Southwest Mississippi THE PLACE FOR METAL FABRICATION SOUTHWEST MISSISSIPPI PARTNERSHIP. Accessability

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1 THE PLACE FOR Southwest Mississippi METAL FABRICATION SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity

2 Southwest Mississippi THE PLACE FOR METAL FABRICATION Executive Summary Introduction Overview of Southwest Mississippi Area Description Historica Background Economic Deveopment Trends Business and Industria Investments Dedication to Deveopment Location Advantages for Meta Fabrication Faciities The Meta Fabrication Industry Why Locate a Meta Fabrication Pant in Southwest Mississippi? Cost-Saving Opportunities Personne Buiding and Land Combined Buiding and Land Costs Energy Costs Taxes Summary of Costs SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity Contact: Britt Herrin, President Post Office Box 83, McComb, Mississippi or

3 Executive Summary Southwest Mississippi is an especiay attractive ocation for meta fabrication pants and manufacturers of devices made from meta. This has been documented by BFPC, LLC, a eading site seection and ocation strategy consuting firm. BFPC recenty competed an in-depth investigation of the Southwest Mississippi region and its economy. Meta Fabrication was seected for its particuar abiity to take advantage of economic, business, and other conditions in the area. Reasons for seecting this industry as a target incude the foowing Southwest Mississippi area assets: Seected business costs over 22% beow typica or nationa average costs for meta fabrication faciities. Projected costs for staffing, construction, utiities, and certain taxes and other expenses to estabish and operate a fabrication pant in Southwest Mississippi are we beow the comparabe US nationa average figures. Detais of these savings are presented at the end of this report. Above average avaiabiity of personne experienced in manufacturing due to a we-estabished industria base over 7,400 peope work in 140 manufacturing pants in Southwest Mississippi. About 830 of them are empoyed at the 21 existing meta fabricating faciities widey distributed throughout Southwest Mississippi, so there is much specific experience for companies to draw from. Loca industria training faciities contribute to abor avaiabiity. The area s attractiveness as a iving environment, with a high quaity of ife and ow cost of iving, support transfer and recruitment of peope from outside the immediate area. Southwest Mississippi has an above average avaiabiity of personne experienced in manufacturing. A high eve of preparedness. Southwest Mississippi has been the ocation of major manufacturing and other industria activity for many decades. It is at a high eve of readiness for new deveopment, with a wide choice of sites and existing buidings ready for quick use by meta fabrication pants. Major investments are being made in new industria parks and sites and supporting access/infrastructure. Academic, research, and industria assistance capabiities directy reated to metas. Mississippi State University, the state s primary technoogy-oriented institution, has extensive programs in a branches of engineering. These incude many specificay reated to metas and fabrication such as the fatigue and fracture study capabiities of the Waker Schoo of Aerospace Engineering and other components of its Bagey Schoo of Engineering. The University of Southern Mississippi in Hattiesburg, about an hour from the eastern edge of the Southwest Mississippi region, aso has programs through the PhD in fieds reevant to metas. In the Southwest region itsef are Acorn State University, Copiah-Lincon Community Coege, and Southwest Mississippi Community Coege, which offer diverse business and industria training and education through the master s eve. Southwest Mississippi The Pace for Meta Fabrication 1

4 EXECUTIVE SUMMARY Huge regiona customer base. The South is by far the fastest-growing region in the US, both in popuation and in business deveopment. Numerous metasusing industria pants and other major consumers of fabricated metas are in and near Mississippi; more information is in the body of this report. Exceent transportation incuding access to major markets for fabricated meta products. I-55 connects Southwest Mississippi with Louisiana and the Guf Coast where many chemica pants, petroeum refineries, driing faciities, and other users of arge fabricated meta equipment are ocated. It proceeds on to Chicago and other industria centers of the Midwest. I-20 between Atanta and Daas is just to the north, and there are severa other major highways. The main north-south ine of the CN Raiway paraes I-55 as it passes through the region and aso hosts Amtrak passenger service. Commercia airports incuding Jackson, New Oreans, and Baton Rouge are within one to two hours drive of various parts of Southwest Mississippi. Severa Southwest Mississippi airports serve corporate aircraft. The Southwest Mississippi economy has generated new jobs at a time when many areas experienced a decine in empoyment. An aggressive state economic deveopment poicy incuding a right-to-work aw estabished in the Mississippi Constitution, an attractive package of industria deveopment incentives, and other poicies contributing to a measurabe growth of the state economy. Mississippi ranks we above the nationa average as we as above many other states such as Texas and Forida in the increase of its average compensation and other economic deveopment and socioeconomic indicators. A growing regiona business sector. The Southwest Mississippi economy has generated new jobs at a time when many areas experienced a decine in empoyment. Tota jobs in the ten-county area grew over 2.5% during the most recent five-year period for which US Commerce Department figures are avaiabe. A quaity of ife that supports recruitment, transfer, and maintenance of staff. A scenic environment incuding the Mississippi River and the Homochitto Nationa Forest. Throughout Southwest Mississippi are beautifu historic houses and other structures in cassic downtown settings. This attractive setting is combined with easy access to New Oreans, Jackson, and the Guf Coast. A cost of iving 15% to 25% beow the nationa average. Loca cuture and entertainment incuding coege sports. SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity More data about Southwest Mississippi and the region s advantages for your company are avaiabe from the SOUTHWEST MISSISSIPPI PARTNERSHIP Britt Herrin, President Post Office Box 83 McComb, Mississippi or Southwest Mississippi The Pace for Meta Fabrication 2

