Top local business stories of the year

What a scary year. Double-digit unemployment. Record foreclosures. Georgia leading the nation in bank failures.

The best thing that can be said about 2009 is that it’s ending.

There were a few bright spots, such as NCR relocating here and Kia beginning auto production. The latter meant Georgia regained an industry that had abandoned the state following the GM and Ford plant closures of recent years.

Our 401(k)s, which started the year as 201(k)s, ended up in the 301 range as the stock market rebounded off its lows.

Let’s take a look back at some of the major business developments. I’ll try to point out a silver lining or two, because the new year should bring with it a brighter future. It has to.

Jobs, jobs, jobs

More than anything else, the growing ranks of the unemployed dominated business news this year.

Metro Atlanta and Georgia, for decades known for more robust economies than the nation as a whole, fell behind. Our over-dependence on home building delivered quite a wallop when the residential real-estate bubble burst.

Construction and manufacturing jobs were especially hard hit, prompting state Labor Commissioner Michael Thurmond to talk about a “he-cession” when describing the disproportionate number of men thrown out of work.

There were so many unemployed — about a half-million in the state — that Thurmond had to request a $70 million federal loan earlier this month to pay for unemployment insurance benefits through the end of the year.

Unfortunately, local economists expect the job picture to deteriorate in the beginning of the year, before stabilizing later on. The UGA forecast calls for state unemployment, now at 10.2 percent, to top out at more than 11 percent in mid-2010 before it begins a slow recovery.

The state’s economy, which contracted by about 3.8 percent this year according to UGA, should begin to grow again in 2010. At 1.7 percent, the projected increase in the state’s gross domestic product will be modest. Still, UGA points out, it would represent the first year-over-year expansion of the state’s economy since 2007.

Record foreclosures

When people lose jobs, they have trouble making mortgage payments. That became all too clear this year as the record for foreclosures in metro Atlanta was not only broken, it was shattered.

A total of 117,107 foreclosure notices were published, a startling 47 percent increase from last year, which was when the previous record was set, according to Equity Depot data.

For 2009, Fulton County led the pack with 24,609 foreclosure notices, followed by Gwinnett with 23,193.

For much of the year, home values tanked, builders and developers postponed projects or went out of business, and condos were auctioned off at fire-sale prices to reduce the glut.

But word came late this year that our residential picture is starting to stabilize as housing inventories declined.

In fact, Equity Depot said relatively fewer residential properties were advertised for foreclosure in recent months, while the proportion of commercial properties is rising.

The good news is that residential makes up the overwhelming portion of the real estate market, so improvement there can have a signicant impact on our economy.

Growing concerns for commercial real estate

We haven’t seen anything yet on this front.

“Georgia’s non-residential real estate market will get much worse in 2010,” UGA said in its forecast.

The culprits: lots of empty space as the economy contracted, weak demand for new space, plummeting prices and extremely tight credit, UGA said.

Already this year, the fallout intensified. In June, for example, the landmark Equitable building downtown became one of the metro area’s first significant commercial foreclosures when it was auctioned for $29.5 million – just 56 percent of what the lender was owed.

Earlier this month, Tower Place 200 in Buckhead was foreclosed on and sold. Meanwhile, construction was halted on major projects inside and outside the Perimeter. They included Streets of Buckhead, envisioned as a ritzy retail district, and Prospect Park, an upscale mixed-use development in Alpharetta.

And to kick off the new year, Country Club of the South – designed by golf legend Jack Nicklaus – is scheduled to be sold at a foreclosure auction on Jan. 5.

Bank failures

Twenty-five and counting.

Georgia captured the unenviable position of leading the nation in bank failures.

Most were small community banks that had only been open for a few years. All of them got into trouble by lending heavily to real estate developers who could not repay their debts when the housing market collapsed.

Byron Richardson, an Atlanta banking consultant, called real estate loans a “narcotic” for banks.

“It was a fast way to grow your earnings and your balance sheet,” Richardson said. “It became too easy for the banks.”

