Contents

Executive Summary....................................................................................................................................... 2
Background and Approach............................................................................................................................ 6
Savannahs Economy: Key Industry Trends, 2005-14 ................................................................................... 7
Bottom Line from Industry Analysis............................................................................................................ 18
Strengths, Weaknesses, Opportunities & Threats Analysis ........................................................................ 20
Asset Inventory & Assessment.................................................................................................................... 22
Opportunity Identification .......................................................................................................................... 34
Overarching Initiatives ................................................................................................................................ 46
Benchmark Indicators ................................................................................................................................. 48

EXECUTIVE SUMMARY
The Savannah region is poised to become one of a new breed of innovative Southern cities,
supported by its strategic location and intermodal transportation assets, high quality of life and
emerging creative class, and existing industrial base. However, the regions stakeholders need
agreement on a long-term vision (spanning 10 to 20 years) for what Savannah can and should
be. That vision will enable the region to align its efforts and investments supporting target
industries and related economic opportunities that will drive future regional growth and job
creation.
On behalf of the Savannah Economic Development Authority (SEDA), SRI conducted a datadriven analysis with input from a range of stakeholders representing established companies,
local technology startups, financial institutions, the port, nonprofit organizations, the public
school system, the technical college, and other institutions of higher education. The SRI study
sought to answer important questions about the current structure of the regions economy and
recent performance of key industries, as well as analyzing the implications of national and global
industry trends for the regions future growth and diversification. We also examined how well
the Savannah region is positioned to take advantage of economic opportunities, focusing on
regional competitive strengths and weaknesses. Finally, SRI recommended target industries and
high-potential economic opportunities related to these industries that stakeholders can act on
in the near term.
SRI recommends that SEDA and regional stakeholders proactively target four industry sectors for
growth and development: (1) Advanced Manufacturing, (2) Professional, Technical and
Specialized Business services, (3) Film/TV/Digital Media, and (4) Transportation and Logistics.
These sectors encompass the following:

Advanced Manufacturing builds on the regions existing manufacturing base and focuses on
aviation and aerospace, materials and chemicals, machinery, and processed food. Advanced
Manufacturing differs from traditional manufacturing in its greater integration of
information technology, automation, robotics, and new materials in the manufacturing
process. Although Savannah has a relatively narrow manufacturing base, the heavyweight
companies in the region are globally competitive and export-oriented.

Professional, Technical and Specialized Business Services is a bellweather for the ability of
a region to support a range of high-tech and high-wage industries, since companies in this
sector provide the design, consulting, legal advice, R&D, computer programming, and other
critical services. The size of many of the industry segments that comprise the Professional,
Technical and Specialized Business Services sector lags the national average employment

concentration, implying that Savannah companies are going outside the region to find these
services. However, nearly all of these industry segments are projected to add employment
through 2014, and many of the companies in this sector are local startups.

Film/TV/Digital Media builds on several existing state and regional assets. The economic
impact associated with film and TV stems from the employment of local crew and technical
talent, but also the variety of small local businesseshotels, restaurants, dry cleaners,
caterers, electricians, taxi driversthat benefit from the large daily expenditures of major
feature films.

Finally, Transportation and Logistics builds on the regions location and intermodal
transportation connectivity, which provides access to 80 percent of the U.S. consumer
market within two days of transit. The Port of Savannah is ranked as the fourth largest port
in the country in terms of container shipments and is projected to grow by 10 percent per
annum over the next 10 years. Transportation and Warehousing represents a mid-level
industry in terms of employment, similar in size to the Manufacturing sector (approaching
15,000 employees).

Building on these target industries, SRI identified the five related economic opportunities for
near-term actions. There is a clear opportunity in Advanced Manufacturing to actively recruit
manufacturers and related service facilities (e.g., maintenance and repair facilities for other
aviation companies expanding in the U.S., such as Embraer). In this sector, overcoming
workforce bottlenecks with an emphasis on technical training and communication of
manufacturing career pathways to K-12 students and their parents is paramount. In the short
term, collective action is needed to recruit skilled workers from the military and outside of the
region.
A second economic opportunity is the development of the Savannah region as a center for
materials research and development, integrated with the use of materials in product design.
SCAD has a world-class industrial design program with many industry partners, and the Herty
Advanced Materials Development Center has unparalleled capabilities in prototyping the
production of new materials for Fortune 500 chemicals and materials companies like DuPont.
Georgia Southern University is also strengthening its materials program with new faculty hires
focused on research to serve industrial needs. SRI recommends developing a business plan for a
collaborative research and design center which includes identifying potential partners for
research and marketing. SEDA can also work with national design associations to bring
executives and thought leaders to Savannah introducing them to the regions unique capabilities
and also raising the profile of the region nationally.

As mentioned, the Savannah region has a clear asset in the Port of Savannah and an intermodal
transportation infrastructure, which is a big draw to manufacturers with global supply chains
and global customers. Significant investments have occurred in warehousing and distribution
facilities. However, there is a clear opportunity for the region to pivot into higher value logistics
and support services leveraging the Port and local companies as a test bed for logistics R&D
activities which could attract software logistics companies to the region.
Directly related to the need to diversify into higher value, knowledge-based Professional,
Technical and Specialized Business Services industries, SRI recommends a strategy to both
support regional startup activity and to recruit small and medium-sized tech companies from
overseas that are looking to enter the U.S. market. SRIs study provides data that shows that the
Savannah region is likely unable to support the formation of companies based on proprietary
technologies that require additional investment and development to reach the market place,
although the region boasts many startup companies that are self-financed. The former type of
company is important, since they may be more scalable with higher employment and growth
potential compared to existing technology and creative companies in the region. Specifically, SRI
recommends the establishment of a virtual incubator or entrepreneurial boot camp
associated with a professionally managed VC fund to provide screening of business ideas and
capital to investable deals.
In addition, SRIs interviews with regional stakeholders point to the interest of non-U.S. smalland medium-sized technology companies that are looking to establish a U.S. base in Savannah.
Increasingly, countries like Singapore and Israel are creating soft landing programs that aim to
make it as easy as possible for international technology companies to incorporate, from
obtaining a business license to finding office space and hiring. Savannah stakeholders should
further develop and strengthen their networks and no wrong door structure to make the
Savannah region a soft landing for international tech companies.
Finally, Georgias Entertainment Production Tax Credit has helped make Georgia a Top 3
location nationally for film production. In Savannah, the City of Savannahs effective film
commission; Meddin Studios, a startup digital production services company with small sound
stages; the Savannah College of Art & Designs (SCAD) capabilities in production and sound
design; and interest by a Los Angeles-based studio infrastructure group with connections to
major motion picture producers are a collective impetus to capitalize on this opportunity. The
key impediment to film industry development in the region is the absence of large sound stages,
as one would find in Atlanta and other competitor regions.
Similarly, in the digital media space, SCAD computer animation, special effects, and related
digital media talent and their recruitment by major companies in Hollywood, Silicon Valley and

New York are a major asset. SRI sees an opportunity in approaching SCAD alumni who are now
mid-career professionals and attracting them back to the Savannah region to start their own
companies leveraging their networks and connections.
The Savannah region is at an important crossroads in its economic development. Alignment and
action by SEDA and regional stakeholders around a strategic vision of the future can help to
transform the Savannah region into a prosperous, innovative Southern city focused on global
opportunities. SRIs study is intended to support the implementation of this vision through the
recommendation of target industry sectors and near-term economic opportunities that will help
SEDA and regional stakeholders generate better jobs and attract more investment to the
Savannah region.

BACKGROUND AND APPROACH

The Savannah Economic Development Authority (SEDA) is undertaking a strategic planning
process to identify four to six economic opportunities that can drive long-term growth and
diversification of Savannahs economy. This strategic planning, or visioning, process is
comprised of three main components: (1) a competitive positioning analysis, (2) an innovation
component (i.e., due diligence on early-stage VC fund), and (3) a marketing strategy for business
attraction and retention. SEDA contracted SRI International to bring an informed, third-party
perspective to bear on the competitive positioning component. Our analysis serves as a datadriven basis for building consensus among stakeholders regarding the set of target industries
and opportunities that can drive long-term growth in the Savannah region.
SRIs technical approach for this assignment sought to answer the following questions:
1. What is the overall structure of Savannahs economy today, and what is the trajectory of
its key industries?
2. What are the regions competitive strengths, weaknesses, opportunities and threats?
3. What are Savannahs unique assets for attracting, retaining and growing new
companies?
4. In which economic opportunities should SEDA focus its time and resources?
5. Are there cross-cutting initiatives in which SEDA and other stakeholders should
collaborate?
6. What indicators should SEDA use to measure its own performance?
In answering these questions, SRI conducted the tasks depicted in the table below.
Key Questions Posed by SEDA

Analytical Tasks Conducted by SRI

What is the structure of Savannahs economy and the

trajectory of key industries?
What are the regions main strengths, weaknesses,
opportunities and threats?
What are Savannahs unique assets for attracting,
retaining and growing new companies?
In which economic opportunities should SEDA focus its
time and resources?
On which cross-cutting initiatives should SEDA and
other stakeholders collaborate?
What indicators should SEDA use to measure its own
performance?

