'Announcements' don't equal job creation

Augusta State University economics professor Mark Thompson last week unveiled the Greater Augusta Economic Activity Index, a statistical measurement of the region’s economic health based on a variety of economic indicators, including wage growth, unemployment and construction activity.

One noticeably absent component to the index is new-job announcements. I consider the omission a good thing because new-job announcements are one of the most unreliable economic indicators.

Wachovia economist Mark Vitner pointed out during the recent Augusta Regional Economic Outlook that the 5,000 job announcements made in the metro area last year translated into 1,800 actual jobs.

Here’s the problem with job announcements: First , it can be years before a new company reaches full employment. ADP, one of Augusta’s newest corporate citizens, has about 250 people on its payroll, one-quarter of the 1,000 jobs that the New York company said it would eventually hire in Augusta during the next several years.

Companies rarely know the actual number of people they will hire. A 100-job announcement can translate to only 87 jobs or, if we’re lucky, 109.

Then there are job announcements associated with projects that never even get off the ground.

Take a look at Xethanol Corp.’s east Augusta property, a failed alternative fuel refinery that company officials announced in 2006 would create anywhere from 100 to 150 jobs. There is no evidence to show that the former Pfizer Inc. facility, which is up for sale again, ever employed more than a dozen people.

How about Flanders Corp.’s 2004 announcement that it would create 800 jobs at its Global Containment Systems plant in Aiken County? So far, the only thing to show for the proposed $60 million facility is a once-wooded tract of land near New Ellenton.*

Don’t forget about vitamin company NBTY Inc., which announced in 2005 it would turn the former Bill’s Dollar Store warehouse near Augusta Regional Airport into a manufacturing and distribution facility that would employ 500 people. Last year, NBTY said in a Securities and Exchange Commission filing that it “no longer intends to develop a manufacturing facility at this site.”

The property is once again for sale.

These are not the only examples of job announcements gone awry, but they are certainly the most glaring.

Another commonality they share is that local economic development officials are still taking credit for the projects as though the phantom jobs were filled by real flesh-and-blood workers.

Economic developers simply never revise their figures to reflect actual job creation. The Development Authority of Richmond County, for example, still claims to have helped create 1,600 jobs in 2005, even though 500 of those jobs were NBTY jobs that never materialized. When the authority puts ADP into the record books, it will list 1,000 jobs, even though ADP’s local payroll has not come anywhere near that figure, and possibly never will.

The numerical puffery involved in job announcements has always struck me as being delusional and somewhat dishonest. I’m not bringing this up to pick on our local economic developers and politicians – let’s face it, this kind of thing happens every year all over the country – I just want people to realize a job claimed is not always a job created.

If you want a clear picture of how our labor market is doing, get figures from the Georgia Department of Labor.

If you want a clear picture of how our overall economy is doing, keep your eye out for the Greater Augusta Economic Activity Index.

We’ll be printing it each month.

HEADLINE FROM A RECENT E-MAIL: “S.C. Department of Commerce Announces a Record-Breaking Year in 2007 … More than 15,600 New Jobs and $4 billion in New Capital Investment Recruited.”
Ugh. See what I mean.

IN DEFENSE OF PFIZER: Last week I mentioned claims by some former Pfizer employees that the drug-maker sold its Augusta plant to Xethanol knowing that it would be gutted and rendered useless for future pharmaceutical production.

This resulted in some responses by other former Pfizer employees, who say the company tried to do everything it could to get another pharmaceutical company to purchase and operate the plant.

“Pfizer maintained full employment and funding for Augusta for over two years while trying to search for a viable owner,” one man wrote. “Pfizer went to what I would consider extraordinary lengths for the employees and the city of Augusta to maintain the Augusta facility’s viability. To say otherwise is wrong.”

FILLED OUT YOUR FORM YET? Those fine folks at the Census Bureau want to remind the 6,900 businesses in the Augusta-Aiken area that received their 2007 Economic Census forms last month that they have until Feb. 12 to send them in.

Filling out the form not only will help the nation make better public policy and business decisions but it’s also required by law.

If you need more information or help completing the form, see the Census Bureau’s business help site at www.census.gov/econhelp or call (800) 233-6136.

UNVERIFIABLE FACT NO. 8: 14 – the number of shopping carts** from the 15th Street Kroger currently “in service” outside the 15th Street Kroger.

DRUGS ON EVERY STREET CORNER: Readers who noticed my recent dispatch on the grading work going on in front of the Earth Fare store at the Shoppes on Furys Ferry shopping center say they have heard that at least one of the outparcel tracts is going to be occupied by a Walgreen s drug store.

That sounds about right, considering there’s already a Rite Aid right across the street.
We shall see …

WANTED: NEW OFFICE: Atlanta Gas Light Co. will be moving into new digs sometime this year.

The company recently sold its 10-acre complex to Augusta-Richmond County, which is planning to move its utility department’s construction and maintenance crews there before the end of the year

Exactly when AGL will leave and where it will go is unknown. A company spokeswoman said those details have not been determined.

* This is not to say that announcements such as the Flanders facility will never materialize. International Flavors & Fragrances, for example, acquired and then sat on its south Augusta real estate for nearly a decade before deciding to build its fragrance factory.

** Yes, I know most folks in these parts call them buggies. Regular readers (and even the irregular ones) of this column should know by now I am not most folks.