Southwest Mississippi THE PLACE FOR FOOD PROCESSING SOUTHWEST MISSISSIPPI PARTNERSHIP. Accessability

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1 THE PLACE FOR Southwest Mississippi FOOD PROCESSING SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity

2 Southwest Mississippi THE PLACE FOR FOOD PROCESSING Executive Summary Introduction Overview of Southwest Mississippi Area Description Historica Background Economic Deveopment Trends Business and Industria Investments Dedication to Deveopment Location Advantages for Food Processing Faciities The U.S. Food Processing Industry Why Locate a Food Processing 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 food processing pants. These assets resut from Southwest Mississippi s proximity to raw agricutura materias and other food resources, ow cost for energy and other needs, and presence in the argest and fastest-growing part of the US suppemented by exceent highway and rai network for shipments to markets. These assets have 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. Food Processing 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 neary 22% beow typica or nationa average costs for food processing 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 a dozen food processing pants are ocated in 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. The Bagey Schoo of Engineering at Mississippi State University provides food processors with a wide range of R&D and technoogy transfer assistance. About a dozen food processing pants are ocated in Southwest Mississippi, so there is much specific experience for companies to draw from. 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 food processing 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 food. Mississippi State University has made food science a major focus; this capabiity, aong with its Bagey Schoo of Engineering, provides food processors with a wide range of R&D and technoogy transfer assistance. In the Southwest region itsef are Acorn State University another institution with a ong tradition of assisting the food industry as we as Copiah-Lincon Community Coege and Southwest Mississippi Community Coege, which offer diverse business and industria training. Southwest Mississippi The Pace for Food Processing 1

4 EXECUTIVE SUMMARY Huge regiona customer base. The South is by far the fastest-growing region in the US in popuation, business deveopment, and purchasing power. Exceent transportation incuding access to major markets for food products. To the south, I-55 connects Southwest Mississippi with Louisiana; northward, it proceeds on to Memphis, St. Louis, Chicago and other popuation and market 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. 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 Food Processing 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 food processing pants. This report provides detais and makes a strong business case why companies in this important industry shoud consider Southwest Mississippi as the ocation for new and expanded production faciities. SOUTHWEST MISSISSIPPI PARTNERSHIP Accessabiity Southwest Mississippi The Pace for Food Processing 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 Food Processing 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 food processing 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: ocationone.com/(s(3meafz45gc3zvcfxwjarj45))/state- MainPage.aspx?type=state&profieid=MS-Mississippi. Southwest Mississippi The Pace for Food Processing 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 and other reevant discipines are offered by Mississippi State University and the University of Southern Mississippi, ocated about an hour east of the Southwest Mississippi region. Southwest Mississippi The Pace for Food Processing 6

9 Location Advantages for Food Processing Faciities Southwest Mississippi s counties comprise a unique and particuary attractive ocation for arger food processing faciities. This section begins with a concise review of business conditions and trends in the food processing industry. It then points out how Southwest Mississippi is we suited to serve this industry s ocationa needs. THE U.S. FOOD PROCESSING INDUSTRY Industry Overview. The US food industry, with neary 1.5 miion empoyees, is among the nation s argest production sectors. It generates around $550 biion of products each year and accounts for over 10% of the nation s manufacturing vaue. Besides the core food processing industry (defined as NAICS Code 311), the industry is generay considered to incude some eements of beverage manufacturing and the processing and handing of some nonfood agricutura products. The food industry is experiencing a transition from highy abor-intensive production conditions to more automation and use of sophisticated machinery, equipment, and systems. Machines have been invented to hande an amazing variety of processing tasks that previousy were done by manua abor that was often tedious, repetitive, and prone to injury. Major academic institutions such as Mississippi State University have engaged in research and deveopment, combining food science with engineering and other discipines, to bring new technoogy to the industry. Productivity per worker has risen substantiay, refecting greater capita investment. New processing technoogy produces higher quaity products, adds greater vaue, and serves new markets. It eads to greater energy efficiency, a greener, more environmentay friendy operation; and is a major contributor to the industry s abiity to process and deiver foods to the consumer more rapidy so that they are fresher. Specific exampes are described beow. Mississippi has been a eading food manufacturing state for decades, a roe which began due to its fertie agricuture. It ranks high in poutry production, whose market demand is increasing due to awareness of its high quaity protein and other nutrients and ower fat content. Other products incude beef, dairy, fresh vegetabes, soy, nuts, and rice. The traditiona southern stape, the sweet potato, is gaining new popuarity. Mississippi continues to be the nation s eading aquacuture state, a business which started by raising catfish and which is being extended to other seafood species. It has a more varied output than many states that produce arge voumes of a few imited commodities such as corn and wheat; the vaue of its products grew a striking 56% between the two most recent US agricuture censuses in 2002 and New processing technoogy produces higher quaity products, adds greater vaue, and serves new markets. Changes in Food Processing and Handing. A major current objective of technoogy is to provide consumers with foods that are protected and preserved to have a ong shef ife and, at the same time, are minimay modified from their natura state. New types of aseptic packaging systems contro bacteria and other microbes that cause food spoiage, prevent oxidation and deterioration, and so aow fresh fruits, vegetabes, juices, and some other food products to remain stabe for months. But it is aso critica for food processors to minimize the amount of packaging and to design their containers so that they are recycabe. In the past, food packaging has made up a arge component of trash disposed in andfis; food processors are under pressure to change this. For this stye of food processing to work, the entire ine must be designed and instaed to aow for extremey high sanitation. Southwest Mississippi The Pace for Food Processing 7