5 Introduction Mississippi has been a nationa eader in economic deveopment for decades, having made a very successfu transition from a traditiona agricutura base into one of the most dynamic business and industria economies in the nation. Nowhere is this optimistic, forward-ooking attitude more evident than in Southwest Mississippi, where ten counties have banded together to undertake creative new economic deveopment activities. This regiona organization, the Southwest Mississippi Partnership, has begun a new campaign to market this area as a ocation for specific businesses and industries that can profit from its appeaing features. The Partnership is supported by many regiona and statewide economic deveopment aies incuding: The Mississippi Deveopment Authority, Entergy (the commercia provider of eectric energy to Southwest Mississippi), The Eectric Power Associations of Mississippi (representing the eectric cooperatives), and Momentum Mississippi (a unique pubic-private organization dedicated to advancing the state s economy). BFPC, LLC, a major internationa site seection and ocation consuting firm, has been retained to provide professiona counse to this program. It was charged to identify specific business activities that are a particuary good fit with the ocationa attributes of Southwest Mississippi, and which might benefit by estabishing a faciity in the community. This was based on a soid, focused business and economic anaysis as we as extensive experience assisting businesses to identify the right ocation for new and expanding faciities and investments. The study concuded that Southwest Mississippi is an especiay appropriate and attractive ocation for meta fabrication pants. This report provides detais and makes a strong business case why companies in this arge and important industry shoud consider Southwest Mississippi as the ocation for new and expanded production faciities. SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity Southwest Mississippi The Pace for Meta Fabrication 3

6 Overview of Southwest Mississippi AREA DESCRIPTION The area covered in this report is a ten-county region in the southwest corner of Mississippi aong the Louisiana border between the Mississippi and Pear Rivers. A ten have inked together for economic deveopment purposes as the Southwest Mississippi Partnership. Component counties are Adams, Amite, Caiborne, Frankin, Jefferson, Lawrence, Lincon, Pike, Watha, and Wikinson. Bridging the area between the Jackson and Baton Rouge metropoitan areas, the region contains 5,268 square mies and about 187,000 peope. Larger urban areas of the ten-county region incude Brookhaven, McComb, and Natchez, which are Micropoitan Statistica Areas, as defined by the US Census Bureau. Major transportation routes incude I-55 which passes through Southwest Mississippi as it connects New Oreans with Memphis, St. Louis, and Chicago. The Natchez Trace Parkway foows a historic route from Natchez to Nashvie, Tennessee. Interstate highway 20 ies just north of the ten-county area; I-10 and I-12 are about 30 mies south. US Highways crossing the region incude 61, the Bues Highway, that paraes the Mississippi River from Louisiana to Minnesota; 84 en route from the Atantic Ocean to Coorado; and 98 from Forida to the Mississippi River. Southwest Mississippi is aso served by a major north-south ine of CN Raiway (formery Iinois Centra) on which Amtrak s City of New Oreans passenger train runs aong with heavy rai freight traffic. Natchez ADAMS Port Gibson CLAIBORNE 61 JEFFERSON Fayette Woodvie WILKINSON 24 FRANKLIN 84 Meadvie Vicksburg Brookhaven AMITE 48 Liberty LINCOLN McComb PIKE Monticeo WALTHALL 98 Jackson LAWRENCE Tyertown KS OK TX MO M I L E S AR 2 0 LA 0 M I L E S IL MS TN IN KY AL FL Distances are approximate. GA GULF OF MEXICO Baton Rouge From the southern edge of Southwest Mississippi, it is about 60 mies to New Oreans via I-55, so residents have easy access to the services and amenities of a major metropoitan area. At the same time, this part of Mississippi is 75 or more mies from the Guf so that it is out of the hurricane impact area. In fact, Southwest Mississippi provided sheter for many persons who eft New Oreans as a resut of Hurricane Katrina. Southwest Mississippi The Pace for Meta Fabrication 4

