By Business Facilities Staff
From the January/February 2015 issue
Tennessee has become Business Facilities’ first back-to-back State of the Year winner. The Volunteer State, which previously won the top award in 2009 and 2013, also is the first state to win three of BF’s annual State of the Year designations in the SOTY competition, which began in 2007.
“We thought it would be hard for the Volunteer State to match last year’s performance, but the folks in Tennessee keep reeling in one mega-project after another,” said BF Editor in Chief Jack Rogers. “Most impressive, Tennessee seemed to pick up momentum as it went along.”
TN’s top five projects in 2014 netted nearly 8,000 new jobs, including the hotly contested Volkswagen expansion and a new Under Armour distribution center. In the last two months of 2014, the state added to this tally with three major announcements: Bridgestone’s headquarters relocation, a 3M manufacturing facility and a Target fulfillment center.
“Tennessee is one of a handful of states that has clearly made economic development priority no. 1,” Rogers said. “With a powerhouse automotive cluster, world-class infrastructure and the nation’s most improved education system, we could be looking at a State of the Year dynasty in the making.”
For two years in a row, Tennessee has notched one of the strongest across-the-board showings in our annual State Rankings Report. In BF’s 2014 Rankings Report, TN finished first in the Education: Race to the Top Leaders category. Tennessee received $500 million in funding from the federal program and was cited by the U.S. Department of Education as a national leader in the implementation of educational reforms mandated by Race to the Top.
Tennessee also has been our top state for Automotive Manufacturing Strength for four of the past five years. In 2014, the state fended off a challenge from competing locations (including Mexico) to secure a major expansion of Volkswagen’s assembly facility in Chattanooga, the German automaker’s sole North American manufacturing plant.
VW DOUBLES DOWN ON CHATTANOOGA
Volkswagen is adding an additional assembly line in Chattanooga and plans to create the National Research & Development and Planning Center of Volkswagen Group of America as part of the expansion. VW is investing $600 million in the Tennessee expansion, with 2,000 new jobs being created in Hamilton County. The expanded plant in the Enterprise South Industrial Park will manufacture a new midsize SUV for the American market. Production of the new SUV will begin in the fourth quarter of 2016, with the first vehicle expected to roll off the new assembly line by the end of 2016.
The state is providing a $165.8-million grant for costs associated with site development and preparation; infrastructure; production equipment acquisition and installation; and facility construction. In addition, the state will provide a $12-million grant for training new employees. As part of the incentive package, Volkswagen Group of America has agreed to waive its right to claim certain statutorily available tax credits directly related to the expansion.
“Volkswagen is one of Chattanooga’s largest and most valued employers. They have brought 12,400 living-wage jobs to our region, employed Chattanoogans and helped build our middle class. This expansion will result in a huge capital investment and thousands of new jobs,” Chattanooga Mayor Andy Berke said.
The big VW decision was one of a bevy of new automotive projects announced in Tennessee in 2014, including:
- The South Korean automotive parts manufacturer SL Tennessee is investing $80.5 million in Anderson County, creating 1,000 new jobs. Located in Clinton since 2001, this will be the company’s fifth expansion. SL Tennessee will construct a 250,000-square-foot building to make headlamps and tail lamps, with full production expected to begin in April.
- Tire giant Bridgestone Americas, Inc. is relocating its headquarters to downtown Nashville in a newly constructed facility slated for completion in mid-to-late 2017. The headquarters will house employees currently based in Nashville, as well as those from three out-of-state business units that are being relocated to the city. Bridgestone Americas is investing $232.6 million in the new 514,000-square-foot, 30-story headquarters, which will create 607 new jobs in Davidson County.
- Comprehensive Logistics Co., Inc. will locate a new automotive manufacturing support facility in Spring Hill, TN that will house the manufacturing and light assembly of automotive components for the nearby General Motors plant. The Ohio-based third-party logistics provider is investing $30 million and plans to create more than 200 new jobs. In addition to logistic support, Comprehensive Logistics will provide value-added services including parts sequencing/assembly of headliners, tires and wheels, rear suspensions and front verticals.
- General Motors continues to revive and expand its Spring Hill complex, former home of the Saturn assembly plant: GM said it will invest $185 million to make small gas engines in Spring Hill; the auto giant also identified the next-generation Cadillac SRX as a future mid-size vehicle to be produced at Spring Hill.
- DENSO Manufacturing Athens Tennessee (DMAT) is expanding its gasoline direct injection (GDI) capability in Athens by building a new 224,000 square foot facility. DENSO will invest more than $85 million and create 400 new jobs over the next three years in McMinn County. The announcement marks DMAT’s third major investment in an 18-month period. The overall expansion effort will represent a total investment of approximately $190 million and more than 700 new jobs. Production at the new facility will begin in July 2016.
