Georgia Pushes Incentives for Economic Growth
01 Aug, 2012
By Sharon H. Fitzgerald
2012 was a banner year for business-friendly legislation in the Georgia General Assembly, and the commissioner of the Georgia Department of Economic Development, Chris Cummiskey, says Georgia is “well on our way to being the No. 1 place in America to do business.”
New statutes that should be business lures include:
*An elimination of the sales and use tax on energy used in manufacturing. The tax will be phased out over four years.
*Discretionary elimination of sales and use tax for construction materials, designed to help companies defray startup costs.
*Elimination of the local inventory tax.
*Strengthening of several tax credits related to job creation, research and development, and the use of Georgia ports.
Georgia also made changes to its Mega Project tax credit. This tax credit applies to qualified companies with 1,800 new employees. To qualify, those companies must either invest at least $450 million or meet a minimum annual payroll of $150 million. The credit is $5,200 per job for five years, and this incentive was the linchpin to help lure Kia Motors Manufacturing to West Point, where production of the next-generation Kia Sorento began in 2009. Now, thanks to the new legislative changes, qualifying companies’ “affiliates” may be eligible for tax relief, too. What’s more, companies that make a larger capital investment enjoy an extended ramp-up period. The new legislation also increases the number of jobs a company can claim for the Mega Project tax credit from 3,300 to 4,500.
The changes to the Mega Project incentive this year were critical to the decision by Baxter International to locate a new biopharmaceutical manufacturing facility near Interstate 20 east of Atlanta. The company’s investment in Georgia will exceed $1 billion. Baxter’s new facility, expected to employ about 1,500, will manufacture plasma-based therapies that treat chronic and life-threatening illnesses. The operation will also include warehouse and distribution facilities. In addition, Baxter will locate plasma centers in a number of communities around the state.
Industries And Innovations
Baxter is the crown jewel in a concerted effort to nurture a bioscience sector. Cummiskey says Georgia’s R&D and Quality Jobs tax credits were enacted partly with that sector in mind, and the result is what’s called the Innovation Crescent, a coalition of about a dozen counties stretching from Atlanta to Athens that are focusing on life-science economic-development initiatives. Athens is home to the University of Georgia, while Atlanta boasts the federal Centers for Disease Control and Prevention, and Georgia Tech and Emory universities. “Baxter is here because of Georgia Tech,” Cummiskey says, adding; “now Baxter is going to be our best salesman.”
Georgia also scored big in February, when Caterpillar Inc. announced its intention to relocate assembly operations from Japan to a site that straddles the Clarke and Oconee county line. “Caterpillar is moving full-steam ahead and going vertical very, very soon,” says Rusty Haygood with the Oconee County Economic Development Department. Production is slated to begin in 2013.
Caterpillar is expected to employ more than 1,400 people. The region’s strong labor pool, wealth of higher-education institutions and high education-attainment levels are reasons the manufacturer chose the region. There’s also room to grow in Oconee County, which hopes to lure Caterpillar suppliers. Haygood says two parcels in particular, 50 acres each fronted by State Route 316, are prime development opportunities.
Another booming Georgia sector is aerospace. In fact, Georgia ranks sixth in the nation in the number of aerospace jobs, thanks to major players like Gulfstream, Lockheed Martin, Pratt & Whitney, Bombardier, Triumph Aerostructures and Boeing. Parker Aerospace, which designs and manufactures control systems in Dublin, now has its division headquarters there.
“We have a very diverse industrial base,” says Cal Wray with the Dublin-Laurens County Economic Development Authority. One reason is the community’s location, along Interstate 16 halfway between Atlanta and Savannah. Thanks to its central Southeastern position, two international automotive suppliers are opening shop in Laurens County. In January, Erdrich Umformtechnik, a German company, announced that it will construct a metal stamping facility there; in March, Denmark-based Dinex Group announced that it will build exhaust systems in Dublin for trucks and tractors. Together, the companies will invest $55 million and create 430 jobs, Wray says. The county is also home to three major distribution facilities, for Best Buy, Fred’s and Farmers Furniture.