Targeted industry analysis over the 2005-2014 time

period.
SWOT analysis based on stakeholder interviews and
data analysis.
Asset inventory analysis based on stakeholder
interviews and data analysis.
Building on previous analyses, identification of 5-6 key
economic opportunities for the Savannah region.
Recommendation of key cross-cutting initiatives
Identification of high-level benchmarks

SAVANNAHS ECONOMY: KEY INDUSTRY TRENDS, 2005-14

The Savannah metropolitan statistical area (MSA)which includes Chatham, Bryan and
Effingham countiesis a $13 billion economy with a civilian labor force of approximately
175,000 people.1 Looking at the size of Savannahs industries ranked by employment, the five
largest industry sectors are: Government, Wholesale & Retail Trade, Tourism & Recreation,
Health Care, and Manufacturing. We examined employment trends in significant industries in
Savannah over the period from 2005 to 2014, which captures trends leading up to the Great
Recession of 2007-09, the effects of the recession on the region, and its projected recovery.
Figure 1 Total Employment by Industry in the Savannah MSA, 2005-14

Source: 1 EMSI (2011).

Several interesting observations can be made regarding the data presented in Figure 1:

The average wage in the Savannah MSA in 2011 is $44,510. Of the five largest industries by
employment, Government ($68,078), Health Care ($51,548), Manufacturing ($85,731) and

According to the U.S. Bureau of Economic Analysis, the Savannah MSAs GDP was $12.921 billion in 2009. Labor
force data comes from the U.S. Bureau of Labor Statistics.

the wholesale component ($63,861) of Wholesale & Retail Trade have average wages which
exceed the regional average.

The average wage levels for Retail and Tourism sector jobs are far lower than the regional
average wage: $28,297 for the retail component of Wholesale & Retail Trade; and $19,112
in the Accommodation & Food Services component and $17,630 in the Arts, Entertainment
& Recreation component, which together comprise Tourism.

Manufacturing employment in Savannah over the 2005-14 time period stayed relatively flat
which is an achievement compared to the steep declines in manufacturing employment at
the state and national level (over 15% declines). Although employment declined in several
of Savannahs manufacturing industry segments (such as paper and chemicals), it created a
nearly equal number of new manufacturing jobs, driven primarily by strong growth in the
aviation and aerospace sector over the 2005-14 time period.

Compared to the national average, several knowledge-intensive industries represent an

unusually low share of total employment in the Savannah MSA: Professional & Technical
Services, Finance & Related Services, and Post-Secondary Education. These are also
industries where prevailing wages are well above the average level.
To promote long-term economic growth with increasing per capita incomes, the Savannah
region needs diversify its portfolio of industries, with stronger emphasis on the more highlyskilled service sector industries.

Figure 2 Gross Change in Employment in the Savannah MSA, 2005-14

Source: 2 EMSI (2011).

To highlight recent industrial drivers of employment, Figure 2 above shows the absolute change
in the total number of jobs by industry sector over the 10-year period from 2005 to 2014.

Growth in Health Care and Tourism & Recreation from 2005-14 is driven largely by the aging
population and the resulting growing demand for and consumption of health care services
and recreational travel among baby boomers.

The Government sector expanded significantly from 2005-08, with the number of
Government jobs peaking in 2008. There was then a contraction in the Government sector
from 2008-11 due to fiscal tightening, with some new jobs anticipated as the economy
recovers in 2012-14. The next few years are likely to see more modest growth in these jobs
because of state and national fiscal austerity measures and a large number of government
employee retirements.

Transportation & Warehousing has generated large employment growth driven by

investments in distribution and warehousing facilities and, of course, very strong growth in
containers moving through the Port of Savannah.

Employment in the Construction sector has suffered a steep decline since its peak in 2006.
Through 2014, this sector is expected to continue to lose jobs shedding nearly 5,500 jobs
from the level in early 2008.Employment in Wholesale & Retail Trade has also contracted as
a result of economic conditions.

Figure 3 Percent Change in Employment in the Savannah MSA, 2005-14

Source: 3 EMSI (2011).

Looking at the relative change in employment presents a slightly different perspective, as

illustrated in Figure 3 above. Some of the industry sectors (such as, Tourism and
Government) with large gross changes in employment from 2005-14 have lower rates of
growth, since they are starting from a large base. Post-Secondary Education moves to the
top followed by Health Care, Transportation & Warehousing, and Professional, Technical &
Specialized Business Services.
The most dynamic sectors are ones that tend to have a higher component of education,
skills, and value-added compared to the large employment sectors. For example, the growth
rate for employment in Professional, Technical & Specialized Business Services from 2005-14
moves it from 6th to 4th in the industry rankings. Therefore, we explore these more
specialized sectors in more detail below.

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Figure 4 Employment Growth in Professional, Technical & Specialized Business Services, 2005-14: Savannah
MSA, State of Georgia, and U.S.

Source: 4 EMSI (2011).

The Professional, Technical and Specialized Services industry is a bellwether for the ability of a
region to support a range of high-tech and high-wage industries, since this sector provides
critical services to those industries (such as design, consulting, legal advice, R&D and IT services).
Since 2007, the growth of employment in the Professional, Technical & Specialized Services
industry in the Savannah MSA has lagged average employment growth in the same industry
nationally and in Georgia overall.

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Figure 5 Change in Concentration of Employment in Savannah MSA vis--vis the U.S. in Professional, Technical &
Specialized Business Services, 2005-10

Source: 5 EMSI (2011).

Significantly, the concentration of employment in this sector regionally is much lower than the
national average. The figure above plots the industry segments comprising the Professional,
Technical & Specialized Business Services sector. The size of the bubble represents employment
in that industry segment in 2005, and the horizontal axis of 1.0 (the location quotient, or LQ)
represents the point where the share of Savannahs total employment contributed by an
industry is equal to the share of U.S. national employment attributed to that same industry. An
industrys position relative to the vertical axis of 0% indicates the degree to which Savannahs
employment concentration in that industry grew or shrank from 2005-10 compared to the
national average. In other words, industries to the left of the vertical axis are ones whose share
of Savannahs total jobs is not keeping up with the national trend for that industry.
From this figure, one can see that the share of regional employment in this industry sector trails
the national average for nearly all of the Professional, Technical & Specialized Business Services
segments, except Architectural, Engineering & Related Services. The rest are all below the
horizontal axis of 1.0. This is a critical industrial indicator, since typically regions with location
quotients less than 1.0 are importing these services from outside the region. For example,
Computer Systems Design and Scientific R&D Services have extremely low LQs, so it is likely that
Savannah area companies are contracting outside the region for these services. Still, it is also
notable that the Scientific R&D Services industry has seen a rapid increase in its relative

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employment concentration in Savannah, despite the fact that it is still far below the national
average. This would indicate that there is a rapid increase in local demand for such services.
Stakeholder interviews suggest that the growth of companies and employment in the
Professional, Technical & Specialized Business Services sector would contribute to Savannahs
overall business environment. Many of the companies in this sector provide needed support to a
variety of companies in other sectors from manufacturing to health care.
From 2005-10, the concentration of employment in Accounting, Tax Preparation & Bookkeeping,
Specialized Design Services, and Advertising, Public Relations & Related Services increased.
However, the concentration of employment in a number of other sectors declined relative to
the national average.
The table below shows actual and estimated employment in the Professional, Technical &
Specialized Business Services sector by industry segment, as well as the average wage in 2011.
One can see that based on current industry trends and state and national projections, all of the
industry segments are anticipated to generate net employment gains from 2010-14.
Table 1 Breakdown of Savannah's Professional, Technical & Specialized Business Services Sector by Industry
Segment: Change in Employment and Average Wage

Source: 6 EMSI (2011).

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An interesting contrast to Savannahs Professional, Technical & Specialized Business Services

sectorwhose performance has trailed state and national growthis Savannahs
Manufacturing sector. The figure below shows that employment growth in Savannahs
Manufacturing sector has been much stronger than the national and state averageboth of
which experienced employment declines of more than 15% from 2005-11.
Figure 6 Employment Growth in Manufacturing, 2005-14: Savannah MSA, State of Georgia, and U.S.

Source: 7 EMSI (2011).

Looking at the share of regional employment in the Manufacturing sector compared to the
national average, one sees that all segments of Savannahs Manufacturing industry are above a
ratio of 1.0. This is significant since a LQ greater than 1.25 typically means that a region is
employing more people and producing more goods and services than can be consumed by the
local economy. In other words, either the regions firms in that industry are highly inefficient
(not usually the case with capital-intensive U.S. manufacturing), or they are exporting their
outputs to other regions. This is definitely the case with Savannahs aerospace and aviation
industry and paper industry, which are both major employers and large exporters to both
domestic and foreign markets.

