Growth In Columbus
The economic outlook for Columbus is good, but not great. The U.S. economy already is in recession and Georgia’s economy can accurately be described as “near recessionary.” The better news for Columbus is that the pace of growth will rise significantly in 2009 – and really take off in 2010. That’s when the Armor School begins to move into Fort Benning.
Expansions at Fort Benning and Aflac as well as the new Kia plant and its suppliers will provide major boosts to the economy. But it isn’t just a few mega projects that will fuel growth. The aerospace and food manufacturing industries will do well. The Cessna Aircraft parts manufacturing plant will benefit from strong growth in demand for general aviation airplanes, especially for small business jets. Late last year Cessna broke ground on its third facility in Columbus and expects to add 150 jobs over the next five years.
In mid-2007, after winning major military and civilian contracts, Precision Components International announced it will expand its facility in Columbus, creating 100 new jobs. AlaTrade Foods opened a new poultry processing facility in the Phenix Industrial Park, creating 600 jobs; and Sun Fresh Beverages announced an expansion of its Columbus bottling facility, which will add 50 jobs.
Driving along I-85 toward Alabama, it’s impossible to miss the construction under way on the $1.2 billion Kia Motors auto assembly plant. The plant will employ about 2,800 workers, many of whom will live or shop in the Columbus region. The opening will lead to about 2,000 jobs at suppliers in both western Georgia and eastern Alabama.
Hyundai Mobis will build a facility in West Point, creating 600 jobs by 2010. Sewon Precision will build a plant in West Point that will create 700 jobs. DaeLim USA will build a new LaGrange plant that will employ 75. Pretty Products will expand its current production in LaGrange, creating 130 new jobs, and Sejong will manufacture muffler and exhaust systems for Kia, creating 250 jobs. Dongwon Autopart Technology will locate a plant in Meriwether County, creating 300 jobs.
With respect to Fort Benning, three factors are critical. The number of military personnel, plus civilian and contractor jobs being created at the base will grow by about 10,000. Those who land the jobs will support 18,000 family members. And the multiplier effects associated with spending by people who land these new jobs should create in excess of 5,000 more jobs in the off-base economy.
The Columbus region’s economy will benefit from an increased annual training load of students. The economic impact of their spending on the off-base economy begins this year and will rise rapidly through 2011.
The Aflac announcement marks the largest private sector expansion project currently in Georgia’s economic development pipeline. The largest public sector expansion project? Fort Benning. And the largest project associated with a company entirely new to Georgia? Kia. It doesn’t get much better than that.
Another recent driver of job growth in Columbus is the hospitality industry. Increasing activity at Fort Benning generates more base-related travel. Downtown redevelopment projects also increased the appeal of Columbus to tourists and meeting planners. The opening of the new National Infantry Museum later this year will add to that allure. The museum was cited as a factor contributing to the decision to break ground on a new 120-room Suburban Extended Stay Hotel on Victory Drive.
The housing downturn will be the biggest drag on growth. Permits to build single-family homes in the Columbus MSA dropped by 8 percent in 2006 and by 35 percent in 2007; I expect a 10 percent drop in 2008. The free fall in new home construction may be over, but a 10 percent drop is still a major headwind.
The good news is that housing remains super-affordable in Columbus. The market never really got bubbly. From 2001-2006, existing home prices rose by only 39 percent. That’s tame compared to nationwide gain of 55 percent. Because so many of the fundamentals for the Columbus housing market are still favorable, I believe that existing home values will hold up well.
Columbus has so many projects in the economic development pipeline that the economy should have the strength to sustain economic growth through a mild to moderate national recession. That doesn’t mean Columbus is recession proof. If the U.S. recession is sharp and long, then Columbus also will take a hit. I put the risk at roughly 25 percent.