Georgia Records Economic Growth, but Job Creation Slows

Due in part to three new Amazon fulfillment centers, the state’s economic development has increased by 4 percent from the last fiscal year. But the projects are investing in technology and automation, not new jobs.

(TNS) — Georgia picked up the pace in economic development the past fiscal year, recruiting more projects. But, at a time when hundreds of thousands remain out of work, the pace of job creation slowed, as did the the value of investments.

The growth was fueled by three new Amazon fulfillment centers near Stone Mountain, Newnan and Augusta, an electric-battery plant near Commerce, and hundreds more projects inside and outside of metro Atlanta. State officials said new projects continue to be hatched despite the coronavirus pandemic.

Amazon confirmed on Tuesday it will add 1,000 jobs at a new warehouse in Gwinnett County. Gov. Brian Kemp used the occasion to tout an award from Area Development, an industry trade magazine, that called Georgia the best state for doing business, the seventh consecutive year the state has won the honor.

Speaking against the backdrop of the 700,000 square-foot Amazon facility near Stone Mountain, Kemp called the magazine award a “powerful testament to the fundamental strength of Georgia’s economy — even in these challenging times.”

For the fiscal year ending June 30, Kemp’s office said Georgia added 350 economic-development projects, a 4 percent increase from the previous fiscal year. The total financial investment by these companies fell 1 percent, to $7.4 billion, in the same period.

Total job creation from such projects fell 17 percent to 24,133 jobs.

Georgia outperforms neighboring states in recruiting companies to all regions of the state and not just metro Atlanta, said Kevin Brown, an economic development attorney at Seyfarth Shaw.

“It’s a significant reason why you are seeing these projects in Georgia,” because state officials direct prospective companies to consider other parts of the state if they rule out metro Atlanta, he said.

However, companies expanding in Georgia create fewer jobs now than in past years. Amazon, for instance, said its new distribution center in Gwinnett County is the company’s first in Georgia to utilize state-of-the-art robotics technology.

The number of jobs may be lower, but they require more training and pay better, Pat Wilson, commissioner of the state Department of Economic Development, said in an interview.

“Companies are investing more in technology and automation,” Wilson said.

Georgia won more of these projects despite making no changes to its offerings of tax incentives, Wilson said. The state provided about $20 million in tax incentives and infrastructure improvements to win the Amazon deal for Gwinnett County. SK Innovation has secured at least $300 million in tax incentives, grants and other considerations for its battery plant.

Still, the state’s unemployment rate has soared during the pandemic as businesses scaled back operations or shut down completely. Metro Atlanta added 15,300 jobs during July, but the area’s unemployment rate was 8.5 percent, more than double the rate from July 2019.

Georgia could be vulnerable to competing states because of health care issues, especially regions outside metro Atlanta that lack health care facilities, Brown said. Many rural hospitals are struggling financially and an industry lobbyist recently predicted that many may close due to the pandemic’s impact.

When considering specific expansion sites, companies typically want a hospital located facility nearby, Brown said.

“They want to know how far away the nearest emergency facility or hospital is,” he said.

Georgia also has shortcomings in education and training, according to a 2019 report by the consulting firm McKinsey & Co. The state’s education system ranked 31st in the group’s report, behind neighboring North Carolina and Tennessee.

The COVID-19 pandemic has not slowed economic-development recruitment, Wilson said. The state has more projects in its pipeline — companies that have officially expressed interest in the state but haven’t made a final decision — now than a year ago. He declined to say how many projects are in the pipeline.

Some recent projects began and were approved during the coronavirus shutdown, including a new Zinus USA mattress manufacturing plant in McDonough, Wilson said.

“The pipeline is as robust now as it’s ever been,” he said.

Some other large wins for Georgia in the past year include:

  • SK Innovation, a $1 billion expansion of an electric-battery manufacturing facility near Commerce.
  • Irving Tissue, a $400 million paper manufacturing plant in Macon.
  • Home Depot, adding 1,000 jobs in three new metro Atlanta distribution centers.
  • Microsoft, a $75 million investment in a new Midtown office.
©2020 The Atlanta Journal-Constitution (Atlanta, Ga.) Distributed by Tribune Content Agency, LLC.