Tennessee: Hotbed for 21st Century Industries
With one of the fastest-growing clean energy sectors in the nation, including electric car manufacturing, the Volunteer State is poised for growth.
The Tennessee Department of Economic and Community Development (TDEC) is thrilled about becoming a haven for some of the 21st century’s hottest growth industries. TDEC has been using the state’s numerous benefits, such as low-cost labor, zero income tax, and new tax incentives to their advantage, and the results have been impressive. In the last five years, according to TDEC, the state has attracted some $26 billion in corporate investment, 42 corporate headquarters and 163,000 new jobs—two-thirds of them from expansion of existing business.
“We’ve made incredible progress in making Tennessee the kind of state where business knows it will be treated fairly,” former Gov. Phil Bredesen said. “We know companies want to be where government understands their needs and will help craft solutions to achieve them, whether it’s creating a trainable workforce or providing the infrastructure needed to get products to market. We’ve proven Tennessee can get the job done.”
“In a very challenging environment, we’ve demonstrated that raising educational standards, expanding workforce development and putting in place flexible incentives is the right formula to create jobs,” says Matt Kisber, outgoing TDEC commissioner.
One of the most exciting things going on in Tennessee is the state’s commitment to growing its renewable energy sector. This effort has started paying off with several new companies moving in. German-based Wacker Chemie chose Bradley County for a $1 billion facility to make the raw material used in solar panels and semiconductors. Hemlock Semiconductor selected Clarksville for a polysilicon plant, a potential investment that could top $2 billion. With Hemlock and Wacker, Tennessee is now home to the world’s top two producers of polycrystalline silicon, the primary component used in solar panels. Tennessee has the third fastest growing clean energy economy in the nation, according to a 2009 study by The Pew Charitable Trusts.
In the past three years, Tennessee has attracted three major manufacturing projects in the solar energy sector due to it’s commitment to solar technology, which comes from the creation of the Tennessee Solar Institute at the University of Tennessee and Oak Ridge National Laboratory in 2009 and the planned West Tennessee Solar Farm. The institute recently awarded $7 million in solar grants to fund 37 projects across the state to increase energy efficiency and incorporate renewable energy products into the workplace. These efforts have put Tennessee on the solar map and attracted next-generation solar component producers that focus on making the technology more efficient and affordable. Missouri-based Confluence Solar, for example, announced in January 2010 that Clinton, TN would be the home of its new manufacturing, warehousing and distribution facility. The $200-million investment means 250 new jobs producing premium quality mono-crystal silicon ingots. Other major players include Sharp Corp., which has expanded its solar panel production capacity in Memphis three times since 2003; AGC Flat Glass, with two operations in eastern Tennessee; and Shoals Technologies Group, which is relocating its headquarters from Alabama to Gallatin and is now building solar components in Portland. Shoals produces wire harnesses, junction boxes and integration equipment.
“Ideally, these companies will process the raw material for solar panels. Tennessee companies like AGC Flat Glass and Shoals Technologies will transform those raw materials into solar panel components and Tennessee installers will bring those solar panels to homes and offices across our state and the nation,” Kisber says.
The TDEC continued its commitment to renewable energy when it awarded 21 Main Street/Green Street Innovation Grants for green and sustainable projects in downtown communities across the state in October 2009.
“These innovative ‘green’ projects showcase our Tennessee downtown communities’ commitment to environmental and downtown revitalization efforts and allow them to lead by example,” says Kisber. “The Main Street/Green Street proposed projects will not only enhance and improve individual downtown communities, but they also support the state’s efforts to advance sustainability and economic development across Tennessee.”
Two other industry sectors that are helping Tennessee’s economy recover are the automotive sector and the healthcare sector.
Tennessee is experiencing a new wave of automotive investment. It is not only the North American headquarters for Nissan, but also where Nissan will be producing the all-electric LEAF, beginning next year, along with the lithium ion batteries that power it. Tennessee is one of six states that will be participating in the nationwide EV project for creating a charging infrastructure for electric cars.
Volkswagen Group of America recently unveiled that the all-new Passat will be built in its $1 billion assembly plant in Chattanooga, TN. The new state-of-the-art facility is ready to start producing the car that will hit the market later this year. According to an economic impact study by the University of Tennessee, Volkswagen’s decision to locate its assembly plant in Chattanooga will boost incomes in the region by $511.1 million annually, generate more than $55 million annually in new tax revenues for state and local governments, and creating an additional 9,477 indirect jobs through construction and supplier activity.