7 OVERVIEW HISTORICAL BACKGROUND Southwest Mississippi was founded as a fortified settement in 1716 and hed successivey by France, Great Britain, Spain, and the United States. The region prospered as the south terminus of the Natchez Trace, a road connecting the area with Nashvie, Tennessee, that was commerciay and strategicay important through the eary 19th Century. Natchez became a great river port and cutura center before the Civi War and was the state capita from 1817 to 1821 as we as home of the state s first institution of higher education. Benefiting from the rich surrounding agricutura area, Southwest Mississippi became a shipping and processing center for soybeans, corn, cotton, ivestock, and timber. It aso served as the commercia hub for a wide area of Mississippi and Louisiana. Other cities in Southwest Mississippi such as Port Gibson deveoped as part of the river-based exchange of agricutura products from the South and manufactured goods from upstream cities such as Louisvie, Cincinnati, and Pittsburgh. Brookhaven, McComb, and other cities inand from the river sprang up with construction of roads and rairoads from New Oreans north to Jackson and Memphis. In the 1800 s, Southwest Mississippi was a cassic American meting pot, with immigrants from Europe and Asia, free peope of coor, and reocatees from the North and East. Southwest Mississippi has effectivey preserved its antebeum charm and the area s extraordinary past is documented today by its many historic houses, commercia buidings, churches, synagogues, and other structures. The area has generated arts, cuture, iterature, and music ranging from cassica to Bues. The Mississippi Bues Trai commemorates artists such as McComb native Bo Diddey, harmonica payer Papa Lightfoot, and the Rabbit s Foot Company which started in Port Gibson in Amite County native Jerry Cower was a writer, comedian, and recording artist who made reguar Southwest Mississippi has effectivey preserved its antebeum charm. appearances on the Grand Oe Opry. Southwest Mississippi has deveoped a arge tourism industry that attracts visitors wordwide to experience its unique heritage and sincere southern charm. ECONOMIC DEVELOPMENT TRENDS The eariest commercia deveopment in Southwest Mississippi was trade via the Mississippi River, which continues to be important. The Port of Natchez maintains buk and iquid termina faciities and infrastructure to support barge traffic. Interior counties of Southwest Mississippi hed huge stands of pine and other trees. The post-civi War construction boom and expanded rairoad service promoted deveopment of a major umber and forest products industry which aso continues to be important through the present. Mississippi s estabishment of the nation s first comprehensive state economic deveopment program in the 1930 s heped expand regiona business activity. Manufacturing pants were constructed to produce cothing, texties, wood and forest products, eectrica appiances, fabricated metas, and machinery. Thus the current effort to recruit meta fabrication pants buids on neary a century of previous manufacturing activity and takes advantages of skis and knowedge in this area deveoped over severa generations. Whie Southwest Mississippi has diversified and now has a we-rounded economic base, manufacturing remains a key component of its economy. Currenty the region has about 7,400 empoyees in 140 pants, with faciities in each of the ten counties of the region. Detais on these companies and other aspects of the individua counties are avaiabe at: tionone.com/(s(3meafz45gc3zvcfxwjarj45))/statemain- Page.aspx?type=state&profieid=MS-Mississippi. Southwest Mississippi The Pace for Meta Fabrication 5

8 OVERVIEW State and community eaders make it cear that manufacturing continues as the cornerstone of economic deveopment. Mississippi has worked diigenty to create an attractive and prosperous setting for industry. It has received we-deserved attention and compiments for some of its arge successes such as Nissan, but has aso made a point of striving to recruit and accommodate medium-sized and smaer faciities as we. The ist beow iustrates the variety of industry in Southwest Mississippi. BUSINESS AND INDUSTRIAL INVESTMENTS A quick scan across Southwest Mississippi shows that its economic deveopment work has been successfu; for exampe: Adams County: Deta BioFues, Dynastee (stee roing), Stine Lumber Caiborne County: Southern Lumber Lawrence County: Atas Manufacturing Lincon County: Great Southern Yea-Wood, EPCO Carbon Dioxide, Reed s Metas, Rex Lumber Pike County: Summit Pastics, Weyerhaeuser, Magnoia Biofue Watha County: Brigade Manufacturing, Kaencom Stringer Industries Wikinson County: Nettervie Lumber Company, Magnoia Honey Jey A promising event reated to the former Internationa Paper site in Natchez is the potentia for its re-use for production of synthetic jet fue described in : doc4b2bedc txt. DEDICATION TO DEVELOPMENT One reason for manufacturing growth is the vigorous ongoing effort to maintain the area at a high state of readiness. The communities of this part of Mississippi have worked hard to deveop sites and buidings, train workers, ensure widespread avaiabiity of energy and utiities, and assist prospects with a quick path to profitabiity. Over 800 acres of new industria parks and sites have been made avaiabe in the past three years. Workforce preparation is managed through area high schoos and two state postsecondary schoos with campuses throughout Southwest Mississippi: Copiah-Lincon Community Coege and Southwest Mississippi Community Coege. In Apri, 2010, SWMCC broke ground on a new $6 miion, 80-empoyee Regiona Workforce Training Center which wi greaty expand the coege s capabiity to train workers for a wide range of positions. Acorn State University, rated by US News among the nation s best coeges, maintains its historic main campus in Caiborne County. Its new center in Natchez houses the Nursing and MBA Program ( usnews.rankingsandreviews.com/best-coeges/acornstate-ms/acorn-state-university-2396). Its academics incude diverse business and professiona training and education through the master s eve to 3,500 undergraduate and graduate students. Acorn is true to its and grant university heritage with many outreach programs to make its capabiities avaiabe to oca business and industry cients. PhD programs in engineering, materias science, and other reevant discipines are offered by Mississippi State University and the University of Southern Mississippi. Southwest Mississippi The Pace for Meta Fabrication 6

