The Economy of Savannah

Morrison Marketing
Michael Morrison
City Profile Report
Savannah, Georgia
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Letter from Author

     Savannah, Georgia is a special place to me because I spent 6 months there when I was 16. I had the perfect chance to see the pre-housing bubble Savannah economy and compare it to Augusta. Overall Savannah wins in many more economic categories than Augusta does, I went back to my city knowing that we had to step our game up to compete with a great city like Savannah. 

     I was baffled that the city was as small as it is, the good location, affordable living and vibrant culture seemed to be a magnet that would pulled together more than the approximate 140,000 citizens of Savannah proper. 

     I felt that our two cities are very linked, not only through business manners but through culture. 200 years ago Augusta, Savannah, Columbia and just about all the cities that I have written about were rural southern powerhouses for planters with a similar city design and culture do to slavery, the hot weather, similar Scottish/Irish/Anglo migrants and close proximity. 

     Since the days of the divergence of the similarity of the southern Economies  Savannah has been leading the race for cities in its size. Their is no equal in the nation for turning from an agricultural based economy to a mixed one we see today. 

     Savannah will bloom and emerge further as the markets and business in Georgia becomes more refined and more divided. Savannah is an attractive place for people and business, it shall enjoy a good front on its economy, any problems I think need addressing are the ones beyond these simple economic measures and information in this report. Savannah has a true shot at being the largest port in America, the most popular tourist destination on the Atlantic coast and to be a Hollywood of the south. 

      My regards goes to the city, not only as another human, citizen of America or as a formidable competition for my own city, but as a sister city of my city. You can compete and be family at the same time. We also all end up bringing that money home to Georgia and that is a direct benefit off of our competition. Let us go out in the world and dominate, let Savannah become the gem it can, let it go from gold to diamond, from little leagues to large and more so in the circles of the 21st century. 

     Sincerely, 

Michael Morrison
Morrison Marketing, President
Augusta, Georgia, United States
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The Economy of Savannah- Intro

     Savannah as a city is a popular tourist destination, an economic port town and has a brand as a “Cool City” that Augusta can only envy. Savannah is a little smaller than Augusta in city size, but the city is much denser than Augusta. Savannah has an established economy around the port of Savannah, the 4^th busiest port on the East Coast with tourism being a good stimulating and seasonal factor.

     Savannah is the oldest city in the U.S. state of Georgia, and the county seat of Chatham County. Established in 1733, the city of Savannah became the colonial capital of the Province of Georgia and later the first state capital of Georgia. A strategic port city in the American Revolution and during the American Civil War, Savannah is today an industrial center and an important Atlantic seaport. It is Georgia's fifth-largest city and third-largest metropolitan area.

(The Intracoastal Waterway is a 3,000-mile (4,800 km) waterway along the Atlantic and Gulf coasts of the United States. Some lengths consist of natural inlets, salt-water rivers, bays, and sounds; others are artificial canals. It provides a navigable route along its length without many of the hazards of travel on the open sea)

     Each year Savannah attracts millions of visitors, who enjoy the city's architecture and historic buildings: the birthplace of Juliette Gordon Low (founder of the Girl Scouts of the United States of America), the Georgia Historical Society (the oldest continually operating historical society in the South), the Telfair Academy of Arts and Sciences(one of the South's first public museums), the First African Baptist Church (one of the oldest African-American Baptist congregations in the United States), Temple Mickve Israel(the third oldest synagogue in America), and the Central of Georgia Railway roundhouse complex (the oldest standing antebellum rail facility in America).

     Savannah's downtown area, which includes the Savannah Historic District, the Savannah Victorian Historic District and 22 park like squares, is one of the largest National Historic Landmark Districts in the United States (designated by the U.S. government in 1966). Downtown Savannah largely retains the original town plan prescribed by founder James Oglethorpe (a design now known as The Oglethorpe Plan). Savannah was the host city for the sailing competitions during the 1996 Summer Olympics held in Atlanta.

     There is a good amount of hotels, especially in the suburbs and the city is a very affordable vacation location. The Hotels help the city build its infrastructure, public services (beyond the extra cost of tourism; police work, hospital visits and depreciation of roads and public facilities.

     Savannah has a good position for Highways with I-95, the busiest corridor in America, and I-16 running either through or near to most of Metro Savannah. The highways leading into Savannah are increasingly industrial with the port deepening, manufacturers taking up business in the state in general and an increasing American economy.

