Selected Article:
State of the Coast economy


BY Michael Olivier
Special to the DBJ

The Mississippi Coast economy demonstrated its resilience in 2002 by maintaining share in a majority of economic sectors. Driven by a strong service and military employment base and fueled by new manufacturing announcements and investment by existing businesses, our economy weathered the effects of the national recession - better than most metro areas.

Population/income trends
Population in the Biloxi-Gulfport-Pascagoula grew between one and two percent in 2002, and is now estimated at over 369,000 residents. Harrison County continues to remain the region’s population center with over 190,000 residents. The six-county region of South Mississippi continues to grow, especially in rural areas, and is estimated to surpass 470,000 residents by 2005. Due to the numerous employment opportunities in the region and an increase in two income households, per capita and household income levels on the Gulf Coast continue to surpass state averages. The average household income on the Mississippi Coast grew to an estimated $53,000 in 2002. The region’s cost of living increased slightly in 2002; however, is still measured at 4.1% below the national average.

School enrollment/spending
With an increasing and mobile population, school enrollment has increased. Over 92,000 students are enrolled in area school districts, with the majority in Harrison County. Average per pupil expenditures surpass the state average in all three counties, with the highest investment in Harrison County, supplemented by dedicated gaming revenue and property taxes.

Gulf Coast establishment based employment
The Mississippi Coast is home to over 12,000 businesses, with 58% of them based in Harrison County. The region’s diversity is reflected in its employment base. In 2002, over 173,000 people were employed in our tri-county region. The top five sectors for employment were: the services industry at 28% (49,197 workers); wholesale and retail trade at 20% (34,919 workers); government at 19% (33,211 workers); manufacturing at 14% (24,131 workers); and construction at 6% (10,638 workers).
Contrast this with 1992 establishment based employment statistics - when only 134,000 people were employed in the region. Since that time, the service industry has grown by 90%, creating 23,307 jobs; the wholesale/retail trade has grown by 35%, creating 9,029 jobs; and construction industry has doubled, creating 5,338 jobs.

Employment trends
According to the Mississippi Employment Security Commission, the majority of these employment sectors remained steady in 2002, recording less than 1% growth or declines. Increased employment was seen in the areas of public education, medical services, government agencies, construction, and manufacturing. However, unemployment levels for the Biloxi-Gulfport-Pascagoula MSA did increase to 5.2% in 2002 - with more people filing for assistance to offset the effects of the recession and layoffs of 2001.
Demand for employees remains high due to turnover and projected growth rates in 2003. Overall future employment is estimated to grow 1.1% annually through 2006.

2003 employment growth areas
According to a recent study of South Mississippi employers by US Works, the need for employees is anticipated to be greatest in the construction sector, followed by finance and manufacturing.

South Mississippi wage survey
When compared to national averages, employee wages remained relatively affordable for Coast employers, as this chart indicates. Wages for new hires began as low as $6.40 per hour for non-experienced workers and were recorded as high as $13.41 for experienced new workers. The highest combined wage rates for new hires were recorded in the education, health services, and transportation/utilities sectors.

Industrial development trends
The year 2002 was active with locations and expansions in the industrial development arena. Over $52 million was invested in capital improvements, creating 687 jobs. The majority was invested by existing businesses, a statistic consistent with national trends.

Locations/expansions
One of the most noteworthy announcements of 2002 was the location of Future Pipe Industries to Gulfport. The manufacturer of high-performance, anti-corrosive pipe systems will locate their first U.S. plant in Harrison County, creating up to 300 jobs in the multi-phased development. Other major expansions include the creation of 250 jobs at Northrop Grumman’s Avondale facility and 100 at Oreck Manufacturing in Long Beach.

International trade
International trade continued to grow in 2002. Business recruitment activity abroad resulted in increased trade through Gulf Coast ports, with growing levels reported with Cuba, Central & Latin America, and Russia. $3.3 billion worth of trade activity was reported in the over 5,000 acres of the Mississippi Coast Foreign Trade Zone. Top exports include frozen poultry, textiles, and paper products; while top imports included apparel, mineral ores, and lumber.

