Georgia - Smoothing the Ride to Success
30 Apr, 2007By: Craig Lesser
Aviation pioneer Ben Epps flew the first powered airplane in Georgia in 1907. Two years later, Ford Motor Company began building automobiles in the state. In the hundred years that have passed, Georgia’s aviation and auto industries have evolved from these modest roots into billion-dollar contributors to the state’s economy.
Today, international companies like Kia, Gulfstream and Lockheed Martin are major players in Georgia. The state is a regular stop for auto and aerospace companies shopping the country for prime locations, and its 1,500-acre mega-site in Savannah has recently been rated the most desirable site in the Southeast for an auto or aviation assembly plant.
There’s no mystery to Georgia’s appeal: its outstanding logistics, excellent incentives and thriving international presence are long-established attractions for businesses. In addition, Georgia’s investment in training for its young and growing population is paying off in the ready availability of a skilled workforce.
For the automotive and aerospace industries, crucial elements of success depend on the ability to deliver their products to customers quickly and efficiently. Georgia’s integrated logistics network helps companies do that. More than 80 percent of the U.S. market is within a two-day truck haul or a two-hour flight, and 83 percent of all U.S. auto assembly plants are within 13 highway hours of the state.
Fifteen interstate highways, the largest rail network in the Southeast, and the two largest fiber optic pipelines in the country connect Georgia companies to their markets. Hartsfield-Jackson Atlanta International Airport, the world’s leading air cargo center, handles more than 900,000 tons of cargo each year.
State-of-the-art deepwater ports in Savannah and Brunswick are not only the fifth largest in the country, but the fastest-growing. Georgia’s ports include the fourth-largest auto port in the eastern U.S., and serve as the South Atlantic’s premier auto-processing facility. Three general-purpose Foreign Trade Zones are located in the state, as well as 12 subzones in Atlanta, Brunswick and Savannah, where firms can delay, reduce and in certain cases eliminate U.S. customs duties on imported items.
For a company to be successful, finding the right people is just as important as using the right distribution channels. Companies in Georgia enjoy a competitive advantage through access to the resources of the Governor’s Center of Innovation in Manufacturing Excellence (CIME) at Lanier Technical College in Gainesville. This partnership between the Georgia Department of Economic Development (GDEcD) and the Department of Technical and Adult Education (DTAE) assists manufacturers with applied research and a highly skilled workforce trained to respond to the rapid changes taking place in the manufacturing sector.
DTAE also operates the state’s internationally-recognized Quick Start program, which provides high-quality training services at no cost to new or expanding businesses. To maintain a steady stream of qualified workers to manufacturing companies throughout the state, DTAE also offers a Certified Manufacturing Specialist Program.
Georgia’s Aerospace Innovation Center (AIC)in Warner Robins helps attract interest to the state’s aerospace resources. The center partners with Georgia’s academic institutions, aerospace industry, the defense establishment, and federal, state and local governments to develop cutting-edge technology for aircraft. The state recently signed a Cooperative Research and Development Agreement (CRADA) with the USAF based at Warner Robins Air Logistics Center to facilitate the transfer of new technologies from the innovation center to the WR-ALC.
Georgia is now preparing its workforce by moving its training curriculum toward convergence in aviation and automotive competencies. Recognizing that the skill sets required to work in the automotive industry are approaching the sophistication of those needed for aerospace technology, the AIC has partnered with the Georgia Department of Education to promote a career path for students, beginning in high school. The STEM curriculum (science, technology, engineering and math) will grow the workforce of the future for Georgia’s automotive and aerospace industries.
In today’s competitive marketplace, Georgia’s progressive business environment smooths the road to prosperity. The state has some of the lowest worker’s compensation and unemployment insurance tax rates in the country, provides compensation insurance credits and discounts for businesses that are certified drug-free or provide certified health care programs, and boosts workforce productivity through right-to-work and employment-at-will laws.
Corporate tax credits
Georgia’s broad range of corporate tax credits allow companies to minimize or completely eliminate state corporate income taxes which, at six percent, are already among the nation’s lowest.
A county’s “tier status” determines the amount of some of the credits. Tier status is an annual ranking of the economic vitality of Georgia’s counties, with disadvantaged counties (Tiers 1 and 2) offering the highest credits and more prosperous counties (Tiers 3 and 4) offering lower amounts.
Georgia recently became the first state in the Southeast to adopt a "Single Factor Gross Receipts" apportionment formula, which significantly reduces Georgia income tax for companies that are based in the state, but that deliver the bulk of their products or service to customers outside Georgia.
Strategic industries like distribution, technology, manufacturing, telecommunications and processing companies and their headquarters qualify for Georgia's Job Tax Credit. Depending on the county's tier, companies must create between five and 25 net new jobs per year to qualify. Companies can choose to have jobs count toward either the Job Tax Credit or the Headquarters Tax Credit. The latter allows companies that create or relocate a North American or international corporate headquarters, and that meet other conditions, to qualify for a tax credit that can offset up to 100percent of corporate income tax liability. Excess credits may be taken as a credit against payroll withholding taxes. The job tax credit can also be increased for corporations with significant increases in shipments through Georgia ports.
If a company invests directly in employee training, it can claim that training as a tax credit – 50 percent of the employer's direct cost, up to $500 per employee, per approved training program. Up to 50 percent of a company's state corporate income tax liability can be offset by this tax credit.
In addition, a company can claim as a tax credit 75 percent of its direct cost in sponsored child care, up to 50 percent of a company's state corporate income tax liability.
Qualified equipment purchases or leases are exempt from sales tax when the equipment purchased is used in the manufacturing process under the state’s Sales and Use Tax Exemption. Under certain conditions, primary material handling equipment; computer equipment; Class 100 (or less) clean room machinery, equipment and materials; and electricity used in manufacturing processes, can also be exempted.
Georgia also has a local-option “Freeport” law, under which many Georgia counties exempt up to 100 percent of qualified raw material, work-in-process and finished goods inventory from property tax. In most of these counties, distribution center and warehouse inventories are exempt as long as the inventory will be shipped out of state.
Hiring, training and education
Georgia's Department of Labor (DOL) helps businesses recruit employees by posting job notices, collecting and screening applications and/or résumés, providing interview space, scheduling interviews and hosting job fairs.
In addition to the Quick Start training program, Georgia was the first state to develop its knowledge workers with a ground-breaking program called the Intellectual Capital Partnership Program (ICAPP). This innovative training program connects companies with the state's public universities, who help them customize the education of highly skilled workers.
Georgia is also the only state in the U.S. that guarantees state high school graduates who have a “B” or better average a free technical or university education through the HOPE Scholarship program. The HOPE Grant provides an opportunity for all Georgians to receive degreed or certificate programs at no cost through Georgia's 34 public technical colleges and universities.
To find out more about the reasons for why Georgia is the right place to grow your business, visit www.georgia.org.