Franklin Square



Ellis Square



Johnson Square



Warren Square



Washingotn Square-



Telfair Square



Wright Square-

Oglethrope Square

Columbia Square-

Greene Square-

Orleans Square-

Chipewa Square-

Crawford Square-

Pulaski Square-

Madison Square-

Lafayette Square-

Troupe Square- 

Chatam Square

Monterey Square

Calhoun Square

Whitefield Square-

Forsyth Sqaure

Colonial Park Cementary

Private Sector

COMPANY	Country	Description
BASF	Germany	Chemical- Manufacturer
Coby Electronics	China	Electronics - Warehousing
DIRTT	Canada	Movable internal walls- Manufacturer
Douglas Brothers of Georgia	Canada	Fabricated Structural Metal Manufacturer
EFACEC	Portugal	Power Transformer - Manufacturer
EMD Chemicals	Germany	Chemical- Manufacturer
Fuji Vegetable Oil Co.	Japan	Vegetable Oil Manufacturer
IKEA	Sweden	Commodity & Merchandise- Warehousing
JCB, Inc.	UK	Excavating Equipment- Manufacturer
Kerry Ingredients & Flavours	Ireland	Food Processing
Lummus Corporation	Switzerland	Cotton Ginning Equipment- Manufacturer
Maersk Sealand	Denmark	Public Finance Activities
Mitsubishi Power Systems	Japan	Gas Turbine Manufacturer
Mitsui-Soko	Japan	Electronics - Warehousing
Nippon Express USA, Inc.	Japan	Freight Forwarding
Noritake Co., Inc.	Japan	Warehousing & Storage
Oracal USA	Germany	Adhesive Film - Manufacturer
Vopak	Netherlands	Public warehousing
Wallenius Wilhelmsen Logistics	Norway	Transportation and Logistics

Military

     Savannah also has military installations, like most Georgian cities over 100K. Fort Stewart and Hunter Army Airfield bring about 1.4 Billion dollars to the Metro economy according to the Savannah Chamber of Commerce. Hunter Airfield has the longest runway in the military and is an alternative landing spot for NASA. For Stewart has infantry troops (3^rd Division) and can deploy troops readily in event of war to any place in the world, but specifically to Africa, South America or the Northeast United States itself. 

Savannah's metro has over 27,000 soldiers based in Fort Stewart and hunter Airfield  This serves as a diversified mix to the economy, with military expenditures not being cut immediately in a recession and gives Savannah a growth catalyst in the event of war. This many troops ready to rock and roll around South America or Africa (2 places that Fort Stewart is geographically poised for). This many troops brings families and friends. This brings people from all over America to Savannah, many of whom would never have lived int he South, had it not been for Fort Stewart and the military  I think of a young boy in Boston signing up, being assigned to Fort Stewart, telling his wife and child and to pack their bags, and moving the economic benefits of the family to Savannah. Think of the bank accounts, the car purchases, grocery shopping and such.

The indirect employees of the military presence in Savannah through Federal Civilian employees is large itself at about 5,000. This experience and expertise in the world of military affairs provides a great diversification and competitive advantage over competing cities labor pools. The clearance levels, discipline, clean drug and background checks and solid credit are some of the most attractive features of a large military presence like this. The amount of fighting the US has participated in for the past 10 years has provided a surplus of active duty veterans, whom are crucial for high security jobs and on another unforeseen and untold note, for defense in event the city is attacked, their will not be a bunch of stumbling babbling citizens approaching slaughter, but a well oiled machine of discipline. 

The indirect benefits of infrastructural upgrades, Construction on base and connection to the world through a military base are all seen in Savannah also. The economy of Savannah is very strong and the military presence is probably the single most important large entity (The port is a much simpler idea and is the largest single aspect, I think). The linkage between the local community and the Fort is stronger here than many other competing cities, like Columbia, Augusta and Macon. Savannah is more comparable to Columbus, Georgia, North Carolina itself and especially Fayetville, NC. 

Manufacturing

     The current manufacturing base in the Savannah MSA stands at approximately 14,600 members strong. With annual earnings of about $70,000, the anticipated job creation notably will contribute to the overall health of the region’s economy.   

(The Gulf-stream aerospace factory. This model is a luxury jet to be sold to some high end Chinese consumers)

     Gulfstream delivered its first large-cabin, long-range G650 business jet. This premium jet is the fastest certified civilian aircraft in production and demand is expected to be strong in 2013, as evidenced by the five-year, 200 order backlog.  Additionally, Gulfstream delivered its first G280 in 2012, thus paving the way for additional growth in 2013. Mitsubishi Power systems delivered its first commercial gas turbine from its facility at the mega-site in Pooler. Given the recent surge of strength in the natural gas market as a source of energy, demand is expected to be strong in the utility industry for the plant’s output. Effingham County’s EFACEC plant delivered the first shell transformer constructed in the U.S. in 20 years. Given a multimillion dollar order for 20 transformers, the plant is expected to be busy throughout 2013. Strong financials in the North American market for JCB, boosted primarily by 17 versions of skid-steer loader produced at the Savannah plant, has resulted in the recent recruitment of 300 workers at the plant. Further, in an effort to develop labor skills in high demand, JCB established an apprenticeship program that is expected to grow into a 100-person-a-year pipeline for the manufacturer. 

