Boeing recently announced that they had chosen South Carolina as the location for a second production line for their 787 Dreamliner long-haul jet.  The Company current has a fuselage assembly and installation operation in South Carolina and this latest move will be a dramatic expansion of those capabilities.  According to Jim Albaugh, president and chief executive of Boeing Commercial Airplanes:

“This decision allows us to continue building on the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica”

Union officials in Everett Washington, the home of the current production line, were less than enthusiastic.  Union leader Tom Wroblewski said Boeing has:

“has betrayed our loyalty once again, walking away from our discussions.”

I guess you can’t please all of the people all of the time.  The Boeing announcement comes on the heals of the announcement by South Carolina that shipping giant Maersk has agreed to continue operations at the Port of Charleston (after announcing they would be leaving).  All in all, it’s been a great month for South Carolina economic development news.

Despite the economic woes in the National economy, Virginia is still landing soem big deals.  From REBusinessOnline:

RAYTHEON CORP. SIGNS 600,000-SQUARE-FOOT LEASE 
DULLES, VA. — Waltham, Mass.-based Raytheon Corp. has signed a 10-year, 600,000-square-foot lease with AOL for space in the company’s Pacific Corporate Park. Raytheon will fully occupy three buildings and lease half of a fourth building in the park, located on Pacific Boulevard in Dulles. The transaction involves a capital investment of $37.5 million and will create 100 jobs. Cathy Delcoco, Vicki Salamon and Terry Reiley of CB Richard Ellis’ McLean, Va., office and Rob Faktorow of the firm’s Washington, D.C., office represented AOL. Jones Lang LaSalle represented the tenant. 
     Raytheon had been looking to consolidate some of its Northern Virginia offices and plans on housing the company’s technical services company and intelligence and information systems unit in the property. The company will move into the buildings in three phases starting in 2010. The majority of the move will be completed in early 2011, with full occupancy expected by the end of the first quarter of 2011. “For the size of the lease, it moved quickly,” Delcoco says. “Both parties were motivated to close the transaction. Raytheon had some leases expiring and were contemplating a consolidation of several locations, and AOL had excess space due to rightsizing their Virginia campus.”
     This transaction represents a substantial commitment to the area in a time when most companies are in a holding pattern. “The lease is significant as it keeps a large user in Northern Virginia and gives a breath of fresh air to the commercial real estate market,” Delcoco says. “In today’s environment, the constant news is the difficulty in the capital markets and the lack of activity in the commercial real estate market. This is a positive commitment to the region.”

HEWLETT PACKARD RENEWS 800,000-SQUARE-FOOT LEASE IN VIRGINIA
SANDSTON, VA. — Hewlett Packard Co. has signed a lease renewal for 800,000 square feet of warehouse space in White Oak I Technology Park. The property is located at 7001 Technology Blvd. in Sandston. HP uses the property as a distribution center. N. Dean Meyer of Thalhimer’s Richmond, Va., office brokered the transaction.  

150,000-SQUARE-FOOT LEASE SIGNED IN VIRGINIA
DOSWELL, VA. — Diamond Hill Plywood Co. has signed a 150,000-square-foot lease for space in a Doswell warehouse. Terms of the lease were not released. The property is located at 17320 Washington Highway. Stephanie Sanker and Clay Culbreth of GVA Advantis’ Norfolk, Va., office represented Diamond Hill.

The Port of Charleston announced a new breakbulk/container service that will provide connectivity to several ports in the Middle East and India.  The “North America” service of the National Shipping Company of Saudi Arabia (NSCSA) will have a rotation that includes the ports of Jeddah, Jubail and Dammam in Saudi Arabia; Jebel Ali, United Arab Emirates; Mumbai, India; Port Qasim, Pakistan and Livorno, Italy.  

No indication was given as to the anticipated volume of the new service.  However, any win in this economy is a great win.  Keep up the good work Charleston!

This week defense supplier Sparta Composite Products announced that they will be building a $13.2 million plant in Suffolk, Virginia.  In association with this new facility, Sparta will be creating approximately 200 new jobs over the next 5 years.  The new plant will be 67,000 SF and will be located in the Northgate Commerce Park.  The Company also has plans to build an additional 87,000 facility in 5 years.  Prologis will construct the building for Sparta on the land it recently purchased in Northgate.  Prologis had intended to develop speculative product at Northgate, but with its recent financial issues had decided to halt all new development nationwide.  