Commercial construction
The national recession and the threat of war appeared to impact the number of commercial projects permitted on the Mississippi Coast in 2002. In Harrison County, commercial building permit valuation levels decreased 24% to $94.5 million.
Of the 604 permits issued, Gulfport and Biloxi continue to lead commercial investment in 2002. However, new retail construction in Pass Christian and D’Iberville helped improve permit activity in these smaller communities.

Office market trends
One area that did see new construction in 2002 was the office sector to serve medical and general professional needs. This addition of new office space led to oversupply in 2002, causing a 12% decline in occupancy, according to the UNO Real Estate Data Center. The largest vacancy rates existed in the Class A sector, with Class B virtually at capacity and opportunities in the Class C arena. In spite of new construction, Class A rents rose in 2002 to an average of $18 per square foot - out of the reach of many recession minded tenants who opted to renew existing leases - while Class B remained constant averaging between $11-$13.50 per square foot.

Gulf Coast retail sales
The Mississippi Coast retailers continued to suffer with the rest of the U.S. grappling with the effects of the national recession and threat of war; however, the region ended the year 2002 with sales almost equal to 2001, surpassing industry estimates. Total gross sales volume totaled $4.79 billion in 2002. Retail sales accounted for $4.71 billion of the region’s total sales. The 2002 levels represent a decrease of only .3 percent from 2001.
Harrison County merchants continue to generate the majority of the region’s retail sales at $3.1 billion or 66% of total sales. Jackson County retail sales decreased slightly in 2002 to $1.15 billion, or 24% of total MSA sales. Hancock County’s retail sales grew by 15%, rising to $460 million.

Retail trends
Overall occupancy rates on the 9.4 million square feet of retail space in the MSA dropped 2.2% to 88% in 2002. Area malls and Class A centers experienced the highest occupancy rates at 95%, while vacancies at Class B & C centers remained high due to K-Mart closures and slow re-leasing of vacancies in older centers. Expansion continues in the big box sector with new stores announced by Home Depot and Wal-Mart. New retailers like Belk and Bed Bath & Beyond will join the market in 2003 at Crossroads Center, and a new cinema project in D’Iberville should bring additional restaurants and retailers to this growing community.

Residential construction
Residential construction increased in 2002, rebounding from a slight dip in 2001. As this chart indicates, construction increased by 12 percent in Harrison County with 2,691 permits issues valued at $164.2 million.
The unincorporated areas, coupled with growth in the City of D’Iberville, accounted for nearly 40 percent of the total dollar volume - continuing a two-year trend. Construction slowed in Gulfport, while activity in Biloxi grew 41% over 2001 levels to $33.5 million. New home construction and improvements also increased in Long Beach, generating $15.3 million in permit activity.

Housing trends
According to the Mississippi Gulf Coast Multiple Listing Service, sales of existing single-family homes increased by 12% in 2002, with 3,463 units sold, spurred on in part by lower interest rates. The average selling price did not increase dramatically, as it had in past years, staying at an estimated $115,000. Time on the market also increased slightly to 140 days - an indication of a softening of the market.
Despite limited construction on the multi-family front, occupancy rates on the region’s base of nearly 9,000 apartments still dropped 2% to 90%. The lowest occupancy rates were reported in Pascagoula and Ocean Springs, while Biloxi-Gulfport complexes reported “normal” occupancy rates of 93-94%. Due to some oversupply, average rents also dropped 2%, with rates ranging from $586 in Pascagoula to $643 in West Biloxi-Gulfport. To fill a void in the owner-occupied market, construction began on two anticipated luxury condominium projects in Biloxi-Gulfport.

Recreation/Leisure trends
In 2002, the Gulf Coast tourism market kept pace with 2001 levels with a strong drive-in market, receiving over 11.5 million annual visits from tourists. While hotel construction slowed, area attractions completed improvement projects to help increase length of stay - including the $2 million expansion to the Maritime & Seafood Museum and enhancements to the Lynn Meadows Discovery Center. Work also began on the Ohr-O’Keefe cultural campus in Biloxi, laying the groundwork for the anticipated groundbreaking for the Frank Gehry designed Ohr-O’Keefe Museum of Art.

Gulf Coast Visitor Inquiries
The Mississippi Coast continues to draw visitors from a national audience. According to the Mississippi Gulf Coast Convention & Visitors Bureau, interest in the region continued to grow in FY 2002, with over 336,000 inquiries recorded, a 13% increase over FY 2001.