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Figure 7 Change in Concentration of Employment in Savannah MSA vis--vis the U.S. in Manufacturing, 2005-10

Source: 8 EMSI (2011).

The figure above plots the industry segments comprising Savannahs Manufacturing sector.
Again, the size of the bubble represents total employment in that industry in 2005, while its
vertical position indicates the share of jobs relative to the national average for that industry, and
the horizontal position indicates whether that industry is growing or declining in significance to
the local economy.
From 2005-10, the concentration of employment in Pulp, Paper & Paperboard Mills, Aerospace
Products and Parts, and Sugar & Confectionary Products increased. The concentration of
employment in a number of other smaller manufacturing industry segment declined relative to
the national average. These include segments such as Motor Vehicles and Trailers, Basic
Chemicals, Industrial Machinery (hit hard by the recession and construction downturn), and
industries based on natural resources.

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Table 2 Breakdown of Savannah's Manufacturing Sector by Industry Segment: Change in Employment and
Average Wage

Source: 9 EMSI (2011).

Table 2 above shows the actual and projected employment in the Manufacturing sector by
industry segment, as well as the average wage in 2011. One can see that based on current
industry trends and state and national projections, employment in nearly every industry
segment, except Aviation and Aerospace, is projected to decline from 2010-14. This is not
surprising when one looks at historical manufacturing employment trends for the U.S., Georgia,
or even Savannah. However, it is a reminder that manufacturing is a highly competitive, global
industry sector. Note that the employment projections are based on models using historical
data, and do not include actual expected changes, such as the announced expansion of
Gulfstreams facilities.
The Aviation and Aerospace industry segment has and is expected to continue to drive
Manufacturing sector employment gains in the region, adding nearly 3,000 new jobs from 200514 and representing over half of Manufacturing sector employment in 2014up from one-third
of Manufacturing sector employment in 2005. Machine Shops are anticipated to grow from
2010-14, albeit from a relatively modest base. Food Manufacturing is expected to maintain

16

employment, with Sugar & Confectionary employment growing modestly and continuing to
represent half of Food Manufacturing employment.
Looking at other major Manufacturing segments, Savannahs Pulp, Paper & Paperboard industry
shed jobs from 2005-10 and this decline is predicted to intensify from 2010-14 with another 800
jobs lost. Chemicals industry employment is also anticipated to decline from 2010-14 pulled
down by continuing contractions in the Basic Chemical segment. Basic Chemicals accounted for
two-thirds of Chemicals industry employment in 2005 and is likely to account for less than half
of Chemicals industry employment in 2014. Modest employment growth is anticipated in the
Paint, Coatings & Adhesives; Resins, Synthetic Rubber & Artificial Fibers; and Other Chemical
Product & Preparation Manufacturing segments from 2010-14.
Machinery segment employment has also been on the decline in spite of large recent
investments by JCB and Mitsubishi Power Systems. This is largely the result of the recession of
2007-09 which severely impacted new construction and infrastructure investments and,
therefore, demand for industrial machinery. However, the relatively low employment growth
that is projected for the machinery segment from 2010-14 likely does not take into account
Mitsubishis near-term expansion plans, since the projections are based on national and state
industry trends.

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BOTTOM LINE FROM INDUSTRY ANALYSIS

It is clear from the analysis of Savannahs industrial performance that the Savannah region
needs to diversify its portfolio of industries, with stronger emphasis on the more highly-skilled
service sector industries. The largest sectors in terms of employment currentlyGovernment
and Wholesale & Retail Tradeare not likely to expand significantly over the next 10 years, and
they do not represent engines of growth for the region in terms of spillover economic benefits.
Rather, the most dynamic sectors are ones with a much higher component of education, skills
and value-added than the largest employment sectors: Post-Secondary Education, Professional,
Technical & Specialized Business Services, Advanced Manufacturing, and Financial Services.
In particular, the growth of Professional, Technical & Specialized Business Services industry is a
bellweather for the ability of a region to support a range of other high-tech and high-wage
industries, since this sector provides critical services to these industries (such as design,
consulting, legal advice, R&D and IT services). Since 2007, the growth of employment in this
industry in the Savannah MSA has lagged average employment growth in the same industry
nationally and in Georgia overall.
Often companies operating in the Professional, Technical & Specialized Business Services
industry grow up locally. There are an increasing number of design, accounting, IT services and
other specialized services companies that represent Savannahs Creative Coast, and the growth
of these companies are reflected in the 2005-14 industry employment data. There are also a
number of small and medium-sized technology companies from overseas that are showing
interest in Savannah as a potential U.S. headquarters. Supporting the growth of local
entrepreneurial companies and attracting innovative companies from outside the region
presents a clear opportunity for the Savannah region to bolster the Professional, Technical &
Specialized Business Services sector and fabric of the regional economy.
Manufacturing is another industry sector in which the Savannah MSA has a clear competitive
advantage represented by the sectors high concentration of employment relative to the
national average. Employment gains and/or retentions are projected for the following
manufacturing segment from 2010-14: Aviation and Aerospace, Machine Shops, Food
Manufacturing, higher value-added Chemicals, and Industrial Machinery. In addition, recent
startup of operations at the new Boeing plant in Charleston and interest by aviation companies,
like Brazils Embraer, in identifying new locations for maintenance, repair and overhaul (MRO)
facilities present opportunities for Savannah to expand its role in the aviation industry supply
chain.

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Driven by recent and future expectations of strong port growth, Transportation & Logistics is
another dynamic industry in the region. Of course, continued investments in infrastructure will
be required and a shift to more highly value-added services, like supply chain management,
logistics, and export/import support services in the region would benefit the regional economy,
as well as the sector overall. The following sections of the report explore some of these key
assets and challenges.

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STRENGTHS, WEAKNESSES, OPPORTUNITIES & THREATS ANALYSIS

A strengths, weaknesses, opportunities and threats (SWOT) analysis determines the degree of
fit between an organization and its external environment. Originally, SWOT was developed as
a tool for evaluating corporate strategy. For the Savannah region, a SWOT analysis provides a
quick summary of competitive advantages and disadvantages for attracting, retaining and
expanding business activity in a region. The SRI team conducted over 25 interviews with
Savannah stakeholders representing companies, local entrepreneurs, financial institutions,
education and workforce institutions, research institutions, and related organizations. The figure
below organizes our key findings from these interviews using a SWOT framework:
Figure 8 SWOT Analysis of Savannah Region, 2011

Source: 10 SRI International (2011).

On the positive side, the Savannah region has many strengths, and significant opportunities
enabled by those strengths. Clearly, the citys location on the coast, with the countrys fourth
largest port and easy rail and highway access, has played a role in the regions historic
advantages in manufacturing and transportation and logistics. Similarly, the citys unique
historical and architectural environment and scenery have underpinned the thriving tourism
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industry. Like many Southern cities with a newly awakening creative class, the citys charm, high
quality of life and closeness of the emerging entrepreneurial and tech community are major
draws for other tech-based startups.
Several stakeholders mentioned the growth of the Savannah College of Art & Design (SCAD) as
contributing to the citys architectural vibrancy and brand. Similarly, Savannah Tech, Armstrong
Atlantic, Savannah State, and Georgia Southern are contributing to the growth and capabilities
of the local workforce.
On the negative side, most people cited a number of constraints on economic growth that will
need to be addressed. Some of these require long-term investments, such as improving road
capacity, expanding facilities at the community college, improving research aligned to industry
need, and upgrading the skill level of the workforce (including support for the public K-12
education system). Progress in these areas will be hampered by the poor macroeconomic
environment. With cutbacks at the state and federal levels, Savannahs economic stakeholders
need to realize that any investments in improving the region in the short term will need to be
funded locally.
With regard to Savannahs entrepreneurial environment, key constraints cited include the
absence of professionally managed venture capital funds and the limited availability of
experienced managerial, financial, and IT talent in the region. The Savannah region is also
hampered by the absence of a Tier 1 research university, and many stakeholders expressed
disappointment at the decision to phase out the undergraduate and graduate engineering
programs at the Georgia Tech-Savannah campus. If Savannah wants to move into a position
where it is generating new technological innovations, rather than only consuming them, then it
will need to make substantial long-term investments in its scientific research capacity and
infrastructure.

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ASSET INVENTORY & ASSESSMENT

SRIs methodology is based on the Asset Mapping framework developed by the Council on
Competitiveness, a Washington, DC, think tank founded in the 1980s by former HP CEO John
Young. The objective of asset mapping is to assemble in one place a data-driven picture of the
regions key sources of competitive advantage (or disadvantage). For each category of asset, we
present some sample quantitative data along with our qualitative analysis.
Table 3 Asset Inventory Overview

Source: 11 Council on Competitiveness

The table above presents the primary categories of economic assets used in the framework.
Keep in mind that the inventory and analysis are targeted at economic assetsthose that
provide the foundation for growing and maintaining industrial production and employment.