10 LOCATION ADVANTAGES This technoogy is most practica to estabish in new pants specificay intended for aseptic operations. Utrahigh temperature processing of dairy products and packaging in aseptic containers aows the product to remain fresh and stabe for months, without refrigeration. This is not ony a great convenience and a means to avoid wasting products, but can aso save energy that woud be used for refrigeration. Some consumers sti prefer cod mik in conventiona packaging but UHT processed mik and other dairy goods are used in many commercia products such as ice cream. Major technoogy improvements now aow for centraized processing of many fresh fruits, vegetabes, seafood, and other foods so that consumers and institutiona customers receive materias in ready-to-eat form without the need for on site work. In the past, it was difficut to pee and sice many fresh foods in a factory setting because exposure to air ed to an unattractive browning of the cut surfaces. Prompt insertion of the processed food in appropriate packaging, such as a vacuum or a pack with an inert gas such as CO2, prevents cosmetic changes that reduce attractiveness of the food. Technoogy aows food processing pants to be inked upstream with growers and producers so that processing operations are ready to hande materias as they come from farms; and assures that downstream ogistics providers are set up to deiver finished products. This heps dea with some of the most frustrating traditiona probems of food processing managing the irreguar fow of inbound raw materias, which wi aways be affected by variations in crop voumes and other conditions affecting production eves; and addressing changes in consumer and market demand. The use of such new approaches is not cheap. However, with food processing pants representing a rapidy growing capita investment, companies are becoming more attentive to ocating in areas which provide a stabe and profitabe business environment. This is one reason that Mississippi has proven an especiay appeaing state in which to construct new food processing pants. Whie US consumers seek foods that take ess time and effort to serve, they are aso more quaity- and nutrition-conscious. Market Conditions and Consumer Preferences. There have been arge shifts in demand for various types of food and agricutura products in the US. One of the greatest growth trends has occurred in demand for foods that require ess preparation by the consumer. This is based on widespread ifestye changes, such as greater participation in the workforce by famiy members who might previousy have had time to buy and prepare food. Products such as packaged fresh fruits and saads are finding terrific acceptance in the marketpace. Many other innovative concepts such as compete prepackaged meas in frozen or refrigerated form have aso proven popuar. But whie US consumers seek foods that take ess time and effort to serve, they are aso more quaity- and nutrition-conscious. They seek better products, with ess processing and fewer additives, ower fat and sat, more whoesome and heathy content, and with specia characteristics such as reduced carbohydrates or the addition of vitamins and mineras. There has been much diversification of foods sought by consumers, with ethnic foods an especiay prominent growth fied. (Not ony are there expanding ethnic popuations in the US, but mainstream consumers often enjoy new foods.) Customers seek greater variety in their foods, which eads to markets for spices and favorings. Food is an area where peope fee comfortabe treating themseves occasionay they may not be abe to buy a new car but they can buy a high-end saad dressing. Gobaization and Import/ Export. A significant part of food produced in the US is exported, accounting for over $100 biion per year, second ony to capita goods, and is one of the fastest-growing US exports. In food and agricutura commodities, the US runs a heathy trade surpus; so foods comprise a vita part of the nation s economy. As other countries deveop, they seek the high-quaity, high consumer-appea food products grown and processed in the US. This has been a cause of growth for US-based food processing corporations. Southwest Mississippi The Pace for Food Processing 8