Unfortunately, the list of troubled banks remains long and experts predict the wave of failures will continue in 2010.

Georgia loses water war

After two decades of fighting, can Georgia, Florida and Alabama sing “Kumbaya” and agree to share water?

That’s a critical question, especially for the future of our state, which was hit with a crushing defeat over Lake Lanier water rights in July.

Senior U.S. District Judge Paul Magnuson found that it is illegal for the Army Corps of Engineers to draw water from Lanier to meet metro Atlanta’s needs.

So the governors of the three states or Congress has to come up with a solution, or we’re going to be dry on more days than Sunday.

Kia revs up

After losing GM and Ford plants, and missing out on some foreign manufacturers that selected nearby states (BMW, Mercedes, Hyundai, VW), Georgia finally scored big with Kia – really big.

Before even starting production in West Point last month with 1,200 workers, Kia announced it would another shift and double the work force.

If you’re calculating, put Kia’s investment at more than $1 billion, with its suppliers kicking in an additional investment of more than $800 million.

The state and local governments, meanwhile, have ponied up more than $400 million in incentives.

Total jobs, both direct and indirect, should amount to as many as 20,000 in Georgia and Alabama, according to some estimates. And, by 2016, Georgia expects a $400 million return on its investment.

NCR relocates

Georgia’s biggest economic-development coup this year was landing NCR, which decided to relocate its headquarters to Duluth after 125 years in Dayton, Ohio. About 1,250 will be employed there.

NCR, No. 446 on the Fortune 500 list with $5.3 billion in revenue, also decided to build a manufacturing plant in Columbus, employing 870.

The company, which makes ATM machines, checkout scanners and self-serve kiosks, received about $110 million in government grants, loans and tax credits.

NCR chief Bill Nuti said the decision to relocate went beyond the incentives.

“It would be disingenuous not to mention the package of incentives,” Nuti said. But, he added, there were several other factors, including Hartsfield-Jackson Airport (two-thirds of its revenue comes from outside the U.S.), the wide availability of skilled labor and high-caliber universities.

Here’s hoping that more companies think like that in the coming year.

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5 comments Add your comment

Mike Jones

December 27th, 2009
9:04 am

2010 will be worse. There’s a perfect storm coming together.

T-Steel

December 27th, 2009
9:44 am

Unfortunately I have to agree with Mike Jones. Commercial real estate is going to be another nuclear explosion of economic grief for Georgia (especially the Cobb-Fulton-Dekalb-Gwinnett urban-suburban-plex). And jobs… When will Democrats and Republicans realize that stimulus and tax cuts won’t bring the jobs back to pre-recession levels? America HAS to get back in the business of creation. There is so so much to research and develop. So so much to create and distribute. And we have to get creative about re-educating a workforce for those type of jobs. The old ways are dead. And recycling them won’t get us nowhere economically.

Old Timer

December 28th, 2009
6:31 am

I think that the hardest thing for most people to accept about these events is that this will be the “new normal” for the next 10 years or so.

As our economy continues to de-leverage from our massive spending frenzy, a lower standard of living for most of us will be the result.

The jobs that have disappeared will never return and many of us in our mid 50s may never work again.

DublDawg

December 29th, 2009
7:06 pm

Is the fact that NCR is bringing a bunch of yankees from Ohio to Georgia supposed to be good news?

If there is anything that this state needs, it is more yankee transplants, right?

The commercial real estate trouble is indeed going to be a problem.

The continued de-industrialization of the US will as well. Perhaps the one good thing in the weak currency is higher exports and some uptick in domestic manufacturing.

I have not seen the AJC or Atl Biz Chronicle publish anything on port activity recently.

NCRHappy

December 31st, 2009
2:24 pm

I live in Decatur and was on unemployment for 6 months when NCR hired me for a position at the headquarters bldg in Duluth. So, no, not ALL of NCR are transplants.. you’d be surprised at how few were offered (or accepted) the chance to come to Georgia.