“Location, location, location” is how Roddie Anne Blackwell describes why business is attracted to Putnam County, located between Interstates 20 and 16 and less than 50 miles from the new Caterpillar site. Blackwell is president of the Eatonton-Putnam County Chamber of Commerce, partner of the Putnam Development Authority, which is putting the finishing touches on its new Rock Eagle Science and Technology Park. The more than $4 million site features 130 acres, with one 20-acre parcel already committed to an out-of-state company, Blackwell says. She adds that the work ethic in the area is cited time and again by community employers. “People have always been used to working, and they don’t shirk it. They know they are supposed to show up and be there and put in a full-day’s work,” she says.
Talent And Education
Georgia’s signature Quick Start program is a national workforce-training model. The oldest program of its kind in the United States, Quick Start has updated the skills of more than 1 million Georgia residents working for 6,200 companies. Training is provided in classrooms, mobile labs and onsite at companies and is offered free by the Technical College System of Georgia.
Cummiskey says Quick Start is one reason Caterpillar and Kia are in Georgia. “Our people went over to Korea to see how [Kia] runs a manufacturing plant,” he says. “Then we replicated that, set up an onsite training center, sorted through 30,000 applications, found the best and trained more than 1,000 people. On the first day, the company opened at 100 percent efficiency.”
Cummiskey doesn’t hesitate when asked about Georgia’s top business asset — he says it is the state’s Southeast location and its logistical prowess. “We are the Southeast hub for logistics, between our airport and our ports,” he says. “I think what you will see in the next decade is that we will be the East Coast hub.”
About 90 million passengers annually pass through Hartsfield-Jackson Atlanta International Airport, making it the world’s busiest passenger airport. It is also in the top 10 as an air cargo hub, hosting 12 cargo-only carriers.
The success of Hartsfield-Jackson also has prompted airport-area development catering to the business traveler. At the edge of the airport property is the city of College Park. “We’re excited to offer some opportunity, which is urban infill in the airport area with property that is ripe for development,” says Barbra Coffee, the city’s director of economic development. Available is space for office,
hospitality, industrial, retail and corporate enterprises. “Add to that the fact that we have the incredible Georgia International Convention Center,” Coffee says. “It’s the state’s second-largest convention facility at 400,000 square feet with the largest ballroom as well.” College Park is connected to the airport by the SkyTrain, a people-mover between the terminals and car-rental facilities; the first station is College Park’s Gateway Center and its convention center. International companies are finding College Park a prime locale. ‘They find it easy to do business, where they can be greeting clients within 15 minutes of their flight,” Coffee says. “It’s a phenomenal product like none other in the United States.”
Georgia has two deepwater seaports in Savannah and Brunswick, serving all major ocean carriers and more than 100 trucking companies. Savannah has been the fastest-growing container port in the United States for the past 10 years and is a main reason why Georgia ranks No. 2 nationally in exports. “Our ports’ average growth rate in the last 11 years is over 11 percent a year, and that’s through some of the worst economic times,” Cummiskey says. “While some of our competitor ports have actually decreased in size, we have flown up the charts.” He credits that growth to the shift in America’s marketplace; he says 44 percent of the marketplace is now in the Southeast and 80 percent is east of the Mississippi River.
From the bustle of Atlanta’s city life and the roar of Southeastern Conference football on a warm autumn afternoon to tiny mountain hamlets and quiet Atlantic sunrises, the ambiance of Georgia is all about variety. Residents enjoy a cost of living well below the national average and positive education opportunities at all levels. In Putnam County, lakes Oconee and Sinclair offer more than 400 miles of shoreline and 35,000 acres of water, Blackwell says, and Eatonton is proud of its new Plaza Arts Center, the result of a campaign that raised $3 million in private funds to renovate an aging school. “It has been a tremendous asset,” she says. “We have people driving 50 and 60 miles for the performances.”