Griffin, East Point, Valdosta, Atlanta, LaGrange, Peachtree City, Columbus and Rincon.
Companies across the country and around the world are taking note that Georgia is open for business. July through October, the Department of Economic Development reported that investments are $637 million, up 30% from FY07.
We remain focused on building up our strategic industry clusters – high-growth areas like Aerospace, Agribusiness, Energy, Healthcare, Advanced Manufacturing, Advanced Communications, Logistics and IT.
I’ve gone on three international trade missions this year alone, targeting companies within these industry clusters.
I went to Europe in June, where I visited with pharmaceutical, aerospace and automotive companies. In October I went to Japan and Korea to meet with automotive manufacturers, including prospective Kia suppliers.
I also went to Canada a few weeks ago. There I signed documents with our top trading partner, creating a new alliance between the Southeastern US and seven Canadian provinces.
These relationships are important – because they result in projects like the Kia manufacturing plant in West Point. Speaking of Kia, I’m pleased to report not only that they are moving forward on schedule … but also that their suppliers are coming.
Six Kia suppliers have already committed to bringing a total of 1400 jobs to that area.
The Koreans aren’t the only ones expanding their operations to the United States. Chinese companies are also selecting Georgia as their entry-point to the U.S. market. In just the past year and a half, three major Chinese firms have announced plans to locate to Georgia.
Kingwasong LLC, is now building a plant in Newnan, creating 200 jobs and attracting $12 million in new investment.
In May 2007, China-based General Protecht Group purchased 211 acres of land in Barnesville to assemble and distribute electrical products.
And just this September, Sany, a major heavy construction equipment manufacturer, announced that it will invest $30 million to build its first North American plant in Peachtree City, creating 200 jobs.
I look forward to visiting our partners in Asia in person this coming March – that is, if the legislature behaves….
I intend to fly on the inaugural Delta direct-flight from Atlanta to Shanghai. From there, I will go on to Beijing to open Georgia’s first economic development office in China which will help market our state to the world’s fastest growing economy.
Domestically speaking, Range Fuels, a Colorado-based company, was another exciting announcement this year. Last month they broke ground on the nation’s first commercial cellulosic ethanol plant in Soperton. Their process takes wood chips and sawdust and all sorts of timber waste product, and turns it into ethanol.
This plant means Georgia is on the forefront of a new technology that capitalizes on our natural strengths and comparative advantages. And the fact that it’s a several hundred million dollar investment doesn’t hurt!
But Georgia’s growth and progress does not hinge solely upon large corporations and million dollar investments. The backbone of our economy, the bedrock and foundation of our communities – that is our small businesses.
Of 600,000 businesses in Georgia, 95% employ fewer than 50 people. 50% employ fewer than 5. We’ve added 320,000 jobs in 5 years – and that doesn’t all come from big businesses.
We recognize this, and we have become a national leader in entrepreneur and small business development. Georgia helps out with things like market research, which is vital to business success, but difficult to take on as a small company.
And Georgia has the first and only program in the country to use this support as a rural and urban development tool.
Another engine driving Georgia’s development is our ports system. Georgia’s ports have seen some monumental advancements over the past few years.
Our very own historic Savannah port is now the second-largest port on the east coast.
Year to date, Savannah’s port traffic, including imports and exports, has increased 25 percent over last year. Compare that to the Port of Charleston which is down 7 percent or to the Port of Los Angeles which has flat growth numbers. In fact, Savannah is the only port in America experiencing double-digit growth and is hailed as the nation’s fastest growing port.
I am also proud to say that the demand for our exports is growing equally as fast as the demand for imports. In fact, Savannah is one of the only major ports in America with balanced trade, or 52 percent of total trade dedicated to imports and 48 percent to exports.
Our deepwater ports are major economic engines – they foster growth in virtually every industry in the state, and give us a strong competitive advantage. I think of them as a heart, driving development and pumping commerce.
And earlier this month I joined Governor Mark Sanford to announce our agreement with South Carolina to develop a new joint port on the Savannah River.
This project will result in serious economic growth – it will mean more jobs, a bigger revenue stream, and benefits for the entire Southeast.
This joint port agreement will prove to be historic. In fact, I believe that, along with education reforms and land conservation, this joint port may be among the projects with the longest-term financial impact on the state after I leave office.
Now, before I conclude, I want to talk briefly about one thing that is not only weighing on the minds of everyone in the state, but is also vital to our economic future. That is our water situation.
Georgia’s continued economic vitality does depend on the sustainable management and protection of our water resources.
We are in the middle of a historic drought, and we are making do with less than we are accustomed to. But we do have enough water in the state.
It’s simply a matter of managing it properly, making smart, conservative decisions, and working with our neighbors and federal partners to make it last.
I will be meeting again with the governors of Alabama and Florida later this month, and I hope to have good news to share with you after that meeting.
One part of managing of our water resources is the adoption of the Statewide Comprehensive Water Plan.
The Water Council has been hard at work on this plan for several years, and it was crafted to support economic growth and prosperity while protecting our resources. It will be presented to the legislature next month during the session – and the time for passing this plan is now.
While this drought was not born out of a lack of storage capacity, I urge local governments to take a hard look and assess their storage capacity needs for the future.
In closing, Georgia’s economic development investments, the additions to our deepwater ports system, and smart management of our water resources each add to Georgia’s strong economic foundation. It is that foundation that has caused the Kauffman Foundation, Site Selection Magazine and KPMG to sing Georgia’s praises internationally.
For the remainder of my second term as Governor, we will continue to foster growth in our economy and keep Georgia the envy of the nation.