Columbus: Cars And Defense

Last year my optimism for Columbus was based primarily on the fact that the area had so many projects in the economic development pipeline. That has not changed. Kia Motors has added a second shift to produce the Hyundai Santa Fe, and hiring related to the move of the Armor School to Fort Benning just kicked into high gear.

For 2011, Benning’s expansion continues to be the most important factor underpinning my optimism, but I am also counting on the Kia plant and its suppliers to provide an even bigger economic boost to the regional economy than in 2010. I expect the economic impacts of many of the projects announced over the last couple of years will increase in 2011. In some cases that’s because the projects were multi-year and are still building out. But a more subtle force is at work: The multiplier effects associated with the direct jobs that have already been created will rise over the next couple of years as these new projects become more fully integrated into the fabric of the region’s economy. Essentially, more and more jobs will get sourced locally as the economy adjusts to the presence of the new projects.

The $1.2-billion Kia auto assembly plant is expected to employ between 2,500 and 2,800 workers, many of whom will live or shop in the Columbus region. About 1,250 jobs were created at the plant in 2009, and last fall the addition of the new production line added 600 more, bringing the total to nearly 2,000. Kia suppliers continue to move into the region.

I ran a simulation based on the most conservative estimate of the number of jobs at the Kia plant. The results, based on 2,500 direct jobs at the plant, show that the employment impact will be 13,700 jobs in Georgia. In 2011, both the Kia Sorento and the Hyundai Sante Fe production lines at the Kia plant will be up and running for the entire year, which means a much greater annual economic impact than in 2010.

According to the U.S. Army, the number of military personnel, civilians and contractors working at Fort Benning will grow by about 11,000. Those are permanent jobs. The multiplier effects associated with spending by people who land these new jobs should create at least 6,000 more jobs in the off-base economy. So Fort Benning’s growth will generate at least 17,000 jobs.

Columbus has yet to feel much of the economic impact of these planned expansions at Fort Benning. The big push in terms of population growth and job creation associated with the move of the Armor School is just beginning. If things stay on schedule, the pace will accelerate through September, when the move is scheduled to be complete. The multiplier effects almost certainly will ensure that the major push to economic growth continues to rise through 2012.

Columbus will continue to benefit from a slew of other projects announced over the last two years, the largest of which is the NCR project, recently recognized as the “Deal of the Year” by the Georgia Economic Developers Association. NCR initially announced that it would add 870 production jobs at its ATM production, research and development facility. A simulation for the Columbus Chamber last year showed that those jobs will create a total economic impact of 1,300 jobs.

The Columbus region’s economy will see a lot of job growth over the next few years: 17,000 jobs will stem from Fort Benning; 13,700 jobs will exist due to Kia; and NCR and other projects should add 2,500 jobs. Put it all together, and you get about 33,000 jobs. Columbus only lost 5,000 jobs to the Great Recession.

Of course, it should be emphasized that many of these new jobs will not be physically located in the Columbus Metropolitan Statistical Area (MSA). Technically, the KIA plant lies just outside the MSA, and many of its suppliers are scattered across West Georgia and Alabama; but much of the workers’ spending will take place in Columbus.

On top of all that, both the national and the statewide economies will be recovering, providing boosts to the Columbus region’s economic growth.

Finally, another reason for optimism is that home prices are holding up better in Columbus than at either the state or national level. The expected population growth implies that the demand for housing, especially apartments, will take off. That rising demand will quickly reverse much of the recent decline in home prices.

Categories: Economic Development Features, Features