“We are already beginning to see anchor projects such as Volkswagen’s decision to locate in Chattanooga and Hemlock Semiconductor’s decision to locate in Clarksville yield tangible results,” Kisber says. “In a University of Tennessee study, it was estimated the Volkswagen plant would create an additional 9,000 indirect jobs for the region. Over the past year we’ve had many suppliers announce the creation of hundreds of new jobs and millions in new capital investments from companies that include Gestamp Corporation, Chattanooga Seating, Faurecia, Magna Exteriors & Interiors, MTEK, ThyssenKrupp, Miniature Precision Components Inc. and SL America. There will be even more suppliers announced as Volkswagen gears up for the production of its new vehicle in early 2011.”
Tennessee also has become known as a health-care innovator in research, delivery and management, and includes renowned facilities such as St. Jude Children’s Research Hospital in Memphis and Vanderbilt University Medical Center in Nashville. The state’s wide range of high-quality public and private colleges and universities, including the University of Tennessee in Knoxville, are augmented by major research facilities, such as Oak Ridge National Laboratory.
In terms of medical devices, Memphis, TN is the place you want to be, as the city is positioning itself to become one of the top centers for musculoskeletal implant manufacturing. Onyx Medical Corp., which produces orthopedic wires, pins, drills and screws, is investing $4.5 million in a new plant. NuVasive, a manufacturer of spinal surgery materials, is investing $1.6 million in facility upgrades. Meanwhile, Medtronic Inc. recently completed a $90-million expansion of its Memphis facilities.
In addition to a quality workforce, Memphis’ well-developed logistics industry makes the city a natural spot for the industry to grow, according to Willis Yates, president of Y&W Technologies, a supplier to the medical device industry.
“The distribution and logistical side of the city really works for the industry. We are only minutes away from Memphis International Airport and FedEx and UPS hubs,” says Yates.
In Franklin, TN, biotechnology company BioMimetic Therapeutics is creating breakthroughs in the areas of tissue healing and regeneration. In Nashville, Cumberland Pharmaceuticals is pursuing a strategy of acquiring currently marketed and late-stage development pharmaceuticals.
“Whether we’re working in automotive manufacturing, clean energy or any other growth industry, Tennessee will continue to pursue transformational job creation projects as an important element in our economic development efforts,” says Kisber
Clarksville-Montgomery County: Powerhouse in the Middle
Clarksville-Montgomery County, Tennessee has positioned itself as an economic powerhouse within the Middle Tennessee region of the United States. Ready to move into the future with top-of-mind recognition for industrial development, relocation and growth, Clarksville-Montgomery County brings assets to the table that make it a clear choice. The city-county has worked closely with the State of Tennessee Department of Economic and Community Development, Tennessee Valley Authority and other regional partners to effectively market the industrial vitality of the region.
Due to the available workforce, high quality of life, convenient location and excellent business climate, many of the current industries in the city-county have expanded over the years, several of them boasting multiple expansions. Service after the sale is one of the greatest strengths among the economic development team and prospects are encouraged to take a look at why so many national and international companies have chosen to settle in Clarksville-Montgomery County.
While the economic development team in Clarksville-Montgomery County works aggressively to recruit new industry, existing businesses are the backbone of the community. Fifty-three manufacturing facilities call Clarksville-Montgomery County home, from one the oldest, a smokeless tobacco manufacturer, American Snuff, LLC established in 1907, to the newest member of our community, Hemlock Semiconductor, LLC in 2008. This is a testament to the environment that has been created to facilitate the needs of businesses in the community.
At $1.2 billion in initial investments and the biggest industrial investment in the history of Tennessee, Hemlock Semiconductor, LLC announced their decision to locate a new polysilicon production facility in Montgomery County in December 2008. As of January 2011, HSC, LLC employs over 1,500 contract workers and will have 500 full-time employees upon opening in 2012. Austin Peay State University has been an avid partner in this project and in the fall of 2010 they opened the doors to the new Hemlock Building. Through funding from the State of Tennessee, the new on-campus lab facilitates a two-year degree program in chemical engineering processing. This program is an example of ways members of the Clarksville-Montgomery County industrial landscape work to ensure a well-trained and readily available workforce which serves as one of Clarksville-Montgomery County’s greatest strengths in business recruitment.
James Chavez, President and CEO of the Clarksville-Montgomery County Economic Development Council, said, “We have made it a priority in our recruitment strategies to create an environment ready for corporations to move forward quickly in relocation and construction, and in the next fiscal year we have projected heavy involvement in solar, automotive and corporate service industry recruitment.”
When your company or client is ready to move forward in relocation, Clarksville-Montgomery County has options including acreage for a build to suit, an existing building to retrofit or a speculative building; there are 880 acres available in the Corporate Business Park, which includes two certified sites. Existing buildings ranging from 2,000 square feet to 575,000 square feet are available in both commercial and industrial settings.