Hotel tax collections
The hotel industry in Harrison County appears to be rebounding from the effects of 9-11 as hotel tax collections increased 2.4% to $4.32 million in FY 2002.

Coliseum/Convention Center impact
The Mississippi Coast Coliseum & Convention Center, the Southeast’s largest beachfront facility, continued to provide a wide variety of activities for Coast residents and visitors. In FY 2002, the facility entertained 569,690 people at 213 events, generating $3.2 million in revenue, a 4% decrease from FY 2001. To better accommodate the region’s growing meetings and conventions market, a study is underway to explore an expansion of the Convention Center.

Gaming revenue
In 2002, the Mississippi Coast region celebrated its 10-year anniversary of dockside gaming with increased gross gaming revenue, despite a national recession and threats of war. Revenue for the region totaled $1.16 billion, with 93% or $1.09 billion generated in Harrison County. $891 million was generated in Biloxi and $200 million generated in Gulfport.
Tax revenue for area governments, schools, and public safety entities also increased in 2002, with $45 million generated for the region, $42.1 million in Harrison County.

Gaming trends
To stay competitive, a flurry of property enhancements, proposed expansions and new facilities were announced in 2002. Nine of the region’s 12 resorts announced renovations or expansions. Casino Magic unveiled its new 14-story hotel and convention center; Copa Casino moved to a new expanded barge; Beau Rivage began work on a $17.5 million property renovation; Grand Casinos invested nearly $7 million at its Biloxi and Gulfport locations; and the Palace Casino completed its $15 million expansion, adding a new luxury marina.
Casino activity continued with the $80 million multi-phased expansion announced by the Isle of Capri, which will add a second 400-room hotel, along with additional parking and meeting space. Casino Magic Biloxi also announced plans for second hotel, scheduled to open in 2004. Finally, Boomtown Casino announced plans to move its barge to allow for construction of a new multi-story hotel. New casino projects also picked up steam in 2002 with renewed interest in the former Jubilation Casino site in Hancock County, the $25 million Rock -n- Roll Casino in Biloxi, and site approval for the D’Iberville Landing project.

Military/federal installations
While the gaming industry is certainly one of our most visible industries on the Mississippi Coast, our area military and federal installations continue to be one of our most important economic engines. These eight facilities, from Stennis Space Center to Naval Station Pascagoula, employ over 30,000 people and have a total economic impact of over $3 billion annually on our local economy. Given their importance, local and state officials along with area business and military leaders are working with Washington DC lobbyists and our Congressional delegation to prepare for the 2005 Base Realignment & Closure hearings. Over $160 million has been invested in Coast installations to enhance facilities and improve mission support in light of these upcoming evaluations.

Transportation trends
To meet the region’s growing population and business needs, over $373 million in new road construction has been programmed. However, major projects under construction (Interstate 10 widening, Cowan-Lorraine Road widening & extension, and Hwy 67 project) have been slow to become realities. Bright spots have been the ahead of schedule status of certain projects in the City of Biloxi (Cedar Lake & Popps Ferry Roads, Bayview Avenue).
To further ease congestion and improve air quality, Coast Transit Authority is moving ahead with its $35 million Multi-Modal Transportation Plan. Hybrid electric buses have been incorporated into its fleet and downtown shuttle routes, while land acquisition began on multimodal centers in Biloxi and Gulfport.
Improvements to the Coast’s north-south railway system to Hattiesburg may be derailed due to Kansas City Southern’s recent transportation pact with Canadian National and its emphasis on operations north from Mobile. In 2002, the acquisition/renovation costs of KCS’s line from Gulfport to Hattiesburg were being evaluated via a study authorized by the Legislature to alleviate truck traffic from the Port of Gulfport and other trade centers. The project continues to be studied.

