(Editor's
note: We are pleased, in this edition of the Delta Business
Journal, to feature our first-ever focus on the burgeoning
Mississisppi Gulf Coast. Though quite a geographic distance
from the Delta, there are many long-standing business
and cultural ties between the Gulf Coast and the Delta.
Long known as a popular vacation spot for Deltans, there
now exists many business ties between the two regions
as well. Moreover, Delta economic leaders and business
people would do well to look at the incredible growth
the Gulf Coast has experienced over the last several years;
their success story could be a blueprint for our own.)
While many segments of the economy have suffered fairly
significantly in the post 9/11 downturn, causing recession-like
conditions throughout much of the country, the Mississippi
Gulf Coast seems to be weathering the storm quite nicely.
No one is cavalier enough to say that no business has
been hurt. There have certainly been instances of economic
trouble, and even some few closures, but the impact on
the Coast has been very slight. Almost to a man (or woman),
Gulf Coast leaders describe a no-growth to slow-growth
situation, with signs pointing to improvement.
“We’re starting to see things pick back up,”
says Mike Garrett of Mississippi Power Company. “We
were on a slippery slope before 9/11, and then of course
things got worse. It started to stabilize last year, but
I’m encouraged by what I see this year.
“Developers
say that they’ve seen more ‘tire kickers’
in the past three months than in all of last year, and
I’m having more dinners with prospects. These are
good industrial prospects, friendly, non-polluting businesses.
We’re not seeing that much commercial.
“The developers have the tools they need and they’re
working well together all along the Coast. I think we’ll
soon see things turning around, not the fast growth we
had during the 90’s, but sustained, long-term growth,”
Garrett concludes.
Jerry St. Pe’, Chairman of Signal International,
agrees. “There’s reason to be optimistic.
Of course we’re not ostriches. We have felt it somewhat.
International Paper Company shut down and we lost a chemical
company, so we have had some loss, but certain business
and industry segments have continued to do well even in
this economic decline.
“The Gulf Coast has not felt the impact nearly as
much as other regions have nationally. That’s due
to the strength of the foundation of our economic elements
on the Coast –shipbuilding, gaming, oil refining
and the military–these are solid anchors for the
rest of our economy.
“We’re also seeing increasing public/private
partnership, which is great for our future. You can’t
get into a comfort zone, no matter how well things are
going. You need a well thought-out plan to grow the economy
and it has to be done from two perspectives. First, you
have to preserve what you have and then you have to seek
and encourage new growth.
“We’re addressing that with out Partners in
Progress program. This is a public/private partnership
that will allow us to speak with one voice. We raised
nearly four million dollars last year, almost equally
divided between the public and private sectors. This five-year
commitment and the program of cooperation it is funding
is almost a textbook lesson in communities working together
at the public and private levels. We’re encouraged
by the future,” St. Pe’ concludes.
Ron Peresich, of the lawfirm of Page, Mannino, Dickinson
& McDermott, also gives a lot of credit to the public
sector. “Our local officials have been wonderful.
Our Coast economy has remained strong. It hasn’t
grown fast like it did the previous five years, but it
hasn’t declined. I think gaming saved a lot of it.
But the main thing is that our officials haven’t
taken the tax money from gaming and squandered it. They
have been conservative and very responsible.
“A well-governed community is important to people
and all of our communities have had that advantage, with
officials using the money to provide good police and fire
protection, schools, roads–total infrastructure–without
tax increases.
“The personalities of communities are important
too, with the private sector working with the public,
and we have that too. The Gulf Coast is optimistic and
works hard to get things that we need. For instance, USM
now has a four-year program at the Long Beach Campus,
and Tulane has moved here too, with a four-year program
at its Biloxi branch. We’re definitely moving in
the right direction,” Peresich concludes.
Chuck Benvenutti, CPA, also sees the Coast poised for
new growth with infrastructure improvements. “Our
support group is terrific,” he says of his Bay St.
