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Charleston-area business leaders keep optimism afloat
By Staff Report
The only thing that seems certain about moving into 2008 is that uncertainty abounds. But in the Charleston region, business leaders and experts tend to weave a common thread of cautious optimism.
On the national front, financial forecasters are all over the place. Either a recession is on the horizon, or that’s a bunch of ballyhoos, depending on where you get your news. The housing market has either hit rock bottom or we’ve yet to see the worst of it.
South Carolina’s economy is slowing, but there are no signs of a recession, said Paulo Guimaraes, a clinical associate professor in the Moore School of Business’ division of research at the University of South Carolina.
Speaking last month at the 27th annual Economic Outlook Conference, Guimaraes said a lack of consumer spending is the most troubling aspect of the state’s economic picture. While he predicts slower growth for employment and personal income, closed wallets are “what’s got us worried,” he said. “We don’t see any spending.”
Statewide retail sales are projected to grow 3.1%, just slightly above the inflation rate. Part of that has to do with oil prices nearing $100 a barrel and rising energy costs across the board, added Guimaraes’ colleague Douglas Woodward, director of the division of research and professor of economics at Moore.
If consumers and businesses continue to curtail spending, the employment rate could climb higher, Guimaraes predicted. Another area of concern is the construction industry, a major growth area for the state in the last decade. Statewide, single-family housing permits should be off 11.4% in 2008, following a 24.7% slide in 2007. The Charleston and Myrtle Beach areas will be the hardest hit, with permits down 20% and 42% respectively.
But Frank Hefner, chairman of the College of Charleston’s Department of Economics and Finance, thinks the growth of new jobs, particularly in the manufacturing sector, will keep the Charleston economy chugging along. New jobs will bring more people and fatten incomes, and the housing market will stabilize in return, he said. (See full story, page 18).
“Personal income just went up this quarter in South Carolina,” he said. “It’s nice, normal growth and the unemployment is still very low.”
The success or failure of the area’s major manufacturers will have an impact down the line, agreed Hagood Morrison, the director of industrial real estate for Colliers Kennan of Charleston. He expects avid growth in the commercial real estate market, particularly if companies such as Ladson-based Force Protection Inc. and North Charleston aircraft manufacturer Vought Aircraft Industries continue to grow. (See full story, page 24).
“Those are the leaders in the industrial market,” he said. “What they do tends to affect a number of different downstream entities.”
In other words, success—like fear—is contagious.
In 2007, the business community chalked up disappointments and disasters, from the residential real estate downturn to economics professor Al Parish’s guilty plea to the Sofa Super Store blaze that killed nine firefighters on June 18.
But the region announced many victories, too.
In April, pronouncing its search complete for a site for a new $600 million data center, Google snapped up a 500-acre parcel in the Mount Holly Commerce Park in Berkeley County. DuPont followed suit several months later, announcing a planned $500 million Berkeley County expansion, one of the company’s largest single investments in the world.
Dubai became a central fascination after Jafza International—the subsidiary of a company that manages business ventures on behalf of the royal family of the Arab emirate—disclosed plans to build a $600 million intermodal center in Orangeburg.
AirTran Airways’ landing at the Charleston International Airport this summer helped drive down ticket prices and increase air traffic to record highs, opening up the region to more tourism and business deals.
Moving forward, the challenges facing this growing region will become more difficult and apparent.
A burgeoning population pumps more money into the economy, but it also stresses the aging infrastructure and stretches the state’s dwindling road funds. (See story, page 16).
It brings more new development that is one person’s prosperity and another’s shrinking back yard.
Dorchester County threw the brakes on new residential development, hoping to get a handle on rapid growth. The town of Mount Pleasant forked over $6 million to stop a new condo development on historic Shem Creek, and plans to build a park instead.
The coal-fired power plant Santee Cooper wants to build in Florence County is either the key to economic vitality—necessary to sustain the state’s growth with power and jobs—or the path to environmental ruin.
The S.C. State Ports Authority’s new $600 million terminal on the old Charleston Naval Base will boost traffic by 12%, but environmentalists sound the alarm on increasing particulate matter, otherwise known as soot, that can lead to heart and lung failure. The S.C. Coastal Conservation League has filed suit.
Regardless, good, honest debate is the best way to combat fear. And if this region is lucky, the years ahead, 2008 included, will be marked by the spread of success.
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