Outlook positive for S.C. manufacturing

By the end of this summer, construction on the expansion of the Panama Canal will be under way, as major excavation is already well along. Southeastern ports are direct beneficiaries. Expansion at Charleston and Savannah along with the construction of the new port on the Savannah River in Jasper County breeds optimism and growth in S.C.'s manufacturing and export outlook.

As BMW's Greer plant expands to make 200,000 vehicles a year, and as Boeing appears focused on North Charleston for its new second assembly line for the 787 Dreamliner, S.C. promises wealth growth for the next few generations.

In addition, on Monday, July 6, CT&T Korea Ltd. was reported in The Greenville News to be looking at five states, including South Carolina and Georgia, to locate its corporate, manufacturing, and R&D facilities, where they would employ 2,600 people.

In the turmoil among Detroit's Big Three, S.C. as a home to automobile manufacturing looks attractive for relocation strategies. Michigan and Ohio still produce about 38% of all cars and trucks in the U.S., but four Southern states put out 24% of U.S. production last year.

Michigan and Ohio taxes, union work rules, and distances from the Atlantic Ocean add up to reconsiderations of what makes for ideal automobile manufacturing sites. Kia of Korea is opening a $1 billion plant in West Point, Ga. next year.

On the eastern end of Tennessee in Chattanooga, still a respectable short throw to Atlantic ports, Volkswagen is building its $1 billion, 2,000- worker plant due to open in 2011.

But, again, the glowing outlook is tied to the expansion of the Panama Canal, which will allow Far Eastern goods to bypass the California coast and its connecting railroads and highways for a cheaper approach to the eastern U.S., the way through the Panama Canal. And the reverse route for American made goods also looks forward to the expansion of the Panama Canal.

On Friday, July 14, 2006, the National Assembly of Panama approved a canal expansion proposal, including a third set of locks, all for $5.25 billion. In October of that year, the people of Panama approved the plan in a national referendum by almost 77% of the vote.

Two major integrated components compose the canal expansion project:

(1) Two lock complexes are being built, one on the Pacific side and another on the Atlantic side.

(2) New access channels are to be excavated while existing navigational channels are widened and deepened.

The under- sized Panama Canal is facing competition and is losing more business every year due to expanding ship size and capacity. The canal suffers from fixed dimensions and proven maximum capacity. In another three years, 37% of the capacity of the world's container shipping fleets won't be able to fit into the canal, but even with just the small ships the canal will be accommodating all the traffic it can bear. Demand growth won't be met until 2015, the projected completion date of the canal expansion.

By then, quartermile- long ships carrying 14,000 cargo containers will be able to transit the 50- mile waterway. The maximum container ships today crossing Panama carry only 4,500 cargo containers.

Planning ahead, the S.C. State Ports Authority is budgeting for dredging the shipping lanes to accommodate the larger ships expected to begin arriving in volume once the expanded canal is complete in another five years. Charleston's port is too shallow at 45 feet, but Savannah's harbor is only 42 feet. A depth of 48 feet is the new minimum.

The Georgia Ports Authority is applying to the U.S. Army Corps of Engineers to deepen the Savannah River from its 42 feet down to at least 48 feet for the 22 miles from the Atlantic Ocean to the GPA's Garden City Terminal, projecting costs at $400 million.

The Jasper County Terminal, a joint- venture project between the states of Georgia and South Carolina, needs only eight miles of dredging at a depth of 48 feet.

Then it gets a little sticky in that S.C. State Sen. Hugh Leatherman (R- Florence) is trying to block the 22- mile dredging Savannah project in deference to the two- state joint- venture eight- mile effort to connect the Jasper County Terminal with the Atlantic Ocean. Leatherman sees Savannah's Garden City Terminal as too much competition.

Jacksonville, meanwhile, is looking at costs between $500 million and $1 billion to deepen its port from its current 40 feet to a new 50 feet.

So, for now, Jacksonville, Savannah, Jasper County, and Charleston are competing for the same scarce federal dredging funds. That's the bad news.

The good news, however, is overwhelming. The expansion in manufacturing and trade is concurrent with the expansion of the Panama Canal and its connecting Atlantic ports, complete in about five years.