By Betsy Finklea
Jennifer Fletcher, deputy director of the South Carolina Department of Commerce, gave the state economic outlook at Congressman Tom Rice’s Coastal and Pee Dee Economic Development Summit at the Florence-Darlington Technical College SIMT building on Wednesday.
Fletcher said she wanted to give the audience “a sense of what they were seeing” at the state level.
“We’ve come a long way in the state in putting people back to work,” said Fletcher. Since 2011, South Carolina has had 25,245,251,043 in investment, 108,192 announced jobs, and 918 announced projects.
Since the turn of the recession on the state level, new development versus development from expansion has been about 50-50. The southeast is seeing growth in manufacturing due to the lower cost of doing business and lack of unionization.
In South Carolina, the vast majority of the projects have been locating in the urban areas. She also compared international versus domestic investment. She said in 2018, direct international investment only accounted for a small percentage of the investment. Typically, this is about a 50-50 split. The tariff issue may have played a role in this.
Fletcher then spoke about the current outlook and what they are seeing for this year. Nationally, Fletcher expects a slower, but still strong U.S. economy; a growing industrial sector; inflation/federal interest rate hike; President Trump’s tax cuts and jobs act coming into play, regulatory reforms; and more trade discussions and tariffs.
She said the tax cuts and jobs act will allow companies to keep more profits and re-invest.
Tax refunds are going to be lower, and people aren’t getting what they thought would be getting.
Companies paying more for importing parts are paying more, which is a big deal especially for smaller companies. This impact in the short-term may mean layoffs for smaller companies.
The results of the automotive investigation into the tariffs are important to several South Carolina companies. If it goes through, it will put a 25 percent tariff on the import of autos and auto parts. Fletcher said several companies in South Carolina will hurt really bad.
Fletcher said long-term, they believe they will see companies adjust and find other suppliers, but it will not happen quickly.
Fletcher said the project activity to start 2019 is better than they thought. “The last three months were dry,” said Fletcher. Fletcher said the last six weeks have been good in terms of new projects walking in the door. She said they are smaller projects than in previous years and not as many international projects. She said so far everything points to a decent year, and there is still good activity from foreign markets interested in South Carolina.
She said they are pleased with what they are seeing and hopeful that the trade talk will settle down.
There are efforts to sustain success. The S.C. Department of Commerce believes “our existing industries should be the most efficient and most profitable in their company’s portfolio,” she said. Fletcher said the Department of Commerce works to help them diversify what they do and see how they can help companies find other sources for products so they are not worried about the extra tariffs.
Fletcher said they also try to get companies to think about exporting.
Another thing they focus on is workforce development. They started ManuFirstSC™. Most jobs require on year experience in manufacturing which provides a huge stumbling block for many South Carolinians. She said some can’t even get into the hiring process to get a job. This is why they are deploying ManuFirstSC™ all over the state. This is a curriculum that when the student completes it, it is accepted as one year experience. It is a short-term solution. A Coordinating Council for Workforce Development is studying how we’re are educating and training our future workforce.
She also spoke briefly about Opportunity Zones. She said essentially every state nominated 25 percent of the low-income areas. She said private and corporate companies invest capitol gains into a fund for opportunity zone projects. Projects can vary. Examples include affordable housing, re-development of abandoned buildings, building a new sports complex, investments in start-ups, etc. It does not require state approval. She said commerce is providing grant funds to governmental entities to help plan, look at zoning, etc.
She concluded her presentation with opportunity zones.