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Table 4 Savannah Region Physical Asset Assessment, 2011

Savannah has several physical advantages led by the strength of its intermodal transportation
options and location. Companies based in the Savannah region can reach 44% of the U.S. market
via Savannahs intermodal network which includes the Port of Savannah (the countrys fourth
largest container port), rail access (Savannah Port Terminal Railroad, CSX, Norfolk Southern),
and highway access (I-95 and I-16). The regions air connectivity is a disadvantage cited by
business people, because Savannah/Hilton Head Airport is not a major hub. One must typically
go through Atlanta, Charlotte, or another major city for connecting flights to Savannah.
Although these assets have supported Savannahs prosperity in the past, they may not do so in
the future without significant additional investment. For example, $100 million of Federal
funding is being pursued to deepen the Port of Savannah. The harbor must be deepened to take
advantage of the expanded Panama Canal and the supersized cargo ships that will sail from the
Canal and possibly offload at the Port of Savannah.2 Some business stakeholders noted that as
the Port of Savannah continues to expand, investment in roads will be required to handle the
additional traffic as well, or else the region risks creating gridlock that limits the movement of
both workers and cargo.
Finally, the Savannah region boasts some key industrial sites with additional capacity for
development, including the Mega Site development and Crossroads Industrial sites, the
2

See USA: Port of Savannah Needs USD 600 Million Deepening, Says Official,
http://www.dredgingtoday.com/2011/08/23/usa-port-of-savannah-needs-usd-600-million-deepening-saysofficial/

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Tradepoort East and West locations, and the Interstate Centre. The region and state also have
natural resource advantages including 24 million acres of forest. While the forest has
historically supported the pulp and paper industry, it can also be utilized for exploring new
market opportunities, such as wood pellet biofuels for European energy utilities.
Table 5 Savannah Region Human Resources Asset Assessment, 2011

People power companies. Whether its the attraction of new companies, the expansion of
existing companies, or the creation of local startups, the quality of the local workforce drives the
growth potential for a region. In this regard, the Savannah region faces two key human
resources challenges: a public K-12 system with historically low high school graduate rates and
the absence of a Tier 1 research university.
Several manufacturers and the Port of Savannah cited workforce as a critical issue to their
future growth and expansion. The Savannah-Chatham County Public School System graduated
only 62% of students in 2006-07.3 This has a huge workforce impact, since without a high school
diploma or equivalent a student cannot even enter a certification or Associates degree

Savannah-Chatham County Public School System, Strategic Goal 1d Graduation Rate,

http://internet.savannah.chatham.k12.ga.us/district/Superintendent/das/Pages/STRATEGICGOAL1D.aspx

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program at a community college. Often employers are looking for technical and line level
workers with skill sets that can be acquired through intensive certification or Associates degree
programs.
High school graduation rates have risen steadily over the past few years under the current
superintendent to 77.5% in 2009-10.4 This is a positive sign, and the business and community
stakeholders will want to ensure that with the rising graduation rates exiting students have
achieved the necessary reading, math and science skills that are required by employers and
conveyed by their holding a high school degree.
On the other end of the spectrum, the Savannah region lacks a major research university like
Georgia Tech, University of North Carolina at Chapel Hill, or University of Florida at Gainesville.
Such universities have strong graduate programs, and it is often graduate students who are able
to fill the high-skill positions available at companies and who invent the technologies that
become the basis for new firms and industries.
While nearly all Savannah companies interviewed said they recruit nationally for key positions,
some executives commented that Savannah is an initially hard sell to married people with
spouses who may also be looking for a job. Several executives mentioned a challenge in finding
workers regionally with mid-level or senior-level experience in management, finance, datadriven marketing, and programming. Most of the promising candidates for such positions are
more readily attracted to Atlanta or other large metro areas, due to the perception that such
cities offer more plentiful opportunities for career advancement and more resources and
attractions for families.

Ibid.

25

Figure 9 Percentage of Population Aged 25+ by Highest Degree, 2009: Savannah MSA and U.S.

Source: 12 U.S. Census Bureau (2010), 2009 American Community Survey.

Looking at the educational attainment of the 25 years and older population in Savannah, over
two-thirds (66.9%) of the population had achieved at most only a high school degree as their
highest degree held in 2009. This is only slightly higher than the national average64.5% of the
25 years old and older population had no high school degree or only a high school degree. 5
Among residents with post-secondary degrees, Savannah is most significantly behind the
national trend in residents who finished an associates degree, followed by those with graduate
degrees, and finally those whose highest degree is a baccalaureate.
However, the national unemployment rate and earnings profile of people with this low level of
educational attainment is striking. In the Bureau of Labor Statistics graphic below, we can see
that the average unemployment rate for people with no high school degree was 14.9% in 2010.
The unemployment rate for people with only a high school diploma was 10.3%.6 By comparison,
the national unemployment rate for people with a PhD or professional degrees was only 1.9%
and 2.4% respectively in 2010; for those with a Masters degree 4.0%; and for those with a

5
6

U.S. Census Bureau (2010). 2009 American Community Survey, http://www.census.gov/acs/www/

Bureau of Labor Statistics, Current Population Survey, http://www.bls.gov/cps/.

26

Bachelors degree 5.4%.7 Individuals who are able to complete an Associate degree gain an
above-average opportunity to find employment in the current economy.

In July 2011, the unemployment rate in the Savannah MSA was 9.4% compared to the national
unemployment rate of 9.1%. The unemployment rate is clearly a function of both the rate of
reduced economic growth and the inadequate educational attainment and skill set of workers,
since many job openings are going unfilled today in Savannah and across the country.

Ibid.

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Table 6 Savannah Region Technical Asset Assessment, 2011

The technical asset base indicates the readiness of the Savannah region to support the growth
of high-technology, research-intensive businesses. In this area, the Savannah region has a
significant number of very strong assets, but also a number of potentially critical deficiencies.
Clearly, Savannah has a number of technology-intensive manufacturers, although many of these
are standalone heavy-weights as opposed to a cluster of companies in one manufacturing
industry sector. The only exception is chemicals, which builds on Savannahs historic
competence in process manufacturing for paper and other wood products. In addition to
companies, Savannah is also home to some notable research institutions. Herty Advanced
Materials performs contract research for a variety of multinational companies, including
DuPont. Skidaway Institute of Oceanography performs federally funded marine and
environmental sciences research. The Savannah College of Art & Designs industrial design
program conducts projects for companies including Coca-Cola, Hachette Filipacchi Media U.S.,
JCB Inc., Dell, Freescale, Philips, PlayPower, Newell Rubbermaid, Kiz Toys, Fossil, Motorola,
Johnson Controls, VTech and Kids II. Memorial University Medical Center (Anderson Cancer
Institute) conducts cancer research and clinical trials, primarily through its partnership with
Mercer Universitys College of Medicine.

28

Looking at the technologies developed within the region, our analysis of 2008-10 patenting
activity shows that Savannahs patenting activity (0.23 patents per 1,000 people) is about a third
of Georgias (0.71 patents per 1,000 people) on a per capita basis and about a quarter of the
national average (0.87 patents per 1,000 people) on a per capita basis. Savannah has a different
set of technical focus areas than the state overall. While computers and communications
technologies accounted for 42 percent of Georgia patents in the last three years, those
technologies composed only 10 percent of Savannah patents. Instead, Savannah has a relatively
larger share of patents in the chemical field (44%), and a large share in other technologies
(particularly furniture and building materials). The majority of patents went to well-established
companies, as opposed to startups.
Figure 10 Patent Classification of Patents Awarded 2008-10: Georgia and Savannah

Source: 13 SRI Analysis of U.S. Patent & Trademark Office data

With regard to Savannahs entrepreneurial environment, some key elements are missing. One is
the absence of professionally managed risk capital funds which will be discussed in the Financial
Asset Assessment which follows. Angel capital is very limited, and there are no venture capital
funds in the region. In addition, federal money for Small Business Innovation Research (SBIR) is
not being tapped successfully by Savannah companies. However, the SBIR program is relatively
less significant for IT-based startups, which seems to be the predominant technology focus of
startup firms in Savannah.
A second constraint is the absence of a Tier 1 research university, which would provide the
capital-intensive infrastructure required to conduct R&D. In other regions, the large land-grant

29

universities excel at partnering with small, medium, and large companies who sponsor
collaborative R&D projects. This is a win-win for both parties, and one of the biggest benefits to
companies is access to students with applied research experience relevant to the company.
Many stakeholders expressed dismay at the decision to phase out the undergraduate and
graduate engineering programs at the Georgia Tech-Savannah campus.8 Faculty and students
had partnered with local companies on research projects, and graduates had been hired by local
companies. While it is good news that Georgia Southern will begin to offer undergraduate Civil,
Electrical and Mechanical Engineering degrees, it will take time to make these programs world
class.
Finally, Savannah lacks many of the specialized firms that support emerging technology
companies in other metro areas, e.g., intellectual property (IP) law, accounting firms specializing
in startups, market research firms, etc. This is a chicken-and-egg type of problem similar to the
risk capital problem: these specialized service providers will emerge as the number of
companies demanding these services grow, but the provision of these services support the
growth of startup and existing technology companies. For now, most startups are forced to go
outside of Savannah, to Atlanta or even farther, for such expertise.
The Advanced Technology Development Center (ATDC), housed at the Georgia Tech-Savannah
campus, is part of the Enterprise Innovation Institute (EI2) at Georgia Tech, which helps Georgia
enterprises improve their competitiveness through the application of science, technology and
innovation. ATDC provides a variety of entrepreneurial support services to startup companies in
collaboration with The Creative Coast and other partners. The Creative Coast is a non-profit
organization that supports Savannahs creative and innovative companies through its
networking and advocacy. The organization has been instrumental in attracting small
technology companies to the region as well. These two organizations are important nodes on
which to continue to build Savannahs entrepreneurial fabric.

