What is Driving the Manufacturing Renaissance?

As the U.S. turns a corner on the road to economic recovery, data supports claims that the manufacturing sector in particular has seen an impressive resurgence. A recent report by the Institute for Supply Management stated its manufacturing index rose to 57.1 in July, the highest levels since April 2011. (Note: Any index number above 50 indicates growth). Furthermore, the Commerce Department recently reported that orders for durable goods were also on the rise, climbing 0.7 percent in June 2014 with business investment planning rising 1.4 percent.

Specifically within South Carolina, manufacturing accounted for 17.3 percent of the state GDP in 2013 according to figures published by the Bureau of Economic Analysis and 24/7 Wall St. According to those same reports, manufacturing within the automotive industry accounted for nearly $4 billion of the state GDP, led by Michelin and BMW—both of which call South Carolina’s Upstate home.

“There are a number of key drivers in the resurgence, or the on-shoring, of manufacturing,” says South Carolina Secretary of Commerce Bobby Hitt. “One is logistics – companies are seeking savings in transportation costs. Workforce considerations – rising labor costs abroad and the ability to have influence over the quality of the finished products – are of great importance, as are competitive costs for both utilities and land.”

(South Carolina Secretary of Commerce Bobby Hitt with BMW’s new X4 sports activity coupe. BMW’s Greer-based facility is the German automaker’s only manufacturing plant in the U.S.)

While all signs point to continued growth in automotive manufacturing, as well as an uptick within the advanced materials, biosciences and aerospace sectors, it’s no secret that the modern-day manufacturing facility no longer looks and operates the way it did when U.S. manufacturing was at its peak throughout much of the 20th century. Today’s manufacturing facility is one that requires streamlined access to international export and import capabilities, a highly-skilled and trainable workforce and the resources to innovate at a rapid pace.

So how is the state of South Carolina and the Upstate rising to meet the difficult demands of the modern manufacturer, thus leading this industrial resurgence?

“South Carolina is uniquely positioned to remain at the forefront of today’s manufacturing renaissance,” says Hitt. “Our infrastructure network, including a world-class port and now the inland port in the Upstate, allows companies to get products to market faster. Our skilled workforce, favorable energy costs, the availability of land and our state’s track record for attracting foreign-direct investment – all make South Carolina an attractive place for manufacturers to call home.”

In order to better understand the Upstate’s unique position in the industrial sector, we must look at the key factors behind the region’s success.
 

Globalization

South Carolina, led by the Upstate region, has proven to be an exception business climate for many of the world’s biggest companies. The Upstate alone is home to more than 375 international companies from 31 countries, including the likes of Michelin, Fujifilm, Bosch, ZF and BMW.

“There is no greater evidence of South Carolina’s ability to lead in manufacturing than the BMW success story in the Upstate,” says Hitt. “As the state’s first automotive manufacturer, BMW is the corporate model for a successful manufacturing operation in the Palmetto State, and their presence has been a catalyst for the state’s automotive sector.”

This year alone has been an impressive one for foreign direct investment (FDI) in the Upstate, accounting for more than 2,100 announced jobs and $2.2 billion in announced capital investment.

Additionally, the Upstate region has one of the highest concentrations of jobs supported by FDI according to a recent report by the Brookings Institution.  Almost 11 percent of the Upstate region’s jobs are in foreign owned enterprise, which is double the national average. When combined, the Anderson, Gaffney, Greenville, Greenwood, Seneca, Spartanburg and Union metro and micro areas housed 50,600 jobs in foreign-owned enterprises in 2011.

Logistics

Alongside its supportive international community, the Upstate also provides an expansive transportation network allowing companies to operate efficiently, importing and exporting their products worldwide with ease.

Among the resource available to manufacturers is the South Carolina Inland Port, which extends the Port of Charleston’s reach all the way to Greer, S.C. in the Upstate. This provides shippers with access to more than 95 million consumers within a one-day drive, significantly boosting efficiency for international freight movement.

Workforce

One of the biggest challenges every modern manufacturer has is finding a highly trained workforce. A recent survey by Manpowergroup claims that as many as 39 percent of U.S. employers have trouble filling talent positions, with skilled trade workers ranking year-over-year as the hardest position to find.

Understanding the importance of providing a highly-trained workforce for manufacturers, the Upstate has proven to be a significant labor resource for international businesses by combining competitive labor costs with impressive productivity, along with the 2nd lowest unionization rate in the nation and a workforce highly skilled in engineering and technical work.

Each of the counties in the Upstate have committed to the state of South Carolina’s Work Ready Community initiative which rallies community leaders behind the concept of a ready-to-work workforce. The initiative certifies the quality of the workforce based on goals met for high school graduation, soft skills development, business support, and National Career Readiness Certificate holders.

The Upstate is served by more than 20 institutions of higher education, including four technical colleges focused on serving the needs of local business and industry. These educational centers and innovative programs provide advanced technical training and workforce development. The technical college system works hand-in-hand with affiliate programs, including readySC, Apprenticeship Carolina and Quick Jobs Carolina, so companies locating in the area can take full advantage of an extensive education and training network.

Innovation

The Upstate holds a wide breadth of industrial focus and expertise, but its true value to the manufacturing resurgence lies where industry and education align. While the area has earned an impressive reputation for its ability to design and produce some of the world’s most advanced products, the Upstate is specifically accelerating growth in the specific areas of Automotive, Aerospace, Advanced Materials, and Biosciences.

The impetus behind much of the Upstate’s success in manufacturing is innovation spurred by local university and private sector research.

Local research and development by BMW, General Electric, Michelin, Timken, Capsugel, Milliken and St. Jude is redefining what’s possible in several industries while universities like Clemson lead the way with groundbreaking work at the Clemson University International Center for Automotive Research (CU-ICAR), the Advanced Materials Research Lab ,the Greenwood Genetics Center and the Biomedical Engineering Innovation Campus.

Small business entrepreneurialism also thrives in innovation hubs and incubators like the Tyger River Campus of Spartanburg Community College, the NEXT Innovation Center, and The Iron Yard.

So while most of the world races to piece together the right combination of resources to effectively support the growth in the manufacturing sector, South Carolina’s Upstate continues to serve as one of the world’s most unique business climates and arguably one of the only ones that can fully meet the needs of the modern manufacturer.

“Businesses can take advantage of excellent quality of life and all of the transportation infrastructure – from port to inland locations – connecting our state to the world,” says Hitt. “And, as our innovation sector continues to grow, manufacturers will increasingly recognize that South Carolina has the technology and the people with the expertise to provide the landscape necessary for success in modern manufacturing.”

For more information on ways businesses can capitalize on Upstate South Carolina business climate, please visit https://www.upstatescalliance.com/.