9 Location Advantages for Meta Fabrication Faciities Southwest Mississippi s counties comprise a unique and particuary attractive ocation for faciities that fabricate and assembe products composed primariy of meta. This section begins with a concise review of business conditions and trends in the meta fabrication industry. It then points out how Southwest Mississippi is we suited to serve this industry s ocationa needs. THE METAL FABRICATION INDUSTRY Industry Definition. The primary target envisioned in the category is NAICS Code 332. This sector incudes a very broad diverse range of technoogies for shaping and treating meta and joining or assembing it into certain products. The output of the sector may be a structura component such as a beam or pate that goes on to become part of a buiding, tower, boier, or other assembed device; and may aso be the finished fabricated equipment or device such as a too, spring, container, vave, buet or piece of hardware. It uses means such as forging (heating meta to a maeabe but not moten state and using hammers, dies, or roers to achieve the desired shape), stamping (subjecting it to heavy forces that push the meta against a shape or form), and casting (heating meta unti it becomes moten and pouring or injecting it into a mod or form). Industries that pate, coat, engrave, or heat-treat meta are aso categorized in this sector. However, this industry does not incude basic metas processing (ore refining and smeting and the production of basic meta forms and shapes by roing or drawing) nor does it incude the manufacturing of machinery such as vehices and industria equipment, athough that business is a consumer of the fabrication industry s products. About 1.6 miion empoyees work in about 60,000 US estabishments in the industry. By number of jobs, it ranks second ony to transportation equipment among the 21 major manufacturing industry sectors and comprises neary 12% of a manufacturing empoyment. Annua vaue of its production is about a quarter of a triion doars. The products of this industry are used by virtuay every sector of the business, industria, and consumer market. Anything which is made of meta, or has any meta components, or which has gone through forming and shaping processes originay deveoped to hande meta passes through the faciities of this industry. The industry has dozens of subsectors, some of which are described on the foowing pages. Machine Shops. By far the fastest-growing subsector of the industry is that invoving machine shops and reated faciities which use a variety of physica, chemica, and other processes to shape meta, pastics, composites, and other materias. Some of the products are mass-produced, whie some are short runs of customized items such as parts for machinery. They are aso often invoved in maintenance, repair, and upgrading of machinery. Much of the activity of the industry is highy automated, such as computer-controed meta turning and cutting equipment, but many processes aso require a high eve of persona technica ski. This is a business where ong periods of apprenticeship and exposure to more senior staff are common. This industry underies a wide range of US business and industria activities and represents some of the highest added vaue. Many machine shops are reativey sma 15 to 20 empoyees and highy focused on a given product, service, or cient. Southwest Mississippi The Pace for Meta Fabrication 7

10 LOCATION ADVANTAGES Meta Structura and Architectura Products. The manufacture of structura and architectura meta products is another segment which has shown robust growth in the past decade, athough the recent decine in construction has certainy affected it. Its products range from compete prefabricated meta buidings to major components of bridges and civi engineering works, eectrica transmission towers, and structura stee for buidings. Many buidings, especiay those for industria purposes, have structures and exteriors comprised primariy of meta beams, panes, and other components that are prefabricated in this industry s manufacturing pants; this resuts in major savings of time and effort when the buidings are constructed on site. Industria materias handing systems are often made primariy of components produced by this business, such as hoppers and conveyors. It aso manufactures many types of architectura products such as windows and doors and decorative sheet meta work. The faciities of this subsector tend to be much arger than those of machine shops; and since they are often preparing arge components they may have a sizabe physica footprint. The equipment needed to carry out operations such as stamping and bending of major components can be arge and require a specia production environment with high ceiings and strong foors and foundations to support heavy moving machinery. Boiers, Tanks, and Shipping Containers. Another expanding business is the production of arge but often precisey made equipment used in manufacturing, energy generation, heath care, transportation, and other appications. Boiers and reated devices are often huge and heavy but must aso be designed and assembed to a high degree of precision since they must safey contain gas, steam, or corrosive vapors under high pressure. Containment vesses for nucear reactors, chemica pants, and other major industria activities aso are assembed by this industry. Its products are a key part of equipment used in environmenta contros and in speciaized processes such as autocaves which use high temperatures and pressures to steriize medica and heath care equipment, an essentia function for hospitas. Many products of this type are made of stainess stee, titanium, and other unusua metas whose fabrication requires specia capabiities. Shipping containers are used more and more widey. Transportation of many goods can be conducted more efficienty if the products are encosed in a standard sized seaed container that can be handed by cranes and easiy paced on ships, rai cars and trucks, and which protect their contents from dirt, the eements, and piferage. Coating, Pating, and Other Treating of Metas. A somewhat separate but growing part of the fabrication business is the treatment of metas often after they have been manufactured or assembed into a product to improve them or add some new characteristic. These processes incude meta pating and coating, in which a thin ayer of new materia is appied to make the product stronger, more attractive, or more resistant to rust or wear; to improve its capacity to conduct eectricity or heat; or to impart some other desirabe engineering characteristic. Some coating processes are essentiay nanotechnoogy, where the gazing may be ony a few moecues thick. Another service is various types of heat treatment, which can change the physica and chemica characteristics of metas at the atomic eve. The resuting recrystaization Southwest Mississippi The Pace for Meta Fabrication 8

