Savannah: Keeping Up
Manufacturing and a bustling port
Business has been brisk in Savannah, and that’s an understatement. Things started picking up in 2009 when Mitsubishi’s Savannah Machinery Works moved into the megasite assembled by the state over the last decade in Pooler. This high-tech manufacturing center will build power components for power plants around the world: giant, futuristic equipment requiring the training of some 500 people who will make around $50,000 a year.
Then late last year Gulfstream Aerospace made an even bigger announcement – it will expand to add nearly 1,100 jobs and invest more than half a billion dollars to build more jets. It is the second big expansion announced at the company in the last five years. New jobs have also been announced at Weyerhaeuser, International Paper, and JCB. It’s almost like Savannah has rocked through the recession as if nothing happened.
Now the Port of Savannah is the focus of efforts to deepen the harbor to allow larger container ships to enter. The result could triple cargo coming into the state and greatly enhance a robust distribution and logistics economy that supports the ports in Savannah and Brunswick.
All these angles have broad repercussion potential for a city that also has growing higher education and medical sectors. Savannah has long operated with a flat population of around 130,000, behind a mysterious moss curtain that seems at odds with such dramatic growth possibilities; but that may be changing as it gears up to become one of the state’s super performers.
“When I look at Savannah, I see a San Diego on the east coast,” says Steven Weathers, president and CEO of the Savannah Economic Devel-opment Authority (SEDA). “I was there for 20 years, and Savannah looks like San Diego did 20 years ago.” Weathers, who has recently taken the helm of SEDA, acknowledges the recent successes but has an even broader vision for diversifying Savan-nah’s industries.
“Like San Diego, Savannah has a large military installation nearby [Fort Stewart], tourism, retirees” and a relationship to a big city – Los Angeles for San Diego, Atlanta for Savannah.
“We have great attributes to capitalize on and diversify our economy into an entrepreneurial, high-tech environment,” says Weathers, who originally hails from South Carolina.
These companies are easy to grow, says Weathers – San Diego biotech companies increased from 30 to more than 700 on his watch; telecom from three to more than 600; software from zero to more than 800 – but such growth takes venture capital. “A lot of those came through programs set up to perpetuate entrepreneurism,” he says. “We also went from seven to 100 venture capital programs.”
In addition to a venture capital fund, Weathers wants to build a five-year plan that includes corrections each year and mitigation assets. “Based on Southern California, we always had mitigation set aside for changes like dredging,” he says, referring to the Savannah River project, which is expected to cost $600 million. “The ratio should be two to one, so if we need 10 acres we set aside 20. The dredging will impact Savannah in a positive way, but we have to be sensitive – more traffic means we need more infrastructure. We need pipe capacity at the front end, but the middle and back ends need to be adjusted as well. That translates to job impact.”
“The river deepening is the most important economic development [project] we have experienced in a very, very long time,” says Savannah Mayor Otis Johnson. “We are concerned about the environmental and economic impacts and do not believe they are mutually exclusive. We think we can take care of the concerns – sustaining the marshes and flow of water from the upper river and the intrusion of more salt water into the underground aquifier – and if we can do it, we can keep our edge. If we don’t, it would be a major blow.”
The deepening project has cleared some hurdles, having received a water quality certificate from the state Depart-ment of Natural Resources, but still needs additional approvals from federal agencies. If the harbor can be ready in time for the larger new Panamax container ships in 2014, the logistics industry will “explode,” says Johnson. “Long-shoremen would profit from this – trucking, rail and airport traffic will expand – warehousing will increase in volume. So it would be a win for multiple sectors.”
In fact, some distribution activity is already taking place in advance of the project: One company, JLA Home, recently purchased a 689,400-square-foot facility and will hire 100 workers for its East Coast assembly and distribution center. The home furnishings company was enticed by SEDA to seal the deal, which is in Dermody Properties/DP Partners’ LEED-certified LogistiPort Industrial Park.
As the port and companies feeding it grow, diversification is as important as ever, says Weathers. “In the next five years I hope to have 100 new innovative technology companies,” he says. “Gulfstream is an anomaly. Our bread and butter is companies with 50, 75 jobs, and we need a lot of diversity.”