See Georgia Institute of Technology, Office of the Provost and Executive Vice President for Academic Affairs
(2011). GTS Task Force Report: Defining a Path Forward for Georgia Tech-Savannah,
http://savannah.gatech.edu/task-force-update/task-force-report-recommendations

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Table 7 Savannah Region Financial Capital Asset Assessment, 2011

Financial asset assessments are difficult to conduct, as much of the data on the industry is
proprietary and not easily accessible. However, comments by stakeholders and small technology
companies indicate that there is a distinct lack of risk capital for individuals who want to start
or expand their businesses. The absence of professionally managed risk capital is a constraint on
regional entrepreneurial activity. There is only one angel fund, Ariel Savannah Angel Partners
(ASAP), and there are no venture capital funds in the region. From 2008-10, Georgia companies
(mainly Atlanta area companies) attracted $1.028 billion of venture capital financing.9 None of
this venture capital went to Savannah companies.
Savannah companies could access public funds, such as the federal SBIR program, but
apparently they are not doing so. From 2008-10, none of the $80 million in SBIR awards to
Georgia companies went to small companies located in Savannah. The overwhelming majority of
SBIR funds went to Atlanta. SBIR awards are an increasingly common form of seed capital for
small technology companies, especially those who cannot access the venture capital flowing
into the software and biotechnology industries (which accounted for 37% of all VC dollars
invested in Q2 of 2011). Venture capital funds look more favorably upon investing in companies
which have already succeeded in winning SBIR Phase 1 or 2 funding for commercialization
activities, depending on the industry sector in which the company is operating.
On the more traditional lending side, Savannahs community banks are still struggling from the
housing market collapse, and lending decision by larger banks are made outside the region in
financial capitals, like Charlotte, NC. This makes it more difficult for local area companies to
make their case to financial decision makers.

PricewaterhouseCoopers/National Venture Capital Association (2011). MoneyTree Report.

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Table 8 Savannah Region Business Environment Assessment, 2011

Objective, quantitative information on the overall business environment in the Savannah region
is difficult to obtain, but comments from interviewees reflect a relatively high level of
satisfaction with the ease of doing business in the region. According to Moodys Economy.com
North American Business Cost Review, 2010 Edition, Georgia ranked in the top half of the
country (30th highest costs) in terms of the overall cost of doing business measured by unit labor
cost, energy index, and state and local taxation. The cost of doing business in the Savannah
region is significantly lower than the Atlanta metro area.
The City of Savannah is committed to being a business-friendly partner, and has implemented a
new system for monitoring and evaluating permitting processing time, which is one example of
responding to local business concerns. City leadership and pragmatic, effective administration at
the city level are key components of a good business environment. The continued collaborative
working relationship between the City, SEDA and other business stakeholders will enable other
business issues to be tackled as they arise. One interviewee, an owner of a small technology
company, raised the issue of one of the zoning ordinances being outdated that permits or
denies the use of a building by a company for a particular business purpose. For some IT-based
companies that may originate in a home, the zoning issue can be problematic since it is tied to
the receipt of a business tax certificate.
With regard to taxes, the Tax Foundations 2009 State Business Tax Climate Index ranks Georgia
as the 27th most favorable overall business tax climate and the 8th most favorable in terms of
corporate income tax structure. In addition, the city and state are able to put together good
incentive packages from Georgia Quick Start workforce programs to tax exemptions and credits.

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Table 9 Savannah Region Quality of Life Asset Assessment, 2011

Quality of life is a significant advantage of the Savannah region. The region compares very
favorably to other locations in terms of the citys unique historical and architectural attributes,
restaurants and nightlife, recreational opportunities, natural environment, and other resources
that are attractive to employees and employers. The most significant issues raised in this area
were around public K-12 education, affordable housing, public transit for low-income workers,
crime, high unemployment, and the limited economic opportunities for minorities.

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OPPORTUNITY IDENTIFICATION
Building on SEDAs previous work and SRIs industrial analysis and asset inventory assessment,
we recommend the following target industries and segments for the Savannah region:

Advanced Manufacturing
o Aviation and aerospace
o Materials and chemicals (resins/plastics, woods products, ceramics, etc.)
o Industrial machinery
o Food

Professional, Technical & Specialized Business Services

o Industrial, graphic, web design
o Architectural, engineering services
o Computer systems/IT

Film/TV/Digital Media
o Film and TV production
o Animation and special effects
o Game design and development

Transportation & Logistics

o Marine transportation
o Logistics and warehousing
o Export/import and other transportation support services

Following from these target industries, a number of economic opportunities emerge with
specific courses of actions that stakeholders can take to bolster these sectors of the regional
economy. We present each of these identified opportunities and initiatives to support them
below.

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Table 10 Advanced Manufacturing Opportunity

According to a 2011 report by the consulting firm Booz & Company10, based on interviews with
over 200 manufacturing executives, four factors which will influence site location decisions for
factories in the future are:
1. The skill level and quality of factory employees, especially for high-tech facilities;
2. The presence of high-impact clusters, in which many companies can learn from one
another and innovate more readily;
3. Access to nearby countries with emerging consumer markets and lower-cost labor; and
4. A reasonably competitive regulatory and tax environment.
The U.S. has been losing manufacturing capacity and employment steadily since the 1960s. One
major factor in that shift was the attractive labor rates found in other countries. Labor cost is
only one input into manufacturing success, however. Today, manufacturers find that their
10

Arvind Kaushal, Thomas Mayer, and Patricia Riedl, Manufacturings Wake-Up Call. Strategy+Business, Issue 64,
Autumn 2011.

35

success depends more heavily on their continuing ability to increase productivity and generate
new innovations in products and processes. A key factor in ensuring such success is the
transition from traditional manufacturing to advanced manufacturing.
A recent report from the Presidents Council of Advisers on Science & Technology 11, a standing
advisory group at the White House, defines advanced manufacturing as a family of activities
that (1) depend on the use and coordination of information, automation, computation,
software, sensing, and networking, and/or (2) make use of cutting-edge materials and emerging
capabilities enabled by the physical and biological sciences, for example nanotechnology,
chemistry, and biology. While Savannah-area factories will continue to generate revenues
from the fundamentals in manufacturingwelding and bending metal, assembly of parts and
components, etc.their competitive edge will be based on newer technologies and techniques,
such as computer-numerically controlled machine tools, and replacing traditional materials
light-weight, high-strength composites and ceramics.
In terms of traditional manufacturing, the Savannah region has several key assets that provide a
locational advantage in attracting manufacturers:

The region is the home of manufacturing facilities for market leaders, including Gulfstream,
Mitsubishi Heavy Industries, and JCB.

Market access is facilitated by proximity to overseas markets (via the Port of Savannah) and
the U.S. market (via rail and the I-95 corridor).

The State of Georgia and the regions municipalities have maintained a favorable regulatory
environment (in terms of state labor law and state and local tax rates). Gulfstream in
particular noted that retaining its tax status enabled the recent expansion of its facilities.

