Competing In the Changing South

Ted Abernathy tabernathy@southern.org

“Everyone has a plan ‘till they get hit in the mouth” Mike Tyson

The Last Decade Was….Not Good

27%

22%20%

-1%-5%

0%

5%

10%

15%

20%

25%

30%

1970-1980 1980-1990 1990-2000 2000-2010

Source: Peter Linneman, NAI Global

Employment

The Last Decade Was….Not Good

34%

40% 40%

17%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1970-1980 1980-1990 1990-2000 2000-2010

Source: Peter Linneman, NAI Global

Real GDP

The Last Decade Was….Not Good

27%

47%

61%

-3%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

1970-1980 1980-1990 1990-2000 2000-2010

Source: Peter Linneman, NAI Global

Real HH Income

USA Total Nonfarm Payroll

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1961 1064 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

Source: BLS, Jan 2012

In thousands

Unemployment SummaryJanuary 2011

13.8%

8.7%7.7%

4.1%

0%

2%

4%

6%

8%

10%

12%

14%

Less thanHS

HS Grad SomeCollege

BA Plus

National Unemployment rate in January, 8.3%, down from 9.4% in December 2010

For Whites (7.4%), Blacks (13.6%), Hispanics (10.5%)

Source: BLS Jan 2012

Unemployment Rate By Education

Employment Monthly Net Change 2000- Jan 2012

-800

-600

-400

-200

0

200

400

600

2000 2008

Jobs

Source: BLS Nov 2011

In thousands

The Stock Market

(NATIONAL)

US % Employment Change December 2010-December 2011

1.2%0.8%

1.6%1.2%

0.2%

2.6%

2.0%1.9%

-0.6%-1.0%-0.5%0.0%0.5%1.0%1.5%2.0%2.5%3.0%

Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted Source: BLS, Jan, 2012

Total % Manufacturing Employment Change December 2010-December 2011

1.60%1.78%

1.50%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

2.00%

United States American South Non-SouthernStates

Source: BLS, Jan, 2012

Employees on nonfarm payrolls by state and selected industry sector, seasonally adjusted

The American South States and Territories represent 34.3% of all US Manufacturing employment in Dec 2011

Southern States 5-Year % Employment Changes

-5.7%

-1.8%

-9.5%

-7.5%

-2.5%

3.0%

-2.3%

-4.9%-3.8%

-5.4%

1.5%

-4.4%-4.6%

4.4%

-2.2%-0.5%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

AL AR FL GA KY LA MD MO MS NC OK SC TN TX VA WV

Source: U.S. BLS, Dec, Measured Nov 2006- Nov 2011

Total -1,478,000 lost jobs

Southern States 1-Year % Employment Changes

0.2%0.6%

1.4%

-0.5%

1.2%

2.6%

0.7%

0.1%

1.0%

0.4%

2.8%

1.8%

1.2%

2.2%

0.5%

0.8%

-2%

-1%

0%

1%

2%

3%

AL AR FL GA KY LA MD MO MS NC OK SC TN TX VA WV

Source: U.S. BLS, Dec, Measured Nov 2010- Nov 2011

Total +562,300 gained jobs

Southern States 1-Year Employment Projections 2012

1.5% 1.5%

2.2%

1.7%2.0%

1.8%

-0.1%

0.8%0.6%

1.2%1.4% 1.2%1.4%

2.0%

1.0%1.1%

-2%

-1%

0%

1%

2%

3%

AL AR FL GA KY LA MD MO MS NC OK SC TN TX VA WV

Source: Moody’s Analysis and USA Today Jan 11,2012

Change“ The future ain’t what it used to be.”

Yogi Berra

The Churn in the Economy

Business Employment Net Private Job Gains and Losses By Quarter

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

Source: BLS Business Employment Dynamics, August 2011

Business Employment Dynamics (Churn)

Net Private Job Gains and Losses

-10,000-8,000-6,000-4,000-2,000

02,0004,0006,0008,000

10,000

2000-1

2000-3

2001-1

2001-3

2002-1

2002-3

2003-1

2003-3

2004-1

2004-3

2005-1

2005-3

2006-1

2006-3

2007-1

2007-3

2008-1

2008-3

2009-1

2009-3

2010-1

2010-3

Source: BLS Business Employment Dynamics, August 2011

In millions

Businesses Opening and Closing

644,122

-604,201

670,058

-619,695

668,395

-620,732

626,400

-707,446

552,600

-721,737-1,000,000

-800,000-600,000-400,000-200,000

0200,000400,000600,000800,000

1,000,000

2005 2006 2007 2008 2009

Births Closures/Bankruptcies

Source: US Small Business Administration Aug 2011

40 Years Ago Alvin Toffler Wrote That the Pace of Change…

“Is the dizzying disorientation brought on by the premature arrival of the future, a product of the greatly accelerated rate of change in society.”

2007 Bear Stearns, Leman Brothers, WaMu,

Wachovia MySpace Kindle, IPad, Twitter, Hulu

What Is the New Normal?“The future is not some place we

are going to, but one we are creating.”