Louis area. “The Hancock County Port and Harbor
Commission does a great job and our school systems have
come a long way in the last ten years. We’re getting
a State Aid road tying the Stennis Airport to NASA which
will cut the travel time in half. We’re also getting
instrument landing capability at the airport, and we have
Port Bienville which handles containerized cargoes through
the area.
“The banks are very aggressive, and if any businesses
need money they are happy to lend it. The casinos have
had an enormous effect. The Golden Calf is not really
the tax revenues, but the jobs, the health benefits and
the multiplier effect. A rising tide lifts all boats,”
Benvenutti happily concludes.
Chevis Swetman, President, CEO and Chairman of People’s
Bank, agrees that banks are ready to lend money and are
aggressive. “We consider ourselves a large community
bank, even though we’re the 12th largest bank in
the state. Our fortunes have always risen and fallen with
the Gulf Coast economy. Since about 2000, we’ve
seen slow growth and no growth, and I think we have about
another twelve months of looking at this.
“God love George Bush. I think he’s done the
right thing, but the war has created uncertainty. The
question is what I call the ‘saucer effect.’
Are we in the bottom, the side, or on the lip? We’re
either at the bottom or on our way out. I don’t
think anybody knows.”
Swetman says his bank is primarily a commercial lender,
being the lead bank for a number of municipalities, hospitals,
the seafood industry and the gaming industry. While the
gaming industry is a boon to the Coast, he says it presented
some new challenges. People moving from other parts of
the country wanted the banking services offered by much
larger banks, so People’s scrambled to upgrade technology.
They also found themselves in direct competition for employees
who were trained to handle money. This called for immediate
salary and benefit adjustments to keep them competitive.
Swetman believes that economic development is the key
to communities’ thriving and both he and his employees
are heavily involved in their communities. He says banking
is always a challenge, but that when the community thrives,
so does his business.
Bill McGowan, Administrator for Comptrust/AGC (Associated
General Contractors) of Mississippi, also thinks that
basic economic development strategies are the answer to
future growth, and he believes everyone is doing a good
job in that respect.
“From a construction standpoint, we’re doing
well on the Coast,” McGowan says. “I see more
projects here than in other parts of the state. Things
look positive. It’s not just the casinos, it’s
everything. The Port of Gulfport has really grown in importance.
There are maybe a billion dollars in new shipyard contracts.
“A lot of this is due to our very constructive governments
on the Coast. Ken Combs, the Mayor of Gulfport, and A.J.
Holloway, the Mayor of Biloxi are good examples. MEC (Mississippi
Economic Council) has taken a pretty aggressive position
throughout the state too. They have developed an excellent
awareness campaign. Everybody is supportive. I think we’re
on line with business and economic development.”
Adele Lyons, Executive Director of the Gulf Coast Business
Technology Center, agrees that the Coast has a good business
development climate. The Center is basically a small business
incubator, begun in 1990. “We’re doing quite
well,” Lyons comments. “We have 43,000 sq.
ft. of office and warehouse space and we’re 66%
occupied. We have 24 participants in the program now,
and we’ve graduated 55 businesses since we began.
“We went for a period from 9/11 until March of 2002
when things were really slow, but then began to pick up.
It’s still a little slow but we’re seeing
activity. There’s a lot of interest, but people
are a little cautious right now. The Mississippi Contract
Procurement Center and the Mississippi Development Authority
(MDA) field office are anchor tenants here. They help
us meet our mission. We think the overall picture looks
promising.”
Dave Dennis, President of Specialty Contractors and Associates,
also thinks things are promising. “Actually, the
economy on the Coast in isolated pockets is real strong,”
he says. “Shipbuilding in Pascagoula is a good example.
They have a $15 to $20 billion backlog which will take
them out many years. Residential housing is incredibly
strong, driven by low mortgage interest rates.