One advantage is that the Middle Tennessee Industrial Development Association has deemed the Certified Sites as “Deal Ready”. Initially saving an incoming company six months of time is the prepared 40-acre Pad-Ready site which is currently prepped for a building foundation. Also, the rail service provided by the R.J. Corman Railroad Group runs directly to the site, making material transport more convenient. There is a proposed route to serve the site with rail and the Economic Development Council will work with the State of Tennessee to obtain Fast Track Grant Funds to pay a portion of the cost of the rail spur. The 500-acre signature site contains interstate visible parcels and both sites are rail servable.
In addition to the 40-acre pad ready site, other featured properties within the Corporate Business Park include a newly available 575,000 manufacturing facility, a speculative building for a corporate services project and a Class A distribution park by Panattoni Development Company. The 575,000 square foot building sits on 75 acres with room for expansion. It is rail served and located near the entrance of the original Business Park and approximately 1 mile from HS, LLC. At the other end of the park, near Exit 8 off I-24 is a speculative, shell building by FRE Resources. The building is 52,800 square feet and may be built out to suit the client’s needs for a service center project. Directly across International Blvd is the future Class A distribution and office park by Panattoni Development Company. 225 acres will be developed over a 10 year period to include up to 3 million square feet total.
The Clarksville-Montgomery County Corporate Business Park is zoned M-2 Industrial and is under full ownership of the Industrial Development Board. The master plan for the park is to transition from heavy manufacturing to light manufacturing to office and distribution space on the South end. The southern end has such amenities as sidewalks, attractive street lighting, and a brick entrance sign. Time saving attractions to the park is that the full entity has gas, water and sewer infrastructure in place along with a four-lane industrial road, International Boulevard, which sits three-fourths of a mile from Interstate 24 at exit eight.
Toyota Suppliers Set Up Shop in Washington County
Mention the automotive sector in Tennessee and the first thoughts are likely to be of major manufacturing operations and suppliers centering around Nashville in Middle Tennessee, and, most recently, of the new Volkswagen facility and related suppliers in Chattanooga. Now add Washington County in Northeast Tennessee as a key participant in that sector.
In 2006 Washington County secured commitments from two Japanese-owned Toyota affiliates, Koyo Corp. of USA and Nakatetsu Machining Technologies, to build adjoining facilities in the Washington County Industrial Park located on U.S. Highway 11E just west of Jonesborough, Tennessee. Both companies produce tapered roller bearings used in vehicle axle and transmission systems and located on 51 acres in the industrial park. Koyo officials cut the ribbon on their initial $27 million project, an 80,000-square-foot manufacturing facility, in 2008. At that time, Koyo representatives said they left themselves plenty of room to expand and went so far as to grade the surrounding land in preparation.
Koyo selected Tennessee from among potential locations in five states. Washington County specifically met Koyo’s needs “with an experienced workforce and an ideal logistical location, plus the outstanding commitment and cooperation from the state,
County, TVA, regional utilities and the surrounding cities,” says Koyo’s general manager, Steve McCullough. (Washington County is located along two interstates—I-81 and I-26—and approximately 60% of the U.S. population are reachable within one day’s drive.)
In November 2010, Koyo announced it will begin construction on a more than $30 million expansion of its Washington County, Tennessee manufacturing plant. The 61,000-square-foot project should be completed by summer 2011, and by 2014, Koyo’s current work force of about 70 should near 125 employees. Of the new $30 million project, $24 million will go toward equipment, with $6 million toward the building. When the expansion is complete, the total facility will be in excess of 140,000 square feet with investments totaling more than $57 million.
Nakatetsu, which produces early process bearings for Koyo, invested $14 million in its 67,800 square foot facility, the company’s first venture outside Japan. Nakatetsu officials were especially captivated by the Blue Ridge mountain scenery and vistas approaching the Washington County Industrial Park which reminded them of the landscape near their operations in Tokushima, Japan.
In addition to the automotive companies, the Washington County Industrial Park also is home to Alo, a Swedish manufacturer of front end loaders. Alo operates in a 300,000 square facility originally developed by Bush Hog in 2001.
P.C. Snapp, Executive Director of the Johnson City, Jonesborough, Washington County Economic Development Board commented on several keys to the success of the county’s industrial park. “Attracting quality companies in the early phases of a park’s development is crucial.” “We had offers to subdivide key tracts for speculative ventures, that quite frankly could have been detrimental in the long run,” said Snapp. Snapp also stressed reliable partnerships with the Tennessee Valley Authority, the Tennessee Department of Economic and Community Development, and the Economic Develop Administration—all of which provide funding for required infrastructure improvements.