These are necessary, but not sufficient, conditions for building a critical mass of manufacturers
for a full-fledged cluster in manufacturing. In particular, for the region to attract higher-value
employers in advanced manufacturing, there needs to be evidence of the regions leadership in
its workforce skills and technology adoption.
Several manufacturers in the area emphasized that recruiting and retaining qualified workers is
their top priority and their greatest challenge. Some noted that they had difficulty in finding
entry-level employees with even basic workplace competencies, particularly in work ethic and in
quality of workmanship. These firms cannot afford to invest singlehandedly in providing
11

Report to the President on Ensuring American Leadership in Advanced Manufacturing, Presidents Council of
Advisers on Science & Technology, Executive Office of the President, Washington, DC, June 2011. Available at
http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-advanced-manufacturing-june2011.pdf

36

remedial training to their new hires. Therefore, the region needs to build capacity in its
workforce development system to give its workers both basic manufacturing skills and in
preparation for learning to work in an advanced manufacturing environment.
A critical weakness of the region is the relative shortage of programs offering such training.
Savannah Technical College has the most prominent role in this domain, but the institution
suffers from space constraints, although the opening of the new Advanced Manufacturing
Program in 2013 should improve this situation. Also, training in manufacturing requires
significant upfront and continuing investments, as students need access to examples of the
latest tools and machinery that they will encounter on the factory floor. Even more significant,
there appears to be a lack of interest among high school students and recent graduates in
careers in manufacturing. Even if the region were to build sufficient training capacity, there is
no guarantee that it would be able to fill those seats with motivated learners.
To address these key shortcomings, the Savannah region needs a multi-pronged approach:
To deal with the immediate shortage of qualified workers, the region needs to seek out less
traditional sources of potential labor. Recruiting military personnel who are leaving service at
nearby Fort Stewart could be one such recruiting pool. The region should also assist local
manufacturing employers in looking outside the region for potential new hires to ameliorate
short-term labor shortage conditions.
Increasing the capacity of public training programs must also be a top priority. The costs of this
effort can be mitigated partially by contributions from local employers. Also, there is likely to be
some funding available from federal agencies, depending on whether the White House can
implement some of the provisions of its Strategy for American Innovation and the recent
reauthorization of the America COMPETES Act. Given sufficient funding, there are many helpful
models and resources available for designing such training programs, such as the Advanced
Manufacturing Competency Model developed by the National Coalition for Advanced
Manufacturing, and sample curricula for advanced manufacturing available through the
Employment and Training Administration at the Department of Labor.
To ensure a longer-term supply of motivated and qualified workers, the region needs to gain the
attention of students earlier in the pipeline, in middle school and high schooland even
elementary school. First, students and their parents need to be aware of the potential for career
advancement and future standard of living in manufacturing. The National Association of State
Directors of Career Technical Education offers literature and resources to help educate students
about the career pathways in manufacturing. Second, students need exposure to some of the
fundamental competences required for advanced manufacturing, such as using statistics for

37

quality assurance and process control. Finally, the region needs to continue marketing
manufacturing training opportunities and job potential to middle school, high school and postsecondary students.

Table 11 Materials & Design Opportunity

Design is one of the most important components of innovation in todays economy. Apple owes
its position as the nations most valuable company (in terms of market capital) not to its use of
technology, but its ability to design a more compelling user experience. Industrial design in
particular helps to transform low-margin commodity goods into more desirable, high-value
items. More of the nations top engineering schools, such as Stanford and MIT, recognize this
trend and have integrated design courses into their curricula.
Cutting-edge product design is enabled by the availability of new materials that meet both
functional product requirements and the creative vision of the designer. With advances in
materials science and engineering, designers are now able to create innovative products that
combine attributes such as low weight, high flexibility, and aesthetic quality. Much of the look

38

and feel of modern goods, from cars to vacuum cleaners to kitchen appliances, are possible
only due to new composite materials constructed from fibers, plastics, and hybrid materials.
The Savannah region is home to two potentially-complementary sets of capabilities that can
make the region into a destination for materials development focused on design:

First, the city is a center for learning and knowledge about design and its applications,
through the School of Design at SCAD. The design program at SCAD has partnerships with
many industrial firms, both local and worldwide, and gives its students a strong practical
understanding of how design sensibility is useful in the marketplace. This existing client
base, and SCADs network of alumni, help to make Savannah a recognizable force in the
design movement.

Second, Savannah has a history of technical competence in new materials, stemming from
the traditional industrial base in wood products and chemicals. This expertise continues to
reside in the area, as evidenced by institutions such as Herty Advanced Materials, one of the
few facilities that can conduct applied research and prototype manufacturing for new
materials. Georgia Southern University has already started to build a center of excellence in
materials science research, by recruiting world-class scientists to the campus and investing
in new facilities and infrastructure.

Integrating these two sets of capabilities could unleash significant benefits to the Savannah
region. For example, the city can be positioned as a geographic center for understanding the
use of materials in design. One unique characteristic of design engineers is that they often need
to feel and play with new materials to understand their qualities and how they can be used in
new products. Therefore, Savannah can provide a common facility and playground where
those designers can visit, learn about new materials, and experiment with them. With Herty,
Savannah can also help firms to understand how to take those new materials and insert them
into their production processes so that new materials are compatible with mass manufacturing.
To create such an environment, Savannah will need to take proactive steps in building its design
capability:

Savannah needs better recognition as a center for industrial design. While SCADs alumni
connections can facilitate this, the region also has opportunities to reach out to professional
and trade associations in the design community, such as the American Institute of Graphic

39

Arts (AIGA).12 A logical first step would be to host industry events and conferences for such
groups, so that their members are drawn to Savannah and can see what it offers firsthand.

A physical facility for introducing designers to new materials will also serve as a natural
magnet for this community. A proposal exists to create a library and research center for
cataloging new materials and experimenting with their properties and potential. This facility
could be attached to a conference center to host events but also to provide continuing
education and professional development courses in design and materials research.
Furthermore, creating a research center in materials will help to attract scientific research
funding to the area, which will eventually benefit local universities as they seek to build their
own research capacity and infrastructure.

The region should convene a task force from the design community, local industry and
education to develop a business plan and a strategy for realizing this vision.

Table 12 Transportation & Logistics Opportunity

Savannah has a clear asset in the Port of Savannah and its intermodal transportation
infrastructure. This is a big draw to manufacturers with global supply chains and global
12

40

customers. Relatedly, significant investments have occurred in warehousing and distribution

facilities in the region. However, the average wages in such facilities are relatively low with
limited career opportunities.
There is an opportunity to pivot into other higher-value logistics and support activities.
Cognizant of intense global manufacturing cost pressures, manufacturers have looked to
implement more lean manufacturing and real-time supply chain management systems. For
example, all of Savannahs major manufacturers and the Port of Savannah have implemented
SAP in order to collect and analyze orders, supply chain, and shipment data. Because of the
Oracle and SAP monopoly on this type of systems infrastructure, the one size does not fit all.
Opportunities abound in developing applications tailored to the specifications of individual
companies. One course of possible action highlighted by an external SEDA consultant would be
to develop a business plan for attracting software logistics companies that specialize in
developing applications for the SAP infrastructure to Savannah.
Leveraging the Port of Savannah, major manufacturers, and Georgia Southerns graduate
program in logisitics, the Savannah region could become a test bed for supply chain and
logistics research activities.

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Table 13 Support for Startups and "Soft Landing" for International Small and Medium-Sized Technology
Companies Opportunity

Small companies are an important driver of innovation and employment creation in the U.S.
economy. Yet, initiatives to support home-grown companies are often neglected, because of a
regions single-minded focus on business attraction or a lack of understanding or agreement on
how to effectively support startup technology and creative companies. Nevertheless, new
business creation is as critically important to long-term regional economic development and
industrial diversification efforts as business attraction and retention efforts.
In the case of Savannah, the region has a growing cadre of innovative and creative startup
companies. However, the type of companies that are capable of being formed currently are
companies for which startup can be largely self-financed and able to generate revenue before
the entrepreneur runs out of money. The region is likely missing out on opportunities to support
the creation of companies based on a proprietary technology or trade secret that may require
additional development and investment in order to reach the market. Such companies may be
more scalable with higher employment and revenue growth potential compared to some
existing startup technology companies in the region.
The Technical Asset Assessment pointed to ATDC and The Creative Coast as important nodes in
Savannahs existing technology community and entrepreneurial network, but more could be

42

done to build on and compliment these existing assets. The Financial Capital Asset Assessment
highlighted the critical absence of professionally managed risk capital in the region. On the one
hand, angel investors and venture capital are attracted by investable dealsstartups that not
only have a proprietary technology or trade secret, but which also have a solid business plan
based on a robust market assessment, the identification of customers, a prototype of their
product and validation that cost and technical barriers to production have been overcome. On
the other, more could be done to identify, screen and promote the pool of investable deals in
the larger Savannah region. This is where the establishment of a virtual incubator or
entrepreneurial boot camp-type model and professionally managed seed or venture capital fund
could enhance the entrepreneurial environment in the Savannah region.
A virtual incubator or entrepreneurial boot camp associated with a professionally managed
venture capital fund would provide screening of business ideas and business support services to
client companies. The virtual incubator would have in-house experts or connections to experts
in market research, finance and accounting, human resources, etc. The venture fund would
invest in those deals in which additional capital is required to get to market.
In addition, stakeholder interviews point to the interest of several small and medium-sized
technology companies that have shown interest in locating in Savannah because of access to
market, relatively low cost of doing business quality of life, and hospitality and inclusiveness of
the existing tech community. Increasingly, small countries like Singapore and Israel have
implemented soft landing programs that make it as simple as possible for technology
companies to locate there, from permitting/zoning to staffing and office space. The City of
Savannah has shown good will and intent to be a business-friendly partner, and the various
stakeholders (e.g., SEDA, the Chamber, ATDC, The Creative Coast, etc.) should work to further
develop and strengthen their networks and no wrong door structure. Savannahs small size is
an advantage to small technology companies who want to focus on their business and would
ideally like to solve problems with one phone call.
In many respects, growing your own companies and attracting small technology companies from
other parts of the country and overseas requires fewer incentives and less investment than
attracting large companies, while achieving the same goal of supporting vibrant, innovative
companies with higher-than-average wages in the regional economy. The growth of such
companies also helps to brand Savannah as a historic Southern city which is on the cusp of
dynamic growth in a number of knowledge-intensive industries.