State port
Projects like the acquisition of the KCS rail line have taken on additional importance as the Port of Gulfport continues to grow. In 2002, the Port ended 2002 with a cargo throughput of 2.13 million tons - a 5% increase over 2001, with record trade in January, June and October 2002. Imports totaled 1.21 million tons, while exports totaled over 921,000 tons.
Increased trade with Cuba contributed to the higher tonnage levels. Crowley Liner Services became the first company in the U.S. to ship commercial goods to Cuba under new humanitarian guidelines in December 2001, and made numerous shipments from the Port of Gulfport in 2002 - with tonnage destined for Cuba totaling over 20,000 tons.
Tropical fruit remains the number one import, followed by apparel, mineral ores, lumber and other forest products. The number one export was frozen poultry to the Baltic region, along with cotton, textiles and apparel. Primary trading partners include Hondurus, Mexico, Costa Rica, Guatemala, El Salvador, Columbia, and Brazil.
To better accommodate growth, work continues on the Port’s $200 million capital improvement plan. In 2002, a 50,000 square foot warehouse facility on the East Terminal was opened and the new $15 million pier extension of the West Terminal was completed in January 2003. A 60-acre expansion of the West Terminal will begin in 2003, and a feasibility study is underway to explore the widening and deepening of the Gulfport channel.

International airport
Activity at the Gulfport-Biloxi International Airport declined 7.1% from 2001 levels due to a decrease in available seats, a drop in charter flight activity, and sluggish business and leisure travel. However, the facility has seemed to recover post 9-11. Each month since September 2002 has shown increased passenger activity. And, the 12-month rolling average shows that the growth trend has been restored. The over 800,000 boardings in 2002 are still 85% higher than 431,439 boardings recorded in 1996 - the lowest level of the late 1990s.
Airtran continued to maintain the largest market share at 29%, followed by ASA/Delta at 25% and Northwest at 19%. The average load factor was 72.9% on 549,900 available seats. In 2002, Continental converted to all jet service and airport officials announced new service to Dallas and Minneapolis-Saint Paul. This increased service should put the facility back on track to meet its 2000 goal of one million passengers. The Airport, which celebrated its 25th anniversary in 2002, completed federally mandated security upgrades and will move ahead with its multi-phased expansion plan in 2003.
On the surface, when you look at all of these economic variables, it may appear that the region has lost some of its economic steam after the meteoric rise of the late 1990s. It is important to note that this is a natural economic plateau, similar to the one seen in 1995-1996, prior to three years of double-digit growth. The level of consumer spending and business investment on the Mississippi Coast is still higher than levels in the early to mid 1990s. And the future looks bright.
Economic development does not happen because of one person or agency. It is through a coordinated program of work and series of partnerships–both public and private. Great strides were made in 2002 as economic development leaders from across South Mississippi joined forces to market the region’s assets through the Mississippi Gulf Coast Alliance for Economic Development. In less than a year, the group has marketed the region to over 100 contacts through joint sales missions, site visits, presentations, and marketing programs. Similar results are anticipated with private sector involvement in such organizations as the newly formed Mississippi Coast Trade Council, formed to help area businesses trade with Cuba, and the Mississippi Gulf Coast Technology Council, designed to grow technology-based labor force and businesses in the region.
We, at the Harrison County Development Commission, strive daily to do our part to help grow the Coast economy and improve the quality of life for area residents. A report outlining the outstanding and varied work of the Commission in 2002 can be found on our web site at www.mscoast.org.
With a staff of only eight people, the Commission annually plans and executes a wide variety of initiatives: from business recruitment to support of existing business and industry, from development of the region’s first Spend at Home campaign to affordable housing development, from operation of the region’s small business incubator to operation of the county’s industrial parks, from participation in the Mississippi Coast Foreign Trade Zone to Coastal Resource Management Planning Effort, and from planning such events as the annual Sustainability Conference and Salute to Business & Industry awards to marketing the region to prospective retirees.
Many people do not realize that the Harrison County Development Commission is an Accredited Economic Development Organization and the only economic development agency in the state of Mississippi with two full-time Certified Economic Developers on staff, and a third sitting for the exam. In 2002, the agency was nominated as one of the Top Development Groups in the nation by Site Selection magazine and won four national and regional promotional awards. And, I was honored being named one of the Top 10 Economic Developers of the Decade by Southern Business & Development magazine.
With the spirit of cooperation from you, the business community, our allies, and our elected officials, a bright future of development opportunities is ahead on the Mississippi Coast. DBJ

(Michael Olivier is a Fellow Member of the International Economic Development Council, Past President of the Southern Economic Development Council, and was named Outstanding Economic Developer in Mississippi in 1999. He has served as Chief Executive of the Harrison County Development Commission since 1987.)

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