Company	Product/Service	Employment	Union Affiliation
Gulfstream Aerospace Corporation (Direct & Contract Workers)	Jet aircraft, aerospace equipment	8,406	none
International Paper	Paper products, chemicals, corrugated containers	650	USW, IAM, BBF, IBW, PPF
JCB Americas, Inc.	Construction equipment	558	none
Imperial Sugar	Refined Sugar	450	none
Brasseler USA, Inc.	Dental Instruments	400	none
Mitsubishi Power Systems Americas, Inc.	Gas turbines and steam turbines used by power plant	315	none
Weyerhaeuser	Bleached pulp	300	none
Derst Baking Company	Bread, rolls, cakes	275	none
Diamond Crystal Brand	Salt, Pepper, Sugar Packaging	250	none
Roger Wood Foods	Smoked sausage and meats	220	none
Kerry Ingredients & Flavours	Formulation, manufacture, & containerization of technology-based ingredients, flavors & integrated solutions	200	none
Savannah Morning News	Information company - paper and pixels	200	none
Arizona Chemical	Specialty Resins & pine-based chemicals	175	USW, PPF, IBEW, IAM, BBF
EMD Chemical	Industrial Pigments	154	none
Oracal, USA	Adhesive film	137	none
Coastal Concrete SE, LLC	Ready mix concrete	125	none
Intercat	Catalyst production	120	none
GAF Materials Corporation	Residential and commercial rolled roof manufacturer	113	IAM, USW
Fuji Vegetable Oil, Inc.	Cooking Oils	105	none
DIRTT Environmental Solutions	Modular internal walls for residential, commercial and industrial buildings	100	none

SEDA, January 2013

      Manufacturing employment in the region has experienced a substantial decline since peaking in
1998. Employment fell fairly steadily from the peak level of 17,500 workers in 1998, except for
the recession of 2001 that briefly accelerated the losses into 2002. Before stabilizing again
during the nation’s period of the “jobless recovery,” the sector shed 4,000 workers or nearly 25
percent of its total job base.

     regional manufacturing industry has declined while non-manufacturing
industries have experience solid growth. Yet, despite its decline in recent years, manufacturing has
become more closely integrated with the region’s non-manufacturing sectors since 2001. In some
respects, manufacturing’s overall role in the economy has increased despite its recent loss of jobs.

the benefits of maintaining a healthy manufacturing sector are substantial. Manufacturing’s
economic ripple effects spread through the entire regional economy creating opportunities in
services, construction, distribution, retail, finance, insurance, real estate, and more. Manufacturing
businesses also support state and municipal governments through their tax payments.

Economic activity associated with the manufacturing sector produces both direct and secondary
impacts in the Savannah area economy. Direct impacts are the results of activity within the
manufacturing industry itself. Secondary impacts are commonly referred to as ‘ripple’ effects,
and can be both indirect and induced. Indirect impacts arise from supply linkages in the regional
economy. The indirect impact arises as local companies provide inputs to manufacturers and as
these suppliers buy their own inputs from other local businesses. multiplier of
2.5. The multiplier indicates that every ten jobs in manufacturing support fifteen other jobs in the
region.

Two historically important manufacturing
sectors in Savannah, Transportation
Equipment and Paper Manufacturing,
account for the majority of the direct
employment impact

Port of Savannah/Logistics

(The Port of Savannah)

     The Port of Savannah is the hottest construction/infrastructure plan in Georgia right now. The Port itself was showing massive growth averaging 16.5% in 2000-2005, the fastest growing in the United States. The depending of 5 feet may not seem much, but it is crucial to supertankers carrying goods, whom need at the minimum the high 40’s for feet. The Port of Charlestown, Port of Jacksonville Port of Brunswick, Port of Columbus and Port Bainbridge (The last 2 are in-land ports) will not be able to compete on supertankers if the plan goes well. It is important to think f the Ort of Savannah as the large port it is, most of the terminals break down millions of units of products that go to wholesalers or directly to the other “Mega-logistics” centers like Wal Mart, Target and Walgreens.