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Table 14 Film/TV/Digital Media/Computer Animation/Special Effects Opportunity

Because of its asset base, Savannah is ripe for a wide range of film, TV and digital media
production. However, the challenges associated with supporting each type of production in the
Savannah region are slightly different.
The film service industry is dependent upon state tax credits, sound stages, crew base, variety
and uniqueness of exterior locations, mix of upscale and affordable hotel accommodation,
essential services (camera, grip, electrical, catering), and a friendly political atmosphere in
terms of city ordinances/permitting. Due in part to its Entertainment Production Tax Credit,
Georgias economic impact from the film industry grew five-fold over the past three years: from
$240 million in 2007 to $1.4 billion in 2010, according to Lee Thomas, director of the film
division of the Georgia Film, Music and Digital Entertainment Office.13 Today, Georgia ranks in
the top three for film production locations in the country.
The economic impact associated with film production stems from employment of local crew, but
also from the variety of small businesses that benefit from the significant daily expenditures of
the crew and other staff during filminghotels, restaurants, dry cleaners, retail, taxi drivers, etc.
Savannah is a film friendly city with an effective film commission and assets in its local talent.
Stratton Leopold is a Savannah native who is an executive producer at Paramount Pictures.
13

See http://news.euescreengems.com/2011/05/25/tax-incentives/

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Meddin Studios is a startup digital production services company with small sound stages that
can support TV, gaming and other production.
A major challenge for Savannah in attracting film production, however, is the absence of large
sound stages: 20,000 sq. ft. stages with 40-45 foot ceilings. International Studios Group (ISG) of
Los Angeles conducted a business feasibility study in 2010 of creating a full service film and
television studio in Savannah with three large sound stages. Since this is such a critical
constraint, Savannah stakeholders should conduct due diligence and explore city/state
incentives for potential sound stage projects.
The strength of SCADs programs in computer animation and special effects, as shown by its
strong showing in the Student Academy Awards, and other competitions, is both a boon and a
constraint for Savannah. While SCAD launches the careers of promising digital artists, they are
frequently recruited away to work in Hollywood, Silicon Valley, or New York, rather than staying
in Savannah. This complicates any effort to attract firms in that segment to Savannah, as they
prefer to bring recruits to their site rather than open a new location in a remote city.
The evolution of this market segment could provide a new opportunity for Savannah, however.
Many of the pioneers in digital media for film and television are reaching the pinnacles of their
careers, and are likely to consider moving to a city with less stress and demand than Los Angeles
or New York. If the Savannah region could target SCAD alumni who fit that profile, and convince
them to relocate back to Savannah while launching their own firms. This would enable Savannah
to grow a new industrial cluster in this market, thanks to the reputations of those alumni and
their access to the stream of new project opportunities coming out of media centers like LA.

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OVERARCHING PRINCIPLES
Savannah is on the cusp of tremendous growth and vibrancy, and could easily be one of the new
breed of transformative Southern cities driving innovation and economic growth in the greater
Southeast region over the next 20-30 years. However, agreement on a long-term vision (2030)
of what Savannah can and should be must start today in order to coordinate and align regional
stakeholders, initiatives, and investments.
SRI recommends that key components of this vision should be:

Act and compete globally: Aging populations and government austerity measures to
tackle growing debt problems in the U.S. and Europe mean that the engines of growth in
the global economy will be in countries like Brazil, China, and India, which have both
strong and growing government and private sector consumption of goods and services.
Savannahs companies will need to connect to global markets and export to achieve
sustainable growth, and Savannah leaders will need to have a global mindset to help the
region compete and succeed. In this regard, SEDAs World Trade Center license initiative
will support the regions established companies in expanding internationally, assist
international companies in looking to establish in the U.S., and help elevate Savannah
on the world stage.

Work regionally: The new Boeing plant in Charleston benefits Savannahs aviation parts
manufacturers; risk capital provided by angels in Hilton Head can support Savannah
startups; and the growth of research activities that are aligned with industrial activity at
Georgia Southern and other regional universities can contribute to the regions
workforce and technological competitiveness. The Savannah MSA has 350,000 people.
What is difficult to achieve as a city or three-county region is not as insurmountable as a
larger geographical region. However, Savannah stakeholders must continue to develop
strong partnerships with other regional stakeholders and work collaboratively to
succeed.

Collaborate on workforce pipeline: The education and skill set of the regional
workforce is a major competitiveness issue for all of Savannahs industries, and it begins
at the pre-K level.

Make investments that benefit multiple industries: In the near term, Federal and state
government will have more limited resources to make major infrastructure investments.
Stakeholders should focus on investments that improve the business environment fo

46

multiple sectors of the economy. Such investment include roads, port deepening,
research, the technical college, the convention center, affordable housing, and public
transit.

47

BENCHMARK INDICATORS
As SEDA further develops and implements its strategic plan, it will want to measure its
performance in helping to move the economic dial in the region. The challenge with
benchmarking is always to select useful indicators that capture meaningful information without
the benchmarking activity becoming an overly cumbersome, time-consuming activity that takes
on a life of its own.
SEDA has internal indicators for measuring its organizational performance. However, in this
section SRI proposes some high-level indicators that SEDA and other business and community
stakeholders can use to measure progress towards the end goals of generating a higher rate of
economic growth that creates higher wage jobs and improves the livelihoods of people living in
the greater Savannah region.
SRI recommends, as a starting point, a small number of indicators in three categories: Economy,
Workforce, and Innovation. For this list of indicators, it makes sense to benchmark the Savannah
MSA against the state and the national average. The goal is to eventually surpass both.

Economy
- Per capita GDP
- Exports
- Job growth
- Business creation
Workforce
- High school graduation rate
- Post-secondary educational attainment
Innovation
- NSF competitive awards
- Patents
- SBIR awards
- Venture capital

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ECONOMIC INDICATORS
A key objective of economic development is to raise income levels for residents, and this is
largely a function of the rate of regional economic growth, the impact of national/international
business cycles, and the level of educational attainment of the population. Changes in the
standard of living in a region can be measured roughly by change in per capita personal
incometotal wages, transfer payments, dividends, interest, and rental income divided by
populationor by change in per capita GDPa regions total productive output divided by the
population. SRI recommends using per capita GDP as a core indicator, since it conveys the
economic productivity of a region and its population. The table below shows that the Savannah
regions real GDP per capita ($35,106) lagged both the state and national GDP per capita in
2010.
Figure 11 Comparison of Real GDP Per Capita: Savannah MSA, Georgia, and the US, 2010

Source: 14 US Bureau of Economic Analysis

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Since a key SEDA focus is business startup, retention, and attraction, regional new business
creation is an important economic indicator. Unfortunately, data that track the startup of new
businesses in a region are only available at the national, state and Top 50 MSA level. However, a
good proxy for new business creation is the net change in business establishments in the
Savannah MSA. This tracks the opening of new establishments minus the closure of existing
establishments between two time periods. From the data in the table presented below, one can
see that Savannahs regional economy tends to perform better than the U.S. during national
economic expansions and worse than the U.S. during recessions. The Savannah MSA had a
larger net increase in new business establishments in 2004-05 (34.4 new establishments for
every 1,000 establishments in the region) and a larger net decline in 2009-10 (16.6
establishment closures for every 1,000 establishments) compared to the state and national
situation.