Johnson City is a medical hub for the northeast corner of Tennessee. “Health and educational services drive the economic activity of the community,” Snapp commented. Johnson City boasts twice the number of doctors per capita than the national average and is home to East Tennessee State University where there is a college of medicine and a college of pharmacy. The Mountain Home Veterans Affairs Medical Center and several other hospitals draw patients from nearby states.
Once a company has located in Washington County, they are not forgotten. The Economic Development Board has a very active Existing Business Program. A number of EDB board members serve as an Existing Business Committee which addresses concerns that arise. The committee meets with a different company at their facility each month. At least one representative from the city and county governments along with natural gas, electric, and water and sewer attend these meetings. These meetings with company representatives open up a dialogue to determine if there are any problems or issues that the committee can help solve that might impact the company negatively. A plant tour of the facility helps to acquaint the board with the products produced and may result in “doing business locally” with another company. Four business roundtables have been established in the county—North, South, East and West made up of businesses in these sectors. In addition to discussing problems and issues, timely topics and speakers are scheduled. Topics include Federal, State and Local legislative changes and incentive updates as well as issues of interest to a particular area such as road construction, utility updates, etc.
EDB staff is ready to help companies when expanding. In the past year, staff has assisted four companies to apply for state training funds that amounted to over $200,000 in reimbursement for training dollars spent.
In 2004, the Johnson City and Washington County area were designated as non-attainment by the EPA. A meeting was held with state staff and over 50 local companies to determine the impact of non-attainment on their business. This designation would have been a burden to the companies and could have prevented expansion. Then County Mayor George Jaynes and EDB staff lobbied Nashville and EPA staff in Atlanta to successfully keep Washington County in attainment.
The local Port of Entry at Tri-Cities Airport is just another example of the benefit of visiting local companies. Some of the companies were not using the local port. The companies were made aware of the benefits of clearing imports and exports locally thus saving time and money.
The EDB wants to be sure that there are no obstacles to existing business expansions and will do whatever it takes to keep our businesses in Washington County.
Amazon.com is Coming to Chattanooga, Bradley County
Amazon.com Inc. will build two new distribution centers in Chattanooga and neighboring Bradley County. According to the Tennessee Department of Economic and Community Development, the Seattle-based online company plans to spend up to $139 million on the projects that will create up to 1,400 jobs in the next three years, in addition to hundreds of other peak season positions.
Amazon.com’s North American Operations vice president Dave Clark said in the statement that the new facilities in Tennessee will allow the Seattle-based online company to “serve customers more quickly and efficiently.”
The distribution centers are expected to be in operation before the 2011 holiday season at Enterprise South Industrial Park in Chattanooga and on State Route 308 in Bradley County.
Attracting Amazon was a team effort from jurisdictions representing Cleveland, Chattanooga, Bradley County, Hamilton County, the chambers of commerce in both Cleveland and Chattanooga, and the state of Tennessee, including the Office of Economic and Community Development and former Gov. Phil Bredesen. In addition to the state funding for roads and other key infrastructure upgrades, Amazon.com negotiated local tax incentives for both locations.
In Chattanooga, the company’s local property tax abatement totals about $10 million over 11 years, while Amazon.com has committed to investing about $91 million and spending about $488 million in payroll.
“Amazon.com’s investment is good for the people of our region not only because it represents new jobs, but also because it is a major investment by a world-class company that stretches across county lines,” Chattanooga Mayor Ron Littlefield said in the announcement.
In Bradley County, Amazon.com is receiving a 50 percent property tax abatement for 10 years that totals about $2.4 million while making a $48 million investment. With 226 full-time employees and hundreds more seasonally, the new center is expected to generate an annual payroll of about $10.3 million.
Doug Berry, the Cleveland-Bradley County Chamber of Commerce vice president for economic development, said there will be “about $800,000 a year of tax gain from this operation.”
Cleveland, TN Mayor Tom Rowland pointed out that although the Amazon.com fulfillment center in Bradley County will be located outside the Cleveland city limits, the residents of Cleveland will still benefit along with all residents of the county.
Enterprise South is a joint project of the City of Chattanooga and Hamilton County, TN, and is the largest, publicly owned mega-site on the I-75 corridor offering a turn-key solution for new manufacturing operations. The City of Chattanooga, Hamilton County and the state have invested $75 million to ensure that Enterprise South is a “ready-to-build” site. Parcels ranging in size from 9 acres to 53 acres are available for immediate development to manufacturers. In addition, the community is committed to partnering with state, federal and private sector allies to customize site infrastructure as needed.