The Richmond Times-Dispatch reported today that Tyson Foods, Inc. will be adding 180 jobs for a new processing line at its Hanover County plant.  Almost a year ago, Tyson announced the layoff of 190 employees.  The Company said it is pleased to be able to hire back most of the affected workers.  50 of the 180 workers have already been hired and the balance will be added over the coming months.  The plant currently has approximately 625 employees.

While I don’t have any inside knowledge of the Tyson Foods operation, I think this story may portend to what we will see more of in the US.  It appears that, prior to the new hires, Tyson found a way to operate its plant with fewer employees.  Basically, they increased their productivity and became more efficient.  It was only when they added a new production line that their hiring needs increased.  I believe that in the lean times, many more companies will find ways to be more efficient with their workforce – whether through technology or other means.  When the recovery comes, we may not need as many workers to accomplish the same level of production.  That speaks well for our national productivity, but would mean a longer more protracted job recovery.

Who knew it would take this long to update a website…  Anyway, the new and improved Moreland Advisors website is up and running.  Take a look and see what you think.  Comments and suggestions are always welcomed.  Next task is to get the Blog to have the same look and feel.

In a surprising economic announcement today, Retail Sales for January were up 1% over December.  This represents a 400 basis point increase over revised Decembers values when sale dropped 3%.   In addition, the results scorched the economists predictions of a 0.8% decrease, with some groups predicting a decrease of as much as 2.2%.  Even sales at auto dealerships and parts stores were up 1.6% after declining 16% in December.  Another interesting note in the report (especially for real estate practitioners) was a 2.7% increase for non-store retailers which includes catalog and Internet retailers.  If this trend holds true, we could emerge from this recession much less dependant on bricks and mortar stores and more focused on fulfillment centers.  

All in all, this is pretty good news.  Despite the positive results, economists continue to predict that consumer spending will decline going forward.  However, given their accuracy here, I’m not sure that means very much.  The economy still has a long way to go and this is a very good start.  Regardless of whether you are a Keynes and Friedman follower, you have to agree that the consumer spending will have to increase to help pull us out of the recession.  It looks like we are trying…

From the Traffic World website:

“Hanjin today announced net profits in 2008 more than doubled from the previous year to 321.4 billion won [$230 million] from $108 million despite a 39-percent drop in fourth-quarter earnings on slumping freight rates. While bulk shipping profits grew, container shipping earnings fell almost 20 percent to $64 million from $79 million in 2007.”

China gets much more favorable and optimistic stories in the news than the US does.  Recently, China’s Federation of Logistics and Purchasing announced the the country’s purchasing managers index (PMI) increased to 45.3 in January, up from 41.2 in December.  That represented a 9.95% increase in the manufacturing sector, although still less than the 50 that is inflection point for expansion and contraction of the sector.  So, north of 50 – expanding, south of 50 – contracting.  If you read the news articles surrounding the release, you notice that they focus on the fact that the number isn’t as bad as December and they talk of the recovery having begun.

This is in stark contrast to the US’s recent release of its PMI numbers – see story below.  The US soundly beat expectations, posted an improvement over December (8.21%) and the media could only focus on the fact that we were contracting and not expanding.  There may still be some pain to endure through this downturn, however, there are some bright spots.  You just have to look very hard in the traditional media to find them.

Keep up the good work China.  You make it and we’ll buy it.

According to the latest Institute of Supply Chain Management Report on Business, their manufacturing index (PMI) stood at 35.6% for January 2009.  This represents an 8.21% increase over the December 2008 value of 32.9%.  Economists survey by Thomson Reuters had projected the index to decline slightly to 32.6%.  In a more drastic jump, the ISCM “New Orders” index jumped 43.7% to 33.2% in January, up from 23.1 in December 2008.  It is important to note that a PMI value in excess of 41.2% indicates that the overall economy is expanding.  While the January numbers aren’t quite there yet, they are heading in the right direction.  If the economy were to continue the same month over month growth, we would exceed the 41.2% inflection point by March of 2009.

While we are still talking about the indexes declining, they are declining less than before and less than was expected.  This represents at least the second economic report this week where the economy has performed better than expected.  I doubt anyone foresees a “V” shaped recovery.  The slowing rate of decline could be an early indicator that we are finding the bottom of a “U” shaped recovery.