Company	Product/Service	Employment
The Home Depot	Home improvement supplies	193
Dollar Tree Stores	Assundry product distribution	271
Coca-Cola Bottling Company United	Soft drink/water bottling warehouse	211
Target	Assundry import center	170
Pier 1 Imports	Household goods	150
Schneider	Warehousing, distribution, export packaging	90
CalCartage	Warehousing for K-Mart	140
Chatham Steel Corporation	Steel service center	120
IKEA Wholesale Inc.	Furniture distribution	95

SEDA, January 2013

     Many of the items you buy daily come from the Port of Savannah. Most of the new routes with the Port of Savannah are in Asia, due to increasing economies in the East, and an increase in direct trade with America and these countries (All of SE Asia is a port now basically). The Port of Savannah is seen as a good destination for many manufacturers who want to be central to their European and American markets for shipping. The car industry has a very strong and more spread out presence in the south. Shipping the final car out brings the massive container shipping while receiving supplies will bring smaller more specialized shipments.  

     Savannah also has the 2nd busiest airports in Georgia and one of the fastest growing in the Southeast. The benefits of being connected into the Atlanta air network of routes and other hops with the low cost and lack of congestion makes this a very attractive airport and will improve its contribution to the economy of Savannah by making travel more efficient and bringing more exposure of Savannah to the hundreds of millions of people flowing to and fro from the East Coast and to the East Coast. The airport is trying to increase its air cargo by making processing time as low as possible and exempt from duties and tariffs. This will place Savannah in the logistical connection of Atlanta, Memphis, Miami and Richmond we see now.  

     Savannah invested into railroads early and benefited greatly, the amount of rail will increase with the port of Savannah being the importing location of many goods from Europe, South America and Africa. The movement by rail is very efficient for many of the unrefined products and this allows Manufacturers who wish to use Savannah's logistical system have the cheapest and most abundant ways of linking their products and their markets. The only thing left to do it to focus on retailing the product. 

     The connection to I-95 is also a strong force for transportation. For many goods that are ready to go to small warehouses, the retailers themselves or to a harder to reach area will need to employ 18 wheelers to move their goods. Geographical position is an advantage that cannot be formed, but capitalized on, which Savannah is doing well in.  Savannah has many logistical awards from magazines and other industry affiliates and future investment into this system seems to be attractive both in investing directly or providing finance in. 

(Savannah offers a diverse portfolio of real estate options consisting of developed sites, parks and buildings as well as greenfield property)

     Savannah, like nearby Augusta, Atlanta, Macon and Columbia, all have crime and poverty problems. This is a much longer term trend. Much of the populations of these cities are black and this slice of America has relatively low incomes. The lack of a culture for education, systematic barriers to poverty (not even accounting for racism on both sides) and a sometimes corrupt local government hinder the development of these cities. The low income affects the purchasing power of the local neighborhoods, starves retail and disallows an economy in and of itself of the city. The reliance on the Federal Government and the State for money has shown to be a failing strategy as the budget cuts proposed in Washington approaches reality.  

The growth we have seen have been despite that in Savannah and the culture seems to be more accepting, tolerant and diversified since becoming increasingly important in the world economy. Savannah is a great companion to Augusta and plays a great role as a tourist destination, beach city and cultural gem for the state of Georgia. I think their economy is very strong and will grow at least at the average pace of Augusta going forward.

Government

(Savannah City Hall)

Housing

     Housing in Savannah reflects architecture styles form all of the European powers. The city is a major port of the South and is receptive of cultures coming from other destination ports such as the Caribbean, Africa, South America and some European cities, but much less so than the northeast ports. The mix of Savannah architecture can be bets compared with other Southern Jewels, like Charleston and New Orleans. the housing stock in the city is in a good balance. The amount for an average home in Savannah is affordable by the median income of a Savannah resident and there is a plethora of choices for where to live, and in what style. 

     Apartments are in Savannah, largely for the military presence, port/construction workers and traveling businessmen. The average rent in Savannah is quite low compared to the national average, and must be incomparably low compared to other cities with such a standard of living and on the prominent East coast Corridor. Savannah has achieved this through the low regulations/tax structure of Georgia as a state economy, its position as a point of transport and in its unique appeal of culture. 

(Left-to-Right-The Andrew Low House, an example of Italianate Architecture, Owens Thomas house, an example of Regency style architecture, the Pink building, an example of Georgian architecture)



(Left-to-Right- Davenport house, an example of Federal architecture style, Champion fowlkes house, an example of Greek Revival Architecture)

Retail



(The Mall of Savannah)



Higher education

     Savannah is not necessarily a college town. There are a couple universities and 2 year colleges, but the main college noted in Savannah is the SCAD, Savannah College of Art and Design. This school is internationally known and is a dream to get into for many aspiring art students. The business and courageousness of the school reminds me of Italian art workshops or academies in the Renaissance. Art is very important in Savannah and this college is a result and cause of that. 