“The auto industry had an incredible 2002. It has
moderated some, but they’re still pleased. Commercial
construction is softer than in years past, but is still
strong. There’s an oversupply of apartments and
agriculture is affected by energy concerns and soft pulp
prices. It’s hard to tell about retail sales because
of increased competition. Some individual stores and malls
may be seeing some drop-off, but sales tax revenues have
remained stable in most of our cities, so the sales may
be about the same but spread out between more facilities.
“I think we’re stable to positive right now
and I know we’re tracking to positive. One of our
strong points is community spirit. It is a cooperative
spirit with the entire Coast tackling infrastructure goals
and needs. When it’s one community’s turn,
they get a road or a school or whatever their particular
need is. It’s a synergy of cooperative success built
on the private sector taking the lead on the hard issues.”
Scott Naugle, Executive Vice President of Stewart, Snead
& Hewes, is optimistic about the future economy, but
less than pleased about the situation in the insurance
industry. “Our industry is going through what we
call a ‘hard market cycle.’ We’re seeing
20%, 30%, even 40% increases in some coverage costs and
that’s hard to explain to clients.
“Some of this is due to huge payouts, from 9/11,
natural disasters, etc. But the biggest issue right now
is health care costs and a litigational climate that combine
to make a difficult health care insurance market. Litigation
reform is both a state and a national issue. The legislature
did address the issue because Mississippi has the worst
environment in the country.
“Their ‘tort reform’ bill didn’t
really address the problem though. They just rearranged
the deck chairs on the Titanic. Physicians are leaving
the state because of litigation. We already had a problem
with physician availability, particularly in rural areas,
but now it’s moving into the urban areas.
“The problem isn’t that bad on the Coast.
None of our counties has been targeted for these cases
because our judiciary isn’t going to tolerate that
sort of thing. On the political and government front,
we’re extremely well off. We have good local government,
good representation in the legislature and a positive
judicial situation.
“As to the Gulf Coast economy, we haven’t
seen a drastic change, and what we have seen we hope is
temporary and minor - a slight correction in the economy.
We’re not in a slump of any kind. I definitely think
we’re looking at and uptick in the near future and
that the economy is going to get back on track. Otherwise,
I don’t think we would see all the construction
we have down here.
“I just opened my own book store in Pass Christian
in January and I’m cautiously optimistic after only
three months. This is an accepting and supportive community
for new business. In fact, I can’t imagine a nicer
place to live and do business than the Gulf Coast. The
people are friendly, polite and easy to work with. The
area is beautiful and uncongested. I’m a transplant
from Pennsylvania, and I can’t say enough nice things
about this area.”
Chris Moore, retired Chief Master Sergeant, USAF, says
he is a Mississippian by birth and a Biloxian by choice.
As a Commissioner for the Mississippi Coast Coliseum and
Convention Center, he believes the Coast is doing well
and poised to do better soon. “We’ve added
another 100,000 sq. ft. of meeting space and we’re
staying so busy that we’re studying the need for
even more space,” he says. “We’ve had
eight straight days of activity at both the Arena and
the Convention Center.
“Infrastructure work is going on throughout the
area. It’s either muddy or dusty all the time,”
he chuckles, describing street, sewer, pipeline and other
improvement projects. “The outlook is that when
thing level out after the war, the economy will start
going up again, according to our Mayor. We still have
businesses opening, plans are still on the drawing boards
for new and expanded businesses, Chambers of Commerce
are still gaining membership, and the employment level
is steady.
“In addition to the shipyards at Pascagoula, we
have the Home Port for the Navy on an island at the mouth
of the river. I believe the last two Commodores there
have been women. We have a major contingent of SEAL training
at the NASA facility. With their buffer area, they have
plenty of space. They don’t bother anybody and they
don’t get interrupted.
“The Air Force has courses for all the services
in weather, meteorology, and electronics. Construction
courses for all the service branches are taught at the
SEA Bees base in Gulfport. It’s amazing what you
can do with an 18-year-old in 12 to 18 months.”
