Columbia’s economic growth lags because of a lack of manufacturing, but the government, education, and the military keep the economy stable
Jan 16, 2019 10:54AM
By Kathleen Maris
By Vincent Harris
The state of South Carolina as a whole is experiencing an economic boom right now. In fact, the state is performing above the national average in a couple of vital areas. The U.S. unemployment rate sits at 3.7 percent; South Carolina’s is 3.3 percent. American wage growth as of September 2018 stood at 2.9 percent; according to Doug Woodward, a professor of economics and research director at the University of South Carolina’s Darla Moore School of Business, the Palmetto State’s wage growth is around 4 percent.
And yet, as the state in general seems to be benefiting from a thriving manufacturing base from automobiles to aerospace, Richland and Lexington counties remain solidly behind the curve.
“South Carolina’s job growth in 2018 is at 1.8 percent,” says Joey Von Nessen, a research economist who works in the Moore School, “and Columbia is 0.4 percent. Which is still positive, but lagging behind the state average.”
As worrying as that might sound, Von Nessen says that level of growth has become typical for the Midlands.
“We’ve seen very strong growth in the state overall over the past several years,” he says. “Columbia, however, has been lagging for the last few years, and that’s true in 2018 as well. So it’s a fairly normal difference. Columbia has traditionally lagged behind during this expansion.”
A quick glance at Columbia’s third-quarter statistics would seem to bear that out. According to a recent Federal Reserve Bank of Richmond report, Charleston’s unemployment rate has fallen from 3.6 percent to 2.8 percent, year to year, while Greenville’s fell from 3.7 percent to 3 percent; by comparison, Columbia’s dropped from 4.2 percent to 3.1 percent.
Similarly, Charleston’s available labor force has increased by 0.32 percent since last year, where Columbia’s declined 0.7 percent. Greenville also experienced year-to-year drop, albeit a lesser one of 0.35 percent.
The reason behind the Columbia area’s slower growth is that the manufacturing companies in the state have traditional looked toward the Upstate or the coastal regions when settling here.
“The major industry drivers have been focused largely elsewhere,” Von Nessen says. “When we look at it from the state’s perspective as a whole, the automotive sector, the aerospace sector, and the tire cluster, because we export more tires than any other state, those are all concentrated outside the Midlands.”
In contrast, Von Nessen says that the economic anchors are the military, the state government, and the university system, and to some extent healthcare and insurance. Which is both good news and bad news for the region.
“Those provide solid anchors, but we don’t see a lot of volatility or variance there,” he says. “So in economic booms or expansions, Columbia tends to lag, but when South Carolina is doing poorly, it tends to provide some stability. So there are positives and negatives within the fact that Columbia doesn’t see a whole lot of significant growth changes in its economy from year to year.”
In fact, it seems as if most of Columbia’s economic development is coming from consumers, not manufacturers. Currently in the Columbia area, there’s construction in progress on more than 88,000 square feet of retail space, while the retail market vacancy rate dropped to 10.09 percent during the third quarter of this year, down from 10.29 percent in the second quarter.
And there are other signs of potential growth in the region. In the city of Blythewood, for example, Owens Corning recently announced a $13.6 million investment in an existing manufacturing facility, with the intention of reopening it as a maker of coated, non-woven products for the building-materials industry. In August, tech firm Capgemini, locally based at the BullStreet District, announced it was planning to add some 200 new jobs to the area in addition to the more than 100 jobs it has already created.
But in terms of what area has the most potential for future areas of economic development, Von Nessen sees Lexington County as a possible new hot spot for manufacturers.
“In Lexington County, there’s a little more potential for growth,” he says. “Lexington is a more rural county, relatively speaking, so there’s more opportunity for manufacturers that need land to come in. Advanced manufacturing has been one of the driving forces for South Carolina, so we’re likely to see more employers go to Lexington County. That’s going to be followed by the logistics industry that’s needed to support manufacturing, and that’s going to help drive construction.”
Von Nessen’s prediction would seem to be borne out by Midway Logistics IV, a recently announced 200,000-square-foot industrial building at Lexington County Industrial Park. Construction on the site is projected to be finished by the third quarter of 2019. And Garden State Lumber, a New Jersey-based manufacturer of moldings, trim boards, and PVC products, has recently expanded into a 170,000-square-foot space at the industrial park, as well.
Despite those advancements, Woodward disagrees somewhat with Von Nessen’s idea that Lexington County could serve as a home for advanced manufacturers.
“I don’t think we have tracts of land big enough to land a large automobile plant,” he says, “but I also don’t think there’s anyone looking to locate here in the U.S. right now with all of the tariff controversy.”
In fact, from Woodward’s perspective, the current philosophy of the Trump administration could spell trouble not just for businesses that would consider expanding to the Midlands, but companies who have already begun to do so.
“The Chinese firm Jushi (the world’s largest fiberglass manufacturer) that was making a big plant expansion, that’s uncertain now because of the tariffs on importing machinery and other components,” Woodward says. “So we’ll see if that happens. That was going to be a significant expansion of our manufacturing employment base in the Midlands.”