11 LOCATION ADVANTAGES makes meta harder, softer, stronger, more ductie, or better in other aspects for a given use. This is a very usefu way to manufacture some meta products, since they can initiay be machined, dried, cut, or turned whie in a reativey soft, easiy manageabe state; then after being assembed they can be tempered to become much stronger and more rigid. Heat treating can restabiize items whose strength was reduced by weding. Low-Technoogy Meta Fabrication. Some meta shaping technoogies have remained essentiay unchanged for centuries. Not surprisingy, severa of these parts of the meta fabrication industry are not growing in the US often unsophisticated forming and shaping activities. Many hand toos, sma pieces of hardware, springs, wire, and other meta products used in consumer and non-critica appications can often be made ess expensivey in China and other overseas ocations. Emerging Technoogies. Whie some meta fabrication methods have existed for thousands of years, the industry is aso benefiting from research and deveopment efforts that are eading to totay new approaches for working metas. For exampe, Powder Metas processing is a new addition to the inventory of meta shaping methods, aong with forging, stamping, and ro forming. It has potentia both to repace some traditiona metaworking methods and to offer new ways of producing items which are difficut or compicated to manufacture by conventiona meta shaping mechanisms. Production of devices by PM technoogy begins with compounding a precisey defined mix of one or more metas (and possiby aso ceramics, pastics, and other materias) and additives such as ubricants. The materia is in the form of fine powder, with individua partices often no more than a micron in diameter. The choice of powders and additives imparts various desired characteristics to the finished product. The industry is aso benefiting from research and deveopment efforts that are eading to totay new approaches for working metas. The compound is then compacted a common method is to force it into a mod under pressure. This action mechanicay compresses the mix together to a point where its density is about 80% that of soid meta. The item being produced has some degree of stabiity at this point, simpy from the friction hoding the partices with each other (ike a caste on the beach made by squeezing together handfus of sand) but it is sti britte and fragie. In the trade, the product is now caed a green compact. The compact then goes through the process of sintering. This invoves heating it beow its meting point but high enough to bond individua meta partices. Microscopic physica connections or bridges are formed among powder partices. At this point it is much stronger and denser, now around 95% of the density of soid meta. Parts so made may possiby then be used as is, or subjected to further processing such as machining or poishing. Components produced this way are more precise than those shaped by some other metaworking technoogies, which often require further machining before they meet their fina dimensiona and quaity eves. Raw forgings and castings, for exampe, are often 20% arger than the finished product and must often be machined to fina dimensions, a process requiring ski and expense and generating much waste. The strength of products made by powder meta can be cose to that of metas shaped by other means, but the cost can be ower because PM technoogy usuay requires ess energy, simper equipment, and fewer steps in the process. Powder meta production aows modifying certain physica properties of the materia being formed. For exampe the mix may incude a ubricating agent so that the finished item (say, a gear) is sef-ubricating, or another meta to be aoyed with the primary meta. Some basic metaurgica properties can be determined or atered via powder meta technoogy. Characteristics such as density and porosity of the finished item can be affected according to Southwest Mississippi The Pace for Meta Fabrication 9

