By Dan McCue
Staff Writer

It was the kind of gathering of public officials and economic developers that always puts a smile on Lewis Gossett’s face.

Under a bright blue Carolina sky, officials from the S.C. Department of Commerce and the Central S.C. Alliance joined with the leadership of the Starbucks Coffee Co. to break ground for a new plant, formally called the Sandy Run roasting facility.

By this time next year, the aroma of roasting coffee will be emanating from a 120,000-square-foot facility situated on 325 acres in the Calhoun County Industrial Park just off Interstate 26.

Best of all, Peter Gibbons, senior vice president of Global Manufacturing Operations for Starbucks, said the plant will employ between 140 and 150 in the economically challenged county.

The plant will provide product to Starbucks’ distribution centers throughout the Southeast.

“There’s no question Calhoun County and Orangeburg are white hot right now. They’re kicking it out of the park,” said Gossett, an attorney and one-time state labor official who now serves as president of the South Carolina Manufacturers Association.

“In part that’s due to the foresight of people like Gregg Robinson, the executive director of the Orangeburg Economic Development Council, who’s at the top of the food chain in terms of getting businesses excited about his community, and in part it’s a matter of simple geography,” Gossett said.

But a significant part of the story is the ongoing investment in business parks throughout the state, he said.

“People opening these parks realize that a call center or warehouse could up and move tomorrow, but a manufacturing investment, that’s something being made for the long term,” Gossett said. “Frankly, and admittedly from a biased perspective, I think if you’re going to build a commerce park today, you’re wasting your money if you don’t make room for manufacturing.”

Commerce parks busting out

While Jafza International’s planned $600 million warehouse, distribution and manufacturing park in Orangeburg has lately been grabbing the majority of headlines, the reality is the Dubai-based firm is one of a score of players—some public entities and others private—that are casting their lot in commerce parks and leading a revival in the state’s manufacturing base.

Five other public and private commerce and logistics parks are in various stages of development within a stone’s throw of the Jafza International site at the intersection of Interstate 95 and U.S. Highway 301, and Orangeburg and Dorchester counties are in the process of determining where they’ll build a joint county park.

Orangeburg is also actively engaged in the process of finding suitable land on the western side of the county for establishing an additional commerce/logistics center there.

And in Jedburg, in Berkeley County, another five developers, including the Rockefeller Group Development Corp., Hillwood Development and Eastway Development, have either secured or are active in the process of developing roughly 1,600 acres in the area.

While the factors Gossett cited are certainly playing a role, the other magnet for this kind of investment are the incentives and other advantages offered by the state of South Carolina. So persuasive is the perception of the state’s business-friendly climate that a recent op-ed in the Columbian newspaper in Washington state warned officials there to adopt similar measures or risk seeing its largest industrial manufacturer, The Boeing Co. relocate to the Palmetto State.

According to Don Brunell, president of the Association of Washington Business, a large measure of South Carolina’s success in luring industry can be attributed simply to the state’s “fighting hard to win a big chunk of that business.”

“Since the closure of the Charleston Naval Base, South Carolina has aggressively pursued growth, economic development and new jobs,” he wrote.

Among the factors that help lure manufacturers from other areas are performance-based incentives that allow employers to significantly reduce their business taxes. South Carolina ranks 34th out of the 50 states in terms of business taxes.

The state also has lower unemployment insurance rates than states in the nation’s traditional industrial centers—the current rate is roughly $154 per employee—and it’s a right-to-work state with a union membership among the lowest in the nation, Brunnell said.

He further lauded the state for investing heavily in training and research.

Kara Borie, spokeswoman for the S.C. Department of Commerce, described Brunnell’s piece as interesting reading.

“It’s always enlightening to see how our efforts are viewed by outsiders,” she said.

Not surprisingly, she also agreed with his interpretation.

“The manufacturing side, particularly aviation, plastics and the automotive sector, are areas we continue to target for future growth,” she said. “We feel, given the historic presence of the defense industry here, as well as the decision by BMW and others to locate here several years ago, that we have real strengths to build on in the manufacturing sector.

“But beyond what we can offer as an incentive on the state level, remember that none of that would matter if we didn’t have the work force with the right skill sets for these industries, and of course, with the port and highway and rail systems, we’re also ideally situated for these businesses to get their manufactured goods to market quickly.”

Jobs not coming fast enough

But for all its efforts, South Carolina’s manufacturing sector is still seen as hard hit by globalization.

On Nov. 3, Former North Carolina Sen. John Edwards brought his presidential campaign to Cheraw and Lancaster to outline his agenda for improving the fortunes of rural families hard hit by the demise of the state’s textile mills.

Visiting with former workers of the Springs Industries plant in Lancaster, which closed after its Brazilian owner relocated its jobs to South America, Edwards said, “I grew up in Carolina mill towns, and I understand the devastating impact trade can have on workers and communities. South Carolina has averaged over 200 mass layoffs a year and lost nearly one in five manufacturing jobs since 2001.”

“It’s no coincidence that ordinary Americans are getting left in the dust when Washington is rigged by powerful multinational corporations and their lobbyists,” he said.

Even Gregg Robinson conceded that despite the influx of manufacturing activity, the state is still a long way from gaining a job for every one lost in the sector.

“I have seen an influx in manufacturing projects here the last 18 months or so, but I still think we’re losing opportunities for low skilled and semi-skill workers,” he said. “That’s why it’s so important to cluster these things in commerce parks, so that by creating a critical mass, we’re creating opportunities for everyone.”

Other potential hurdles

While happy with the trend, Gossett also sees potential pitfalls ahead for South Carolina’s manufacturing sector.

One of those is the differing philosophies of Gov. Mark Sanford and the leading members of the state Legislature when it comes to which businesses should receive tax and other incentives.

Sanford, Gossett said, believes in taking a more hands-off approach when it comes to existing businesses in the state, preferring instead to offer incentives for large new employers to enter the market.

House Speaker Bobby Harrell, R-Charleston, and Senate President Pro Tem Glenn F. McConnell, R-Charleston, have a more expansive view of who should be offered a helping hand, he said.

“Don’t get me wrong, luring new manufacturers into South Carolina is a wonderful thing, but the reality is 80% of our economic development each year comes from existing industry,” Gossett said. “The problem with not offering existing companies incentives is that manufacturing facilities, by their nature, are built to break. If you don’t continually invest in these facilities, they die.”

Another thing the state has to be mindful of going forward is affordability, Gossett said.

“We used to advertise South Carolina as a low cost place for labor and a low cost place for land, but that hasn’t been true for 20 years,” he said. “And among those most pressing issues we face is the rising cost and potential lack of availability of energy.

“That’s why I firmly believe that Santee Cooper, must build one more coal plant and build the nuclear plant it wants to operate in cooperation with SCANA,” Gossett said. “I agree with those who say we have to be smart about it and adopt clean coal technology and the like, but we have to have these things, otherwise it will put the brakes on economic development.”

Gossett’s fear is that without that additional capacity, Santee Cooper will be forced to buy energy “off the grid at premium prices” and then will pass those costs on to business and residential consumers.

“Unfortunately, I think the ongoing debate over Santee Cooper’s plans has become polarized, making it harder to strike a balance between quality of life and prosperity, and if you can’t strike that balance, manufacturers are going to be loathe coming here or staying here,” Gossett said.

“Before we get to the point where there are brown outs in Charleston and disruptions in production, I think we and our elected officials need to recognize that there can be a balance, and one achieved without throwing the baby out with the bathwater.”

Dan McCue is a staff writer for the Business Journal. E-mail him at dmccue@setcommedia.com.

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