     This draws international kids from all over the world and places its part in that for benefiting the country as a whole. The top scientists may be taught in Boston, New York or Atlanta, but the best art students come from colleges like the SCAD. They are not affiliated with many other schools and have a very high degree of autonomy in their teachings. The icon of the school adds to the vibe of the city and makes it more than a bland city of cheap tourist spots lingered on the beach and dirty industry, which many of the smaller cities North and South of Savannah deal with. 

     Many kids who live in Savannah will leave to go to school, some may not return, but many will. The city of Savannah is not necessarily strongest in this sense, and it does not look to be growing. I recommend Savannah to concentrate on some other areas of their economy to achieve a higher state of growth. The higher education center here in not be overexerted, it is not very robust. On another note, they are making great use of the little there is present in Savannah. 

     To make a comparison, there is Raleigh, North Carolina, Atlanta. Georgia and Charleston close to Savannah and with a much better academic environment to foster scholarship and a liberal arts education.

Tourism

Savannah is a party city. There is no other way to put it. The youth, alcohol and hot weather is the recipe of a good time. to walk down River Street and smell the crisp southern air, shop at very affordable hotels and shops and to gaze at the architecture all day is a common occurrence. Tourists come to Savannah as a tourist spot for the natural love of the beach and the tourist developed land that is Tybee Island. The separations from other tourist spots is in a pristine beach, a medium sized city and a strong infrastructure in place for the travel and accommodation of such sector. 

Savannah draws much revenue from the hotel room taxes, the gasoline bought in Savannah and in sales tax. The city has to be careful to spend the money it draws from the tourists in good care. To have tourists brings other inconveniences also. The strain on police, medical staff and other public services can bankrupt a city. Savannah does very well, it seems their streets are clean, police are present and their is a sense of actually getting things done, not politicking. Savannah has a good entrepreneurial spirit, this keep the governments work in developing tourism limited and in hands of the developers and investors. This has allowed Savannah to react much more dynamically than other cities, whom have a much more direct presence in stimulating tourism, like Los Angeles and New York.

The cheapness of the Savannah market is also a strong magnet for tourists. The malls in Savannah sell the same Levis that are sold in New York, but at half the cost. The low cost of operations extends into this market and brings shopping tourists, one of the best for the city, as they spend a lot of money, while consuming very minimal resources. This category of customer will see the fastest growth in Savannah, due to Chinese, Arabian and South American emerging consumers. They will love to come and see a Southern gem and pick up some American fashion or whatever other advanced and diversified sectors of the economy. 

     

(The Bohemian Riverfront in Savannah)

     2008 yielded Savannah 6 millions visitors, who spent almost 2 billion dollars. This brings the number of people employed in hospitality (This is SEDA's version of classifying tourism, I am using a slightly different term, but not a major difference, the words could be synonymy) up to 20,000. This is very important to the lower income citizens of Savannah, as they meet the low qualifications of these jobs and it gives them a step into the higher rungs of the job in Savannah. Having a good tourism sector will allow that economic mobility ladder to add a notch on the lower side, it stops at minimum wage, which Savannah is also in an advantage to other Northeast and Midwest cities in the cost of living in Savannah. So Savannah has more tourism jobs than many cities, Lower costs for those citizens, a lax attitude to tax on local and state levels for those citizens. This reinforces the sector, making the workers more productive relative to others due to increased satisfaction from compensation. You will have less workers in 2 jobs in Savannah due to the circumstances already outlined, another contribution to the sector in general.  

The Government 

Company	Product/Service	Employment
Savannah-Chatham County Board of Education	Public school system	4,781
Ft. Stewart/Hunter Army Airfield	Military/civilian personnel	3,200
City of Savannah	Government	2,500
Savannah College of Art and Design	Education	1,457
Chatham County	Government	1,356
Armstrong Atlantic State University	Education	1,277
Georgia Ports Authority	Ship terminal operation	860
US Army Corps of Engineers	Civil engineers	598
Savannah State University	Education	450
Georgia Department of Labor, Fourth Quarter 2006 Company Product/Service Employment Ft. Stewart/Hunter Army Airfield Civilian personnel 4,637 Savannah-Chatham County Board of Education Public schools 4,808 City of Savannah Government 2,795 Savannah College of Art & Design* Education 1,750 Chatham County Government 1,600 Georgia Port Authority Ship terminal operation 988 Armstrong Atlantic State University Education 602 US Army Corp of Engineers Civil Engineering 600 Savannah State University Education 586