12 LOCATION ADVANTAGES features desired in the end product. There is no need for arge, fast-moving machinery of the type sometimes used in stamping and forging, which can require heavy foors and foundations and has the potentia to be dangerous to the operators. Powder meta approach aows the working of some metas that do not end themseves to other shaping technoogies it is difficut to machine, forge, stamp, or cast some metas and aoys. Aircraft manufacturers are one of the major Friction Stir Weding. is consumers of another emerging meta fabrication technoogy, fabricated used to join certain products made of auminum meta parts... and other metas that are not candidates for conventiona weding. It is usefu to assembe products such as aircraft, where bonds must be strong, and resuts in ighter weight than aternative meta joining processes such as rivets or nuts-and-bots. It can bond panes composed of dissimiar metas. Composite Materias are comprised of diverse materias; a common product is carbon or metaic fibers contained in a matrix of pastic or other poymer base. The resuting materia can be ighter and stronger than either component used aone, and has uses in aircraft, other transportation equipment, medica/surgica devices, and numerous others. WHY LOCATE A METAL FABRICATION PLANT IN SOUTHWEST MISSISSIPPI? Southwest Mississippi is particuary we suited as a ocation for meta fabrication pants and functions. This is due to a combination of unique oca conditions as we as a diigent effort by the community to wecome new manufacturers and provide an operating environment that aows them to prosper. Here are some specific reasons: Market Opportunities in the Surrounding Region. A Southwest Mississippi ocation puts meta fabricators in the midde of the fastest-growing part of the nation. The region from Texas to the Southeast ranks highest in expansion of demographics, economic deveopment, purchasing power, and other key indicators of market strength. There is a strong market for fabricated meta products and services to meta-using industries in and around Mississippi. Specific exampes incude: Aviation. Mississippi has identified aviation and aerospace as a focus for deveopment, both on its own and in coaboration with nearby states. Aircraft manufacturers are one of the major consumers of fabricated meta parts and have a need for a wide variety of sophisticated components. American Eurocopter, a subsidiary of EADS North America, opened a production pant in Coumbus, Mississippi, in 2006 at which it is manufacturing UH-72A Lakota for the US Army and other heicopters. Southwest Mississippi is we positioned to serve that pant as we as one owned by the company in Daas, Texas. The Stennis Space Center ocated in southern Mississippi near Louisiana is NASA s argest rocket engine test faciity. Moss Point houses Northrop Grumman s Unmanned Systems Center. There is a chain of important US Air Force instaations extending from Bioxi eastward into Northwest Forida. The Raspet Fight Laboratory at Mississippi State University focuses on materias for ightweight aircraft systems. Other Transportation Equipment Manufacturing. Faciities in and near Southwest Mississippi incude the Northrop Grumman Shipbuiding pant and the Ros Royce Nava Marine center in Pascagoua, Mississippi. American Raicar Industries maintains a major faciity in Southwest Mississippi. Southwest Mississippi The Pace for Meta Fabrication 10

13 LOCATION ADVANTAGES Energy. Southwest Mississippi is an exceent ocation from which to serve the oi and gas industry. Driing and extraction activities require towers, patforms, and other major structures. Southwest Mississippi is cose but benefits from being outside the area of probabe hurricane impact. Pants in this area are unikey to be shut down due to storms or surges. Emerging energy generation technoogies are aso being expored. Soar shows promise, given the area s sunny cimate. New pants manufacturing components of soar panes and other components of photovotaic generating systems are under construction in Mississippi and adjacent states. License appications have been fied for a second unit at the Grand Guf generating station in Port Gibson, Mississippi; eectric generating faciities require extensive amounts of fabricated metas and meta parts. Avaiabiity of Good Peope. Southwest Mississippi is better prepared than many other ocations to offer we quaified empoyees to a new or expanding meta fabrication pant. Avaiabiity of peope with industria work backgrounds, often going back severa generations, is a main feature over 7,400 peope currenty work in 140 manufacturing pants here, according to the atest US Commerce Department data. About 830 of them work in 21 meta fabricating pants widey distributed throughout Southwest Mississippi, so there is much existing specific experience for companies to draw from. Mississippi has made economic deveopment a priority. Mississippi s industria training programs are among the nation s odest and best. The state is constanty updating and expanding its training capabiities, with the new Regiona Workforce Training Center in Southwest Mississippi a primary exampe. Mississippi has advanced steadiy up the ranks of states in improving the quaity of jobs and income of its citizens. It ranks we above the nationa average in the increase of average pay received by its private sector empoyees over the most recent five-year period for which compete statistics are avaiabe. This refects a workforce in Southwest Mississippi that is better educated and prepared to be productive for empoyers. With the area s quaity of ife, ow cost of iving, and proximity to urban and ocean attractions, it is possibe to recruit skied peope from other areas. Mississippi has a right-to-work aw and ow unionization. Athough its average income is ower than the nationa average, its percentage of home ownership is higher, refecting a strong work ethic, sense of persona responsibiity, and commitment to the area. Pubic Poicies. For neary 80 years, Mississippi has made economic deveopment a priority of the state. Its Baance Agricuture With Industry initiative, begun in the 1930 s by Southwest Mississippi native and Governor Hugh White, was the first comprehensive statewide pubic economic deveopment program in the nation. Many techniques that became keystones of business recruitment and expansion, such as industria deveopment revenue bonds, emerged from this innovative program. Whie many other states programs have often been inconsistent and variabe, Mississippi s focus on economic deveopment has remained firmy in pace through changes of time, administration, and other conditions. Pubic officias up to the Governor have made it cear that economic deveopment is a primary responsibiity of the state and its communities. The state has a widey recognized reputation for aggressive recruitment, thorough attention to the needs of prospective and existing companies, and works hard to cose deas with new and expanding companies. Some states have incentives and other recruitment efforts that sound impressive but are actuay avaiabe to ony a few prospects. Mississippi has a record of supporting business deveopment at a eves, incuding sma and start-up faciities. Its incentives can ead to payback of Southwest Mississippi The Pace for Meta Fabrication 11

