A recent report gave South Carolina mostly average and below-average grades on manufacturing and logistics when compared to its peers. However, projects already underway are likely to improve the state’s standing in next year’s Manufacturing and Logistics National Report from the Ball State University Center for Business and Economic Research (CBER).
The study looked at nine factors most likely to be considered by site selection firms. South Carolina received A grades for manufacturing and global reach, but an F for global reach.
Michael Hicks, CBER director and economics professor, blamed low educational achievement among adults in addition to other challenges.
“An average tax climate and a higher-than-average pension liability combines with an historically underperforming educational system to hold the state’s manufacturing sector from higher growth,” he said.
The state has improved since 2009 in all areas but human capital, which has remained a steady D, and worker benefit costs, which dropped from C to D. Hicks said human capital was a challenge throughout the Southeast.
At the same time, aging worker populations in the Midwest and Northeast will make states like South Carolina increasingly more attractive in the future. Other parts of the country will see as much as 20 percent turnover in their workforce in coming decades, he said.
“My sense is, though, that as many states struggle with the human capital issue, the Greenville metro area is going to be a really fruitful location for manufacturing because you have a big enough population that most employers will be able to find the right number of skilled workers to fill almost any size factory,” Hicks said.
However, low educational attainment will remain a stumbling block throughout most of the state.
The health of the logistics industry improved only slightly in that period, receiving a D+. In this category, researchers looked at the share of logistics industry income as part of total state income, commodity flows on rail and road and infrastructure spending.
“Clearly the gap between where you are in the strength of manufacturing and where you are in logistics is highly visible,” Hicks said.
Hicks said that while the state’s north-south routes are sufficient, its east-west logistics are not nearly as strong as states like Virginia. He suggested that more investment at the Charleston port and creation of an inland port would make a big improvement. He was unaware that one is currently under construction in Greer.
He said the roads were “okay” but rail capacity had the bigger deficiencies.
“You just don’t have nearly the rail infrastructure of the industrialized Midwest or Northeast,” Hicks said.
The high score in global reach was less about access to ports and more reliant on the fact that South Carolina exports to diverse parts of the world. The state also displayed an ability to adapt well to international changes in demand.