ON-SITE WORKFORCE TRAINING
Tennessee took a leading position in workforce training initiatives in 2014, announcing a new on-site training facility to create a pipeline of skilled workers for Nissan’s Smyrna, TN assembly plant.
A public-private partnership between Nissan and the state will provide training programs aimed at preparing workers for jobs in advanced manufacturing such as engineering, robotics and manufacturing maintenance. The training center, which is scheduled to be completed by late 2016, will operate as an extension of the Tennessee College of Applied Technology (TCAT) campus at Murfreesboro. Nissan and Murfreesboro TCAT will occupy the facility jointly.
While TN stays ahead of the curve with on-site training, it’s not stopping there. The Volunteer State is busy tailoring its first-in-the-nation education reforms to support a revolutionary workforce training initiative that’s been endorsed by President Obama as a model that deserves to be replicated across the country.
In 2014, Tennessee became the first state in the U.S. to offer two free years of Technical School or Community College to all eligible students. The program, recently signed into law by Gov. Bill Haslam, is called Tennessee Promise.
The folks in western Tennessee are busy working to augment Tennessee Promise with a grade-school initiative, which could dramatically change—for the better—the way states address the availability of a homegrown skilled workforce that can meet the needs of 21st-century advanced manufacturing.
BF recently met with the top execs from the Greater Memphis Chamber during their annual sit-downs with media folks in New York. Phil Trenary and Mark Herbison, president and senior VP, respectively, gave us an inside look at the groundbreaking workforce training initiative now up and running in Memphis, Shelby County and Fayette County that aims to build an ample supply of ready-to-go skilled workers by channeling students in grade school into technical/vocational programs.
What they’re doing in Greater Memphis is providing technical courses to high school students in the basics they’ll need to develop the skills for advanced manufacturing jobs. The area’s numerous Tech Schools and Community Colleges have agreed to grant full college credits to the kids who take these courses. So high school graduates in Greater Memphis will emerge with a huge head start in what it takes to operate a CNC (computer numerically controlled) machine tool or 3D printer in the 21st century workforce.
Add in the state’s two free years of college (for a total of 14 years of free education) and Tennessee’s youth will be ready to meet the needs of any advanced manufacturing job that’s waiting to be filled the minute they get their college diploma.
The program includes a full-court press to counsel students in the K-12 years about potential vo-tech careers and the value of enhancing their STEM skills. And if you still think vo-tech is not where the high-wage jobs are, here’s an eye-popping factoid from Phil Trenary: “The starting salary for someone with superior CNC skills is around $85,000,” he told BF.
The program is working with business leaders to essentially take “advance orders” for skilled workers. The plan is to create an army of home grown skilled workers–there are 120,000 high school seniors in Shelby County alone as we speak–who are ready to march into any advanced manufacturing facility that opens its doors in the region.
According to Mark Herbison, this initiative aims to do even more than that: “We also believe this is the most effective way to break the cycle of poverty,” Herbison said. “All of our kids have the potential, but many never get the opportunity or finish their education before they develop these skills. This will change that.”
Tennessee’s focus on maintaining and upgrading its infrastructure—including an unmatched combination of air freight (Memphis is the global FedEx hub), rail, land and water options for shipping—is rapidly making the state the nation’s prime location for logistics and distribution facilities. TN also is leading the way in establishing 1-gigabit broadband service, already up and running in Chattanooga.
The Volunteer State snared one of the biggest logistics prizes in 2014 when Under Armour, Inc. announced the company will build a new 1-million-square-foot distribution and warehousing facility in Beckwith Farms in Mount Juliet, TN.
Under Armour, a global leader of performance apparel, footwear and accessories, will invest more than $100 million and create 1,500 new jobs in Wilson County over the next five years.
“Under Armour is an innovative, globally renowned brand whose cutting-edge products are consistently seen on everyone from the world’s greatest athletes, to youth sports teams, to Tennesseans across the state,” former Economic Development Commissioner Bill Hagerty said at the project announcement ceremony.
“Tennessee’s advanced transportation and logistics infrastructure paired with the state’s superior workforce will certainly aid in Under Armour’s future success. I appreciate the company’s decision to locate and invest in Mount Juliet and for further enhancing the extraordinary momentum behind the Tennessee brand,” he added.
“Under Armour’s mission is to make all athletes better, and that begins by building a great team and providing best in class service for our customers,” Under Armour COO and President of Product Kip Fulks said. “We take immense pride in partnering with [Tennessee].”
The Mount Juliet facility, scheduled to open in early 2016, will be Under Armour’s third distribution facility in the United States, with the original warehouse in the company’s hometown of Baltimore, MD and the other location in Rialto, CA. Under Armour also operates two Under Armour Factory House retail destinations in Tennessee, located in Nashville and Sevierville.