11 LOCATION ADVANTAGES At the same time, the exceent business cimate and market opportunities here attract substantia investment from overseas. Many of the argest food manufacturers in the US are part of corporations headquartered outside the US such as Swiss giant Neste and Begiumbased InBev (which acquired Anheuser Busch in 2008). Interestingy, significant US-based expenditures by our neighbors in North America, Canada and Mexico, have occurred, both as direct investment in manufacturing faciities and in acquisition of existing US companies. The United States continues to be one of the most effective and east expensive of the industriaized nations in which to conduct manufacturing activities. The need to compete on a goba basis puts new pressures on food processing companies. Food pant criteria such as productivity and profitabiity are scrutinized against demanding performance standards. Astute managers reaize the importance of siting production faciities in a business environment which supports a high eve of economic achievement. Mississippi s ongstanding assets as a food processing state are receiving new attention. Business Opportunities. Rapid growth of the restaurant business and institutiona food service has created the need for food items prepared in a centra kitchen. These faciities send food items to individua stores, restaurants, schoos, hospitas, and workpace cafeterias in refrigerated, frozen, or other stabiized form for fina preparation and serving or sae. The faciities receiving such products can then serve a hot, recenty cooked, high-quaity mea without the need for a major kitchen or speciaized cooking skis on-site. This approach aows more efficient use of staff time, assures higher and more consistent food quaity, aows serving a variety of foods, minimizes waste, and assures adherence to a company s particuar stye and branding. Another trend providing markets for processed agricutura products is their use as an input to new biotechnoogy production. Emerging Food Sectors. Severa eements of the food processing business have become important ony within the recent decade or so. The interreationship between food and heath has been generay known for thousands of years but not understood or utiized fuy. Increasing consumer awareness of heath benefits from foods and natura suppements has ed to increase in markets for food products caed neutraceuticas. These products may provide heath or medica benefits in a more natura state or be enhanced to increase a given food s content of desired nutritiona components. They are beieved to enhance the body s abiity to resist and prevent disease, combat some heath conditions, and avoid probems and side effects sometimes caused by medicine. Many are surprised to earn that the demand for food for pets and companion animas has risen even faster than most foods for human consumption. In the past, there was a smaer market for this product because many pets were simpy given eftovers from their masters meas. This was not aways optima for their heath, however; and as the importance of pets in American society increases, market for foods produced expressy for them has increased. The average wage for anima food pants is one of the highest in the entire food processing industry, over $60,000 per year more than in breweries. Another trend providing markets for processed agricutura products is their use as an input to new biotechnoogy production activities incuding pharmaceuticas, chemicas, fues, and other appications.. Consequences for Food Processing Pants. Mississippi has been one of the nation s most active states in deveopment of new food processing pants, for severa reasons described in the foowing section. Southwest Mississippi The Pace for Food Processing 9

12 LOCATION ADVANTAGES WHY LOCATE A FOOD PROCESSING PLANT IN SOUTHWEST MISSISSIPPI? Southwest Mississippi is particuary we suited as a ocation for food processing pants. 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 food processors in the midde of the fastest-growing part of the nation. The region from Texas to the Southeast ranks highest in expansion measured by demographics, economic deveopment, purchasing power, and other key indicators of market strength. Mississippi and other parts of the South aso rank among the highest in the US for growth of purchasing power; food is one of the chief areas where famiies tend to spend increased income. Distances are approximate. Shipment of finished products is one of the argest cost items for KS food processors. After foods have been made ready for the consumer, Kansas City MO they often have a short OK AR shef ife and must be moved prompty. Many, such as frozen or refrigerated foods, must be kept in specific conditions in transit. Some, such as cereas have ow density and fi up a truck or raicar with their buk before they reach the maximum weight; this imbaance means that shipping them is expensive. Food products often require significant protective packaging to protect the contents and keep Daas T X LA the finished items cosmeticay in good shape picky shoppers may not buy food products if the package appears damaged M I L E GULF OF MEXICO S Southwest Mississippi especiay is we-served for outbound shipping of food products. The presence of Interstate Highway 55 and a major CN Raiway ine make up an important transportation advantage, reducing cost and time of shipment. No part of Southwest Mississippi is farther than a one to two-hour drive from a commercia airport. Within the ten counties are severa genera aviation airports capabe of handing 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). Avaiabiity of Agricutura Raw Materias. Southwest Mississippi is we positioned to obtain a wide variety of foods in a raw state ready for further processing. MS IL 98 TN Mississippi is one of the nation s most productive agricutura states, with an annua vaue exceeding $5 biion. It is the nation s fourth-argest corn growing state and aso ranks high in rice, soybeans, vegetabes, and other crops. It is a eading poutry producer and significant source of other meats. Mississippi virtuay created a new aquacuture industry, transforming catfish from a food randomy avaiabe according to ski and uck to a major source of heathy, owcost, high-nutrition vaue meat. Southwest Mississippi is especiay proific and saw a 72% RAIL increase in the vaue of its agricutura production between the two most recent US Censuses of Agricuture in 2002 and Southwest Mississippi s Watha County, known as the Cream Pitcher of Mississippi, is the state s primary mik producer. KY AL Atanta FL Southwest Mississippi The Pace for Food Processing 10

