May 5, 1971
While the outlook of businessmen and bankers is still mixed, confidence appears to be increasing. A definite upswing in optimism is reported from various sections of the District, although from some areas we still get reports that the future pace of recovery is in doubt or recovery is not widely based. Reports of employment increases and plant announcements are becoming more numerous, whereas weakness continues in such important regional industries as textiles, aluminum, mobile homes, and phosphate production. A special survey of leading department stores throughout the District indicates that sales have been exceeding expectations and that respondents are more optimistic than at any time in the past year and one-half. Because of recent wage settlements and possible strikes by steel and aluminum workers and longshoremen, inflation fears persist.
Plant announcements include a major urethane plant in Lake Charles; plants to manufacture water heaters, microwave ovens, gloves, and fire extinguishers in Alabama; a sewing plant in Alabama; a small appliance manufacturing plant in Mississippi; a household paper products plant in south Georgia; and a natural-gas-processing facility in north Florida. In addition, a Gulf Coast shipyard has received an order for 246 Seabee barges. A power company executive reports renewed interest in industrial and other projects that were postponed earlier.
The trucking industry which transports poultry from Alabama and Georgia and returns produce is reported to be expanding. For example, one carrier with a fleet of thirty refrigerated diesels is buying sixteen additional trucks and anticipates "all the business he can handle". In Florida, port facilities are handling record tonnage, and frozen orange juice shipments are running 30 percent above a year earlier. Also, some increase in operations is occurring at selected military installations; for instance, Alabama air bases are benefiting from the resumption of full operations at an air force school and the transferring of a helicopter school from Texas to Alabama. The Mississippi test facility is adding 250 employees because of tests of the space shuttle craft engines; an increase in sales of nylon and dacron polyester products is responsible for a 200-man employment rise at a Chattanooga chemical plant.
Housing construction is reported strong in several areas of the District. A large residential development-covering 1,000 acres and planned for a community of 7,000-has been announced in Orlando. A huge complex, including office buildings, a hotel, and retail shops, is being planned for downtown Atlanta. The project, which will not be under construction for eighteen months, will eventually cost more than $100 million. However, construction of a domed stadium in New Orleans may be delayed. Stadium bonds failed to attract any bidders, because some groups are opposing the stadium in the courts. The legal .issues cannot be settled until the state legislature meets, and by that time market conditions may not permit the sale of these bonds within the 6 percent limitation.
A Research Department telephone survey of department stores indicates that Easter sales were better than expected in New Orleans, Jacksonville, and Nashville. One leading store reported a year-to-year 15 percent gain in sales in the January through mid- April period. Sales have been weak in Birmingham, perhaps because of the threat of a steel strike. The Atlanta sales picture was mixed, with one respondent reporting sales stronger than expected but the other reporting sales about as expected. The survey detected a noticeable increase in optimism among retailers, and most of the respondents thought that the consumers had "loosened up" and begun to spend.
There are some notable exceptions to generally more prosperous conditions in the District. The mobile-home industry continues to be in a slump, although some pickup has been reported in recent weeks. Several mobile-home plants are reported to have closed in south Georgia, and one Alabama producer has filed for bankruptcy. Yet, a site has reportedly been purchased for a fourth mobile-home plant near Ocala, Florida. One banker noted that he is reluctant to lend to mobile-home producers, because he believes the industry is "shaky", and he expects a consolidation of existing firms into three or four major producers.
The aluminum industry is also reported to be depressed, although strike-hedge buying is expected to lift production soon. Employment at the Cape Kennedy Space Center has been holding steady, but another sharp drop in employment is expected unless the center is to play a part in the space shuttle program. Textile manufacturing in Alabama is reported weak, which is evidenced by the recent closing of a long-time sportswear producer. Four hundred have recently been laid off by a maintenance firm that has a contract at an Alabama air base. Three hundred and fifty employees have been laid off at a phosphate fertilizer plant in Florida. Because of the increase in unemployment, a prominent Gulf Coast employer reports that he is able to get and keep better employees.
There has been some increase in consumer loan delinquencies, mainly associated with the start-up of bank credit cards.
Inflation remains worrisome. There is growing concern that the labor agreement in the can manufacturing industry may be the pattern for upcoming steel and aluminum industry negotiations. There is also the possibility of a longshoreman's strike in October. Prices of homes in Miami have risen 100 percent in the past five years, including a 20 percent rise from the first quarter of 1970 to the first quarter of 1971. TVA has hinted that there may be another increase in electric rates-on top of a 23 percent raise last October-when existing coal contracts expire and have to be replaced with new ones at high price levels. Another natural-gas utility has requested a rate increase.