14 LOCATION ADVANTAGES a arge percentage of a new or expanding operation s capita expenses. Detais on these programs are avaiabe from the Mississippi Deveopment Authority website at: mississippi.org/index.php?id=458 Manufacturing pants have faced difficuties and reuctant pubic acceptance in much of the US. Mississippi, by contrast, is proud of its commitment to attract new production industry and has made this process easier for companies than virtuay any other state. Success of this poicy is cear. US Commerce Department data show that the contribution made to the Mississippi economy by its manufacturing sector has grown at a rate we above the nationa average (at a time when it has decined in some states). Manufacturing is we estabished in Southwest Mississippi. Peope iving here understand the vaue and opportunity which it brings. Transportation, Infrastructure and Business Support Services. Southwest Mississippi has been an important business and industria center for many decades and has a wide range of services ikey to be needed by a meta fabrication pant. It is we-served for inbound and outbound shipping. The presence of Interstate Highway 55 and a major CN Raiway ine make up an important transportation advantage, reducing cost and time of inbound raw materias shipment. No part of Southwest Mississippi is farther than a one to twohour drive from a commercia airport. Within the ten counties are severa genera aviation airports capabe of handing KS OK Daas T X Distances are approximate. Kansas City MO AR 2 0 LA 0 M I L E S arge corporate aircraft and some with major service and maintenance capabiities. These incude Brookhaven Airport (5,000 X 75-foot runway), Hardy-Adams Fied in Natchez-Adams County (runways of 6,500 X 150 and 5,000 X 150 feet), and Lewis Airport in McComb-Pike County (5,000 X 75-foot runway). Virtuay a providers of speciaized services such as repair and maintenance specific to meta fabrication pants are readiy in and near Southwest Mississippi. Preparedness. A terrific genera business cimate is not of much use to a company uness the area has avaiabe sites and buidings ready for quick acquisition and use. Most counties in Southwest Mississippi have deveoped pubicy-owned industria parks and sites, some have avaiabe buidings, and the utiities, energy, and industria support services ikey to be needed by a metas fabrication faciity of amost any type are in pace in many areas. Industria property is avaiabe in a ten counties of Southwest Mississippi. Over 800 acres more than a square mie of newy prepared industria parks and sites have come on ine in the area recenty. MS IL 98 TN KY AL Atanta FL Other infrastructure is aso widey avaiabe, such as broadband teecommunications networks, eectric service at a variety of votages suitabe for various industries, and natura gas ines. Favorabe Economics. A meta fabrication pant in Southwest Mississippi can possiby save over 22% reative to the US average for the industry. This asset is so important and compeing that it deserves more detai, which is provided in the foowing chapter. GULF OF MEXICO RAIL Southwest Mississippi The Pace for Meta Fabrication 12