John Schaar

Demographic Shifts

Specialization

Intensifying Competition

Corporate Integration

Technology (Speed)

The Omni Customer

Natural Resources Urbanization

Global Interdependence

Complexity

Changing Institutions

Radical Decentralization

Community Resilience

Trends Changing Our World

The Role of Talent

Demographic Shifts

Specialization

Intensifying Competition

Corporate Integration

Technology (Speed)

The Omni Customer

Natural Resources Urbanization

Global Interdependence

Complexity

Changing Institutions

Radical Decentralization

Community Resilience

Trends Changing Our World

The Role of Talent

Global Interdependence

Top % GDP Growers in 20121) Macau2) Mongolia3) Libya4) Iraq5) Angola6) Niger7) China8) Ethiopia9) Rwanda10) Laos

Source: The Economist, The World in 2012

Foreign Direct Investment in U.S.

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

In $ Billions

Top Region: South

Top Sector: Manufacturing

Source: Southern Business & Development, Summer 2011

Foreign Direct Investment 2010

228

106

69 6248 46 46 41 39 32 32 28 26 25 25

0

50

100

150

200

250

Source: Rediff.com, Global FDI

U.S. Foreign Direct Investment

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

1960-69 1970-79 1980-89 1990-99 2000-07

FDI OutflowFDI Inflow

In $ Billions

Source: BEA

U.S. Exports & Imports (Goods)

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009 2010

Exports Imports

In $Millions

Source: Census, World Almanac 2009 & U.S. BEA 2010

U.S. Exports 2009-2011

$-$20,000$40,000$60,000$80,000

$100,000$120,000$140,000$160,000$180,000

2009-Jan

2009-May

2009-Sept

2010-Jan

2010-May

2010-Sept

2011-Jan

2011-May

Exports

42% Increase

Source: BLS Sept 2011

Less than 1% of U.S. firms export and of those that

do more than ½ export to only one country

Export Customers of the Future

91%85% 80%

15%9%

0%

20%

40%

60%

80%

100%

U.S. Japan U.K. China India

% Middle Class

Source: Adler-Miller-McCune 2008

By 2020 80% of the middle income consumers in the world will live outside the “developed” countries

The Role of Talent

Creative Work

Routine Work

Outsourced

RoutineWork

Machines

Routine Work

Source: National Center on Education and the Economy, Tough Choices or Tough Times, 2007

Work Shifts

Educational Requirements For U.S. Jobs 1973-2018

32%10% 11% 10%

40%

34% 30% 28%

19% 17% 17%

12%19% 21% 23%

9%19% 21% 23%

7% 10% 11% 10%

0%

20%

40%

60%

80%

100%

1973 1992 2007 2018

HS Dropouts HS Grads Some CollegeAssoc. Degree BA Grad Degree

Source: Center on Education and the Workforce, Dec 2009

Middle-Skills Require more than a high school degree

but less than a BA degree 52% of employers said in 2011 manpower

survey that they were struggling to fill positions, an all-time high

Southern Skills Mismatch

32%

43%

25%

29%

51%

20%

0% 10% 20% 30% 40% 50% 60%

High Skills

Middle Skills

Low-Skill

JobsWorkers

Source: Middle skill jobs in the American South’s Economy, National Skills Coalition, August 2011

National Association of Manufacturers 2011 Skills Gap

67% report shortage of qualified workers 56% expect shortages to get worse (3-5 yrs) 5% of current jobs unfilled due to no qualified

Source: National Association of Manufacturers 2011 Skills Gap

Demographics

USA Annual Population Growth

0.97% 0.96% 0.95%0.88%

0.83%0.73%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

Source: Brookings Jan 20, 2012

Growth- Demographics

Between 2010-2020 3 out of every 4 new workers in the USA will be Latino

Growth- Demographics

Growth

Last decade US population grew at the lowest rate since the great depression

Tell Me About YOUR Place

“Human beings reason largely by means of stories, not by mounds of data. Stories are memorable, they

teach.”

Tom Peters, A Passion for Excellence

The American Dream

“life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement, regardless of social class or circumstances of birth.” American Dream, James Truslow Adams, 1931

Vision For America Take 20 seconds and think about America

in 2040

Newsweek Magazine

Rising Above the Gathering Storm, Revisited

“When I compare our high schools to what I see when I am traveling abroad, I’m terrified for our workforce of tomorrow.”

(Bill Gates)

Source: Members of the Committee, Prepared for the National Academy of Science, 2010

“Whether you believe you can do a thing or not, you are right.”

Henry Ford

So, what do you need to do to be competitive in the future?

Strong leadership, connected citizens with high social capital

Smart, informed, & nimble Have a plan and capacity to act Good, flexible education, training &

retraining assets Global view & engagement Really good at some things

Southern Growth’s 40th Anniversary

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Commentaries June Conference

Thank YouTed Abernathy

tabernathy@southern.org