Higher education is playing a big role in Savannah’s growth plans. At Savannah Technical College, the state’s Quick Start program is key to training workers for the Gulfstream expansion. JCB, which is hiring 200 workers to build skid steer and compact track loaders, told the Savannah Morning News that the company worked with Georgia Tech Savannah and the industrial design department of Savannah College of Art and Design (SCAD) to make the loaders safer, more cost efficient and environmentally friendly.
“SCAD is now the largest art and design school in the world,” says Chatham County Commission Chairman Pete Liakakis. “We have 8,500 students in Savannah, and all the campuses are growing.” Savannah’s other institutions of higher learning include Armstrong Atlantic State University and Savannah State University; collectively, the institutions make an annual $900-million impact, says Liakakis.
“We’ve also added proprietary schools – Phoenix University, South University and Strayer University,” Johnson says. “We have Medical College of Georgia providing student doctors for Candler Hospital and Mercer University associated with Memorial University Medical Center, and even Georgia Southern University in Statesboro, which has doctorate programs, is just an hour away, so we are rich in higher ed institutions.”
“From my angle,” says Weathers, “we are part of their parade and support their efforts to grow, for instance, our healthcare sector. But there’s more. We want to meet doctors and researchers to commercialize technologies. We want job opportunities and investments so that five years from now, we could have 30 health-related companies that weren’t here before. I want a convergence of technologies and ideas through the colleges, to get into the minds of SCAD students or Memorial and Candler doctors. If we get enough ideas on the table, we’ll find some jewels – medical simulation technologies, for example.”
That said, “I’m not sure we have enough workers with skill sets in the region,” says Weathers. “We need to train as many in the region as possible, while acknowledging that we need to attract others here. You could see tremendous growth in South Carolina, which is good – we’re all in it together.”
“The challenge is to get more local people to finish high school and get into post-secondary educational institutions,” says Johnson. “I have heard that good jobs in the future will require at least two years of post-secondary education.” He wants Savannah residents to be prepared to fill those jobs.
The city has an initiative, Step Up Savannah, in partnership with the Annie E. Casey Foundation and local technical schools, to teach important levels of skills that may not surface in traditional training. “According to feedback we’ve gotten from employers, they can teach them the hard skills, but somehow they haven’t learned ‘soft skills’ like getting to work on time, dressing correctly and taking instructions,” says Johnson.
“We have also started the Savannah Impact program, to work with the penal system and try to give people on parole and probation a second chance. It involves drug testing and counseling, job training, mental health evaluation and eventually job placement, so we need to sensitize our employment community to the benefits of this program.”
“We need a proactive focus on reducing our poverty rate,” adds Weathers. “There’s a lot of talk about high-tech, high-paying jobs, but I say, not everybody is in that skill set. We need a bigger plate that includes companies with middle- to lower-skill jobs as well as high-skill jobs – a call or service center, say, as well as a biotech research facility – so that there are employment opportunities for the community as a whole, instead of only having aerospace jobs.”
Savannah already has a huge service economy feeding a $1.4-billion tourism sector – some 6.5 million tourists came to Savannah in 2010. “We have huge events every month, and most of them are free,” says Johnson, adding that the city spends around $800,000 on cultural events each year.
“While we had a slide in 2009, I’m happy to report that 2010 was our best year for tourism ever,” says CVB President Joseph Marinelli. “Part of it was pent-up demand left over from 2009, when people traveled less, and part of it was the Gulf Oil spill – I know Tybee Island, our feature beach community, also experienced a record year for hotel-motel taxes.”
On Hutchinson Island, developers plan for a new hotel and yacht slips to take luxury tourism in the city to a new level. “With the International Trade & Convention Center, there has been a pressing need to have another large hotel over there to accommodate large conventions,” says Johnson. “With only 400 rooms in the Westin, people currently have to stay in town and water taxi out there.”
“We’d like 500 more rooms out there, but it will need some public financing or a bond,” says Trip Tollison, vice president of existing industry and government affairs for the Savannah Area Chamber of Commerce. “It’s hard to find private dollars to underwrite such a big project. We are looking at Birming-ham and Tampa, some models we can learn from to plan it.”