15 Cost-Saving Opportunities Southwest Mississippi offers meta fabricating pants the potentia for more than a 22% reduction in capita and operating costs, compared with the nationa average or typica costs for such faciities. This section iustrates some of those potentias. It estimates certain costs for a hypothetica production faciity in Southwest Mississippi and then compares them with nationa average or typica costs for pants in the industry. This hypothetica pant consists of a 50,000-square foot buiding on a site assumed to be 20 acres and is assumed to empoy 50 personne. Its eectrica energy consumption is 30 miion kiowatt-hours per year, a oad based on simiar pants in this industry. PERSONNEL The nationa average annua pay for a typica meta fabrication pant is estimated from various pubic and private sources to be about $52,500. It is estimated that a simiar poo of empoyees coud be hired in Southwest Mississippi for an average of $41,000. This is based on data from pubic sources incuding the US Department of Commerce and discussions with managers of numerous industria pants in Southwest Mississippi. On this basis, annua direct wage costs for 50 empoyees in Southwest Mississippi woud be $2,050,000, whie the nationa average woud be $2,625,000. Benefits are estimated to cost an additiona 34% in both cases, annuay costing $697,000 in Southwest Mississippi and $892,500 in the nationa average pant. Therefore the tota annua personne cost in the hypothetica Southwest Mississippi production pant woud be $2,747,000 and in the nationa average pant $3,517,500. On this basis, a meta fabrication pant ocated in Southwest Mississippi coud save its owner $770,500 per year in staffing costs. BUILDING AND LAND On a nationa average basis, construction woud probaby cost $200 per square foot. This refects heavy construction with strong foors, high ceiings, and structures capabe of supporting cranes. A buiding of 50,000 square feet woud thus cost $10,000,000. The 2010 R.S. Means Buiding Construction Cost Data report indicates that construction costs in Southwest Mississippi are about 78.4% of the nationa average. Therefore a oca cost of $7,840,000 is assumed for constructing the hypothetica pant. This is a saving in construction costs of neary $2.2 miion. A recent nationa average estimate for above-average quaity industria sites was $37,000 per acre. In Southwest Mississippi, serviced and can be purchased for $12,000 per acre, and possiby even ess. So for a site of 20 acres, the nationa average cost woud probaby be $740,000 and the Southwest Mississippi cost woud be $240,000, representing savings in and costs of onehaf miion doars. COMBINED BUILDING AND LAND COSTS Based on the above assumptions, the nationa average cost for buiding and and together woud tota $10,740,000; whie in Southwest Mississippi the comparabe cost woud be $8,080,000. The tota in Southwest Mississippi woud be neary $2.7 miion ower. One way to express this cost in a manner comparabe to wages and other ongoing expenses is to spread it across a period of years, in a manner simiar to a mortgage. Even if the firm does not iteray borrow money from a bank, in effect it pays an opportunity cost for money that coud otherwise be invested or used profitaby esewhere. Based on a 6% interest rate and monthy amortization over 8 years, annua payments for the nationa-average faciity woud be $1,693,664. In Southwest Mississippi, this cost woud be $1,274,190. This amounts to an annua saving of neary $420,000 in faciity costs in Southwest Mississippi compared with the nationa average. Construction costs in Southwest Mississippi are about 78.4% of the nationa average. Southwest Mississippi The Pace for Meta Fabrication 13

16 COST-SAVING OPPORTUNITIES ENERGY COSTS Based on a review of simiar pants, the hypothetica meta fabrication pant considered in this study is assumed to have an annua average eectricity consumption of 30 miion kiowatt-hours with a 5 MW oad. According to the US Energy Information Administration, the nationa average cost for eectric power sod to industria users is $0.0655/kiowatt-hour (Eectric Power Monthy, data for February, 2010, It is thus projected that the nationwide average annua eectric power cost for a pant with these requirements woud be $1,965,000. Based on estimates from Entergy, which suppies eectric energy to much of Southwest Mississippi, the ikey rate woud be $0.0456/kiowatt-hour so the pant s tota annua average eectric energy cost woud be $1,368,000. Using these figures, a meta fabrication pant ocated in Southwest Mississippi woud save neary $600,000 per year in eectric energy bis. The natura gas consumed by this pant is assumed to be purchased from a broker or whoesae suppier, rather than directy from the oca gas company. The cost of such transportation gas is dependent on the spot price of gas at the wehead rather than oca tariffs, and so its variations are mosty not affected by ocation. In fact, Southwest Mississippi s proximity to major gas fieds and arge number of pipeines woud amost certainy resut in ower costs for a major user but no figure can be projected. TAXES The pant s iabiity for state and oca taxes is difficut to project. BFPC has made an approximation based on data from various nationwide surveys. Using an assumed nationa average base of one miion doars, the cost in Southwest Mississippi is projected to be $969,000, representing an annua saving of $31,000. SUMMARY OF COSTS The capita and operating costs associated with a meta fabrication pant as discussed on the previous pages, are summarized beow: Nationa Average SW Miss. Cost Item or Typica Pant Pant Wages $2,625,000 $2,050,000 Benefits 892, ,000 Amortization of Land and Buiding 1,693,664 1,274,190 Eectric Energy 1,965,000 1,368,000 State and Loca Tax Cost 1,000, ,000 TOTAL $8,176,164 $6,358,190 Index (Nationa Average = 100) Thus the tota of these seected costs in Southwest Mississippi is over 22% beow the nationa average for a comparabe faciity. A of these costs are before the appication of any incentives, so the savings potentia in Southwest Mississippi may be significanty understated. These costs are highy generaized estimates for a hypothetica meta fabrication pant. Most base data are derived from figures deveoped by the US Commerce Department and other governmenta agencies, industry organizations, and BFPC s experience with cients in this business. The overa finding is very compeing. Southwest Mississippi shows great promise as a ocation for meta fabrication pants, based on a wide range of cost and other advantages. More data about Southwest Mississippi and the region s advantages for your company are avaiabe from the SOUTHWEST MISSISSIPPI PARTNERSHIP Britt Herrin, President Post Office Box 83 McComb, Mississippi or Southwest Mississippi The Pace for Meta Fabrication 14