13 LOCATION ADVANTAGES Southwest Mississippi is aso we positioned to receive and process many foods from overseas. It is within a few hours truck drive of New Oreans and other deepwater ports on the Guf, and has barge access from the Mississippi River; so many imported raw food materias are easiy accessibe. Avaiabiity of Good Peope. Southwest Mississippi is better prepared than many other ocations to offer we quaified empoyees to a new or expanding food processing 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 a dozen food pants are distributed throughout Southwest Mississippi, totaing hundreds of empoyees, so there is much existing specific experience from which companies may draw. 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. Mississippi has made economic deveopment a priority. 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 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 Southwest Mississippi The Pace for Food Processing 11

14 LOCATION ADVANTAGES 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. One of the chaenges specific to construction of food pants has been the physica setting and environmenta permitting. Some pants have conditions such as high waste water BOD that have made them difficut to site. Southwest Mississippi is we prepared with appropriate sites and infrastructure. The state s Department of Environmenta Quaity has estabished a one-stop process to speed the permitting process. Mississippi has proven itsef a hospitabe and successfu ocation for major food processing pants. The presence of gobay known food-reated companies in the state such as Sanderson Farms, Land O Lakes, Sara Lee, and Tyson iustrates its attractiveness for this important industry. Utiities, energy, and industria support services ikey to be needed by a food processing faciity are in pace in many areas. 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 food processing 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. 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 food processing pant in Southwest Mississippi can possiby save neary 22% reative to the US average for the industry. In the particuar mode, this savings amounts to we over $3.5 miion. This asset is so important and compeing that it deserves more detai, which is provided in the foowing chapter. Industria property is avaiabe in a ten counties of Southwest Mississippi. Southwest Mississippi The Pace for Food Processing 12

15 Cost-Saving Opportunities Southwest Mississippi offers food processing pants the potentia for a neary 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 food processing faciity in Southwest Mississippi and then compares them with nationa average or typica costs for simiar pants. This hypothetica pant consists of a 100,000-square foot buiding on a site assumed to be 20 acres and is assumed to empoy 100 personne. It eectrica energy consumption is assumed to be 20 miion kiowatt-hours per year, with a 3 MW oad, based on simiar pants in this industry. PERSONNEL The nationa average annua pay for a modern food processing pant is estimated from various pubic and private sources to be about $39,000. It is estimated that a simiar poo of empoyees coud be hired in Southwest Mississippi for an average of $31,500. 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 100 empoyees in Southwest Mississippi woud be $3,150,000, whie the nationa average woud be $3,900,000. Benefits are estimated to cost an additiona 34% in both cases, annuay costing $1,071,000 in Southwest Mississippi and $1,326,000 in the nationa average pant. Therefore the tota annua personne cost in the hypothetica Southwest Mississippi production pant woud be $4,221,000 and in the nationa average pant $5,226,000. On this basis, a food processing pant ocated in Southwest Mississippi coud save its owner over a miion doars per year per year in staffing costs. BUILDING AND LAND On a nationa average basis, construction of a food processing pant woud probaby cost $100 per square foot. This is for the basic structure and does not incude any equipment, nor does it incude the specia interiors required for good manufacturing practices in some types of food pants. A buiding of 100,000 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 here. 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 one-haf 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. Thus 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 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 a saving of neary $420,000 per year 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 Food Processing 13

16 COST-SAVING OPPORTUNITIES ENERGY COSTS Based on a review of simiar pants, the hypothetica food processing pant considered in this study is assumed to have an annua average eectricity consumption of 20 miion kiowatt-hours with a 3 MW oad. According to the US Energy Information Administration, the nationa average cost for eectric power sod to industria users is $0.0679/kiowatt-hour (Eectric Power Monthy, data for March, 2010, It is thus projected that the nationwide average annua eectric power cost for a pant with these requirements woud be $1,358,000. Based on estimates from Entergy, which suppies eectric energy to much of Southwest Mississippi, the ikey rate woud be $0.0478/kiowatt-hour so the pant s tota annua average eectric energy cost woud be $956,000. Using these figures, a food processing pant ocated in Southwest Mississippi woud save over $400,000 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 food processing pant as discussed on the previous pages, are summarized beow: Nationa Average SW Miss. Cost Item or Typica Pant Pant Wages $3,900,000 $3,150,000 Benefits 1,326,000 1,071,000 Amortization of Land and Buiding 1,693,664 1,274,190 Eectric Energy 1,609, ,000 State and Loca Tax Cost 1,000, ,000 TOTAL $9,529,164 $7,420,190 Index (Nationa Average = 100) Thus the tota of these seected costs in Southwest Mississippi is neary 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 food processing 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 food processing 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 Food Processing 14