Rebecca Montgomery, Associate Vice President for Development
at Mississippi Gulf Coast Community College, likes to
talk about what can be accomplished by not only 18-year-olds
but all ages who need either an associate degree or special
skills training. Both, she believes, are important in
the economic development picture of the communities served
by the college.
In addition to a 26% enrollment increase in full-time
students between 2000 and 2002, the spring semester enrollment
grew by another 7.6%. MGCCC likes to point out the earnings
advantages (36.5%) to students who obtain an associates
degree over those with a high school diploma, as well
as the advantages in return on investment to communities
who support the college.
The college was ranked #78 among the top 100 community
and technical colleges in the country for FY 2001, #8
in associate degrees to education majors, and # 32 for
nursing graduates. They also had the state’s second
highest placement rate for career training and technical
students. Montgomery believes that MGCCC fills a very
important niche in the overall education picture between
the secondary schools and the four-year institutions.
Paul Guichet, Vice President of Investor Relations for
the Hancock Bank, sums up the picture of the Gulf Coast
economy by citing the diversity of sectors which has buffered
the Coast from the more significant downturn felt by so
much of the country.
“In a time when there are so many geopolitical concerns
that affect the economy, we don’t have all our eggs
in one basket. While the economy has softened, we’ve
been fairly stable. Of course the catalyst for the economic
run-up in the 90s was gaming. In addition to the casinos
themselves, there are some 20,000 hotel rooms and 18,000
to 20,000 in direct employment.
“We already had a number of large contributors to
the economy before that. Chevron’s refinery in Pascagoula
is the largest Chevron facility in the U.S. and their
tenth largest in the world. Northrup-Grumman Ship Systems
(known locally as Ingalls) is the largest private employer
in Mississippi with 13,000 employees and a payroll in
excess of $8 million a week. They have a huge expansion
beginning for the DDX program.
“The DDX is the next combat ship for the Navy, and
it will be stealth-related. The state just approved issuance
of $48 million in bonds for this project, which Northrup-Grumman
will match with a$96 million investment. Construction
alone will add 2,000 jobs, and the completed plant expansion
will total $248 million. The DDX project is a four-year,
$3 billion program. The state is committed to economic
development and Northrup-Grumman is committed to the state.
“There is another contract of some $17 billion to
upgrade the Coast Guard fleet, and yet another to build
Aegis destroyers. In addition to shipbuilding, there is
an enormous military presence. Keesler Air Force Base
has 15,000 employees and it is estimated that it costs
$2 million a day just to open their gates. A lot of training
has been consolidated at Keesler, for all branches of
the service, and they have a top-notch medical facility
as well.
“The Sea Bees Base is also very significant. I don’t
have their employment figures, but they service the entire
Atlantic Fleet there as well as providing training for
other service branches. Then the Stennis Space Center
has a huge impact. The direct global impact is estimated
at $817 million, with $560 million of that within a 50-mile
radius. Of their 4,600 employees, 1,700 are scientists.
Sixty percent of all employees have bachelors’ degrees
or better. Of the NASA employees 82% have bachelors’
or better,” Guichet continues.
“There are also 30 state and federal agencies located
there and 60 commercial and technology companies. Using
the multiplier effect, it is estimated that without this
center, employment in the area would be reduced by 33,000
jobs, personal income by $1.1 billion, and retail sales
by $429 million.
“Mississippi Power Company has 1,300 employees and
has invested $3.5 billion in new development since 1992.
Gulfport is the #1 importer of tropical fruits on the
entire Gulf Coast–names like Dole, Chiquita and
Turbana. Port Bienville Industrial Park has two dozen
or more diverse companies, including Wellman Plastics
which is the largest resin recycler in the world. Dupont
has a titanium dioxide plant at Bay St. Louis that accounts
for 10% of the U.S. market and 6% of the world market.
The list goes on and on.
“With
this diversity, we feel good about the future. We’re
looking forward to when things turn around. We’ve
been lucky to remain fairly stable, but we’re ready
to grow again,” Guichet concludes. DBJ