Table 15 Change in Establishments, Total and Relative to Size of Company Base: Savannah MSA, Georgia, and
the US, 2004-05 and 2009-10

Region

Savannah MSA
Georgia
US

Net Change in
Establishments,
2004-05

Net Change per

1,000
Establishments

Net Change in
Establishments,
2009-10

Net Change
per 1,000
Establishments

281

34.4

-145

-16.6

6,709

27.3

-3,449

-13.4

201,520

24.3

-3,974

-0.5

Source: 15 US Bureau of Labor Statistics, Quarterly Census of Employment and Wages

Employment growth reflects the rate at which the regional economy is creating and filling new jobs.
Over the past decade, the Savannah regions employment growth has outpaced the state and national
average during economic upswings and performed worse than the national average during the most
recent recession. Employment growth was negative for the most recent Aug. 2010 - Aug. 2011 period,
contracting by 0.2%. By comparison, the national employment rate grew by 1.0%

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Figure 12 Annual Percent Change in Employment: Savannah MSA, Georgia, US, 2001-11

Source: 16 US Bureau of Labor Statistics

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More than 70% of the worlds purchasing power today is located outside of the United States, and the
share of purchasing power concentrated in other countries is only going to increase over the next 20-30
years. Several studies have shown that U.S. companies that export are more competitivethey grow
faster and are less likely to go out of business than non-exporting companies. Therefore, the Savannah
regions export of goods and services is a critical indicator of competitiveness and outward orientation
of Savannah area companies. From the data in the table below, exports of goods and services from the
Savannah MSA significantly lag exports at the state and national level relative to the size of the regional
economy. It is important to remember that the Savannah regions export of services is nearly equivalent
to the value of its export of goods.
Table 16 Value of Goods Exports, Gross and Relative to Size of Economy: Savannah MSA, Georgia, and the US,
2009

Region

Goods Exports
($ billions)

Goods Exports
as % of GDP

Savannah MSA

$.021

0.2%

$.039

0.3%

Georgia

$23.7

6.0%

n/a

n/a

$1,069.5

7.7%

$1,575.0

11.3%

US

Goods &
Goods &
Services
Services
Exports ($ Exports as % of
billions)
GDP

Source: 17 US Bureau of Economic Analysis and Brookings Institute for Savannah MSA export data

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WORKFORCE INDICATORS
Workforce is a critical competitiveness issue in the Savannah region for the foreseeable future.
With regard to useful workforce indicators, the educational attainment of the adult population
(25 years and older) is a good measure of the investment that a region has made in developing
and attracting human capital. The figure below compares educational attainment in the
Savannah MSA relative to the state and country overall. Ideally, over time, one would want to
see a larger share of the adult population migrating from the left hand side of the figure (no high
school degree or only a high school degree or equivalent) to the right hand side (associates and
higher degrees).
Figure 13 Educational Attainment of 25+ Year Old Population: Savannah MSA, Georgia, and the US, 2009

Source: 18 US Census Bureau

Census data indicates that the Savannah MSA lags slightly the state and national average in
terms of the populations attainment of college degrees and higherwith the exception of
Associates degrees. On the left hand side of the figure, the Savannah MSA has a higher share of
the population with only a high school degree or equivalent. The Savannah MSA performs better
than the state and national average with a lower share of the population with no high school
degree. The table below presents educational attainment of the adult population in the
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Savannah MSA, Georgia, and the country overall in 2009. As noted earlier, this will tend to limit
the employment prospects for Savannahs residents, and also constrains the pool of talent
available to fill higher-skilled positions at local employers.
Table 17 Educational Attainment of 25+ Year Old Population: Savannah MSA, Georgia, and the US, 2009
Region

No HS Degree

HS Degree Only

Associates
Degree

Bachelors
Degree

Grad or Prof
Degree

Savannah MSA

11.7%

55.2%

6.7%

17.3%

9.2%

Georgia

16.1%

49.9%

6.4%

17.6%

9.9%

US

14.7%

49.8%

7.5%

17.6%

10.3%

Source: 19 US Census Bureau

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INNOVATION INDICATORS
Patents are a measure of the overall level and type of inventive activity occurring in a region. Patents do
not necessarily convey a particular commercial value or level of innovation, since many patented ideas
or processes never reach the market place. On the other hand, since the purpose of patenting is to
protect ownership of an invention with potentially large commercial value, patenting is an important
indicator of one type of innovation output.
There are many challenges related to the analysis of patent data. One major challenge with corporate
patents is corporate patenting policy and parent-subsidiary relationships. For example, SRIs search of
Gulfstream patents turned up only one patent awarded to Gulfstream from 2008-10. However,
Gulfstream is a subsidiary of General Dynamics which is headquartered in Falls Church, Virginia. If
General Dynamics policy is to have all of its subsidiaries patents assigned to the address of the parent
corporation, then one cannot distinguish between parent and subsidiary patenting activity. Its not clear
if Gulfstream was awarded only one patent from 2008-10, or if the Savannah address for this patent was
an outlierthe inventor forgot to follow General Dynamics corporate patenting policy.
This can also be a problem with educational institutions. For example, most universities have a research
foundation or corporation through which all of its patents, including those of branch campuses, are
assigned. Another challenge is that certain types of patents may run into USPTO bottlenecks at different
points in time. This could be caused by staffing issues or by large fluctuations in the number of
applications in a particular patent category in a given year. Therefore, looking at patents for a single year
may be misleading.
SRI analyzed USPTO data from 2008-10 and totaled the patents awarded nationally, in the State of
Georgia, and in the Savannah MSA over this time period. Patenting activity in the Savannah MSA was
approximately a third of that in Georgia and a quarter of that nationally on a per capita basis from 200810. The table below presents inventor companies or inventors that received two or more patents over
this three-year period and the types of patents that were awarded.

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Table 18 Patents Awarded, Total and Per Capita: Savannah MSA, Georgia and the US, 2008-10

Region

Total Patents Awarded

2008-10

Patents per 1,000

People

79

0.23

6,918

0.71

267,267

0.87

Savannah MSA
Georgia
US
Source: 20 US Patent & Trademark Office

The Small Business Innovation & Research (SBIR) Program aims to promote technological innovation and
economic growth through the investment of Federal research funds in small U.S. companies. This is a
competitive, set-aside program for small businesses that are engaged in R&D with the potential for
commercialization. All Federal agencies with a budget greater than $100 million per year must set aside
2.5% of their extramural research budget for SBIR awards. Phase I SBIR awards provide up to $150,000
for 6 months, and Phase II SBIR awards provide up to $1 million for 12 months. Only Phase I winners
may apply for a Phase II award.
As venture capital funds have migrated from seed stage to later stage investment deals over the past 10
years, SBIR funding has become an increasingly important source of seed capital for small, technologybased companies. Nationally, federal agencies make SBIR awards of between $2.2 billion to $2.5 billion
each year. Looking at the three-year period of 2008-10, companies in the Savannah MSA received no
SBIR awards compared to the 251 companies located elsewhere in the State of Georgia (mainly the
Atlanta metro area) which received a total of $80 million in SBIR awards.
Table 19 Value of SBIR Awards: Savannah MSA, Georgia and the US, 2008-10

Region
Savannah MSA
Georgia
US

Value of SBIR Awards

($ millions) , 2008-10
$0
$80
$7,250

Source: 21 US Small Business Administration

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Access to venture capital is also a challenge for Savannah area companies, and a good indicator to track
going forward. From 2008-10, Georgia technology companies attracted over $1 billion of venture
capital. However, this represents only 1.4% of all venture capital invested over this three-year period. By
comparison, Georgias economy represented 2.8% of national gross domestic product (GDP) in 2010,
implying that Georgia is underrepresented in the venture capital market relative to the size of its
economy.14
The Savannah MSA is too small a region to be tracked by most national data sources. However, from
stakeholder interviews and online research it appears that Savannah area companies attracted very little
venture capital investmentpossibly a few million dollars total, and from outside the regionfrom
2008-10.
Table 20 Venture Capital Investment: Savannah MSA, Georgia and the US, 2008-10

Region
Savannah MSA
Georgia
US

Value of Venture Capital

Investment ($M), 2008-10

% of US Venture
Capital, 2008-10

% of US GDP,
2010

$0

0%

0.1%

$1,028

1.4%

2.8%

$71,303

--

--

Source: 22 PricewaterhouseCoopers/National Venture Capital Association, MoneyTree Report

Finally, looking to future regional technology development opportunities stemming from research, it is
useful to know what type of research Savannahs regional universities and institutions are undertaking
and how this research profile is changing over time. One indicator in this regard is NSF competitive
research funding awards. From 2008-10 Savannahs regional universities were awarded $17.6 million of
competitive NSF funding. For comparison, NSF granted $376.3 million of awards in the state of Georgia
overall and $21.5 billion of awards nationally over the same three-year period.
The table below presents the Savannah area institutions that were awarded NSF grants, the NSF division
granting the research award, and the total value of NSF research funding received by Savannah area
institutions from 2008-10. One can see that NSF research funding is highly concentrated in three
institutions: the Skidaway Institute of Oceanography, Georgia Southern University and Savannah State
University. Data was not available for the Georgia Tech-Savannah campus whose NSF funding was not
reported separately from the main Georgia Tech-Atlanta campus.
14

According to the U.S. Bureau of Economic Analysis, Georgias GDP was $403.7 billion in 2010 compared to the
U.S. GDP of $14,526.5 billion, or 2.8% of national GDP.

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Not surprisingly, most of the NSF awards to Skidaway researchers were in the area of ocean sciences
research. At Georgia Southern University, NSF awards were concentrated in environmental biology and
in the provision of Undergraduate Research Opportunities. Savannah States NSF awards have focused
on the preparation and growth in the number of students pursuing science, technology, engineering and
mathematics (STEM) disciplines and careers, represented by the Division of Engineering Education and
the Division of Graduate Education awards. Research awards were also received in the geosciences and
mathematical sciences fields.
Table 21 NSF Awards by Savannah Area Research Institution, 2008-10

Source: 23 National Science Foundation (NSF) Awards Database

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