More hospitality is anticipated to grow the Savannah East Riverfront Ex-tension, a mixed-use public-private project extending River Street to the east.
The city has secured $8 million in federal funds and anticipates raising more matching funding from the East Downtown Tax Allocation District. The extension will add nearly 2,000 feet to the pretty walkway, with around 40 percent of the 54 acres of the mixed-use project designated for greenspace. Soil conditions and historical discoveries have delayed the project, but when it moves forward it will have a massive impact. “It needs an anchor, and we’re studying what would be the best use,” says Tollison. “The good news is that the investors are in it for the long term and have staying power.”
The most recent glitch, when soil conditions caused the walk to pull away from the bulkhead, will result in delays that will actually improve the project, says Liakakis. “It will be very advantageous because it [the repair] goes beyond what was originally needed,” he says, adding that the insurance company is picking up the tab. Regardless, the project is moving forward, and won an 2010 Institute Honor Award from the American Institute of Architects.
Ultimately, Savannah’s riverfront will see big improvements in concert with the dredging. “We’re also looking at potential cruise ships one day – an expanding industry with tremendous growth, not only in the size of cruises [as many as 6,000 people], but the number of vessels available,” says Marinelli. “The development of larger vessels creates a category of midsized ships looking for ports, and our leadership is looking at prospects of Savannah becoming the home port city for Geor-gia. We could steal business from Cape Canaveral, Jacksonville and Charles-ton, instead of getting one [ship] in here just once or twice a year. Being a port of embarkation creates pre- and post-hotel stays, parking and a brand new industry not only for the city but also the state.”
Other developments are under way in town bringing improvements to downtown borders. On Martin Luther King, Jr. Drive, SCAD is rehabbing the Central of Georgia Railroad 1853 depot as part of an expansion of the SCAD Art Museum. Scheduled to open this fall, the complex will house the Walter O. Evans Center for African American Studies as well as Evans’ collection of African American Art, considered one of the finest in the country. The center will become a community center as well, with classrooms, exhibition space, event space and a theater.
Elsewhere in the corridor, a new Food Lion has opened, bringing the first supermarket downtown in decades. “We’ve had what we call a food desert problem,” says Johnson. “This will be a full-service supermarket with fresh vegetables, fruit, bread and a pharmacy. We also have Carver Street Bank tearing down its office to move into a nearby building. It will be a hub of economic activity there.”
On the outskirts, growth is heating up around Mitsubishi’s Savannah Machinery Works and the Savannah/ Hilton Head International Airport. “The airport passenger terminal expanded about three years ago,” says Johnson, “so it’s more convenient, and it now has direct flights to New York, Chicago, Detroit and Dallas.”
Liakakis notes that there is plenty of other investment in the region. The county passed a SPLOST tax to pay for a $100,000 addition of 1,000 cells to the county jail and an education SPLOST to rebuild its crumbling public schools. “Phase five of the Truman Parkway construction is $66 million, and we are replacing Skidaway Island Bridge for $22 million. So with all of our construction projects, we could see close to half a billion dollars in investment putting quite a few people to work.”
And could there be high-speed rail to Savannah in the region’s future? Johnson worries that the city will need a new education SPLOST, and residents, given the choice of a TSPLOST in 2012, may not abide three penny taxes at once. But Liakakis sees it as a bigger, more regional effort in which locals don’t really have a choice. “There’s just not enough money from fuel taxes right now, so all 159 counties in Georgia have to do it,” he says.
He adds that statewide investments outside the region may be just as good for the city. “Just a couple of years ago we discussed reviving the Nancy Hanks rail service from Atlanta to Savannah. No one is using it, so is there the possibility the tracks could be converted to high-speed rail? It would be a great thing for us.”
Mayor Of Savannah
County Commission Chairman
Visit Savannah President
Savannah Chamber of Commerce President
Savannah Economic Development Association CEO and President
Savannah MSA 343,092
Per Capita Income
County, 8.9 percent
Georgia, 10.2 percent
Top Five Employers
Memorial Health, Gulfstream Aerospace Corp., St. Joseph’s/ Candler Medical Center, Walmart, Georgia-Pacific Corp.
Savannah Economic Development Authority, U.S. Census Bureau, Ga. Dept. of Labor