Location, logistics advantages bringing big business to Tennessee municipalities

BY KATE COIL
TML Communications Specialist

The power of same-day shipping and overnight rush delivery has changed the face of the American economy, giving consumers the ability to order and receive products in a 24-hour span – whether they are an online customer ordering clothes or a major manufacturer requiring supplied parts to arrive by the end of a single eight-hour shift.
Logistics and location have become major concerns for manufacturers and companies looking to deliver goods and products in short time frames. Bordered by eight states and within a day’s drive of much of the eastern U.S. , Tennessee’s location has become an important economic recruitment tool.
Allen Borden, deputy commissioner of business, community and rural development for the Tennessee Department of Economic and Community Development, said Tennessee’s geography is one of its greatest selling points when it comes to prospective industry.
“One of our huge selling points, going along with our geography, is logistics costs,” Borden said. “The next highest cost beyond human capital and your workforce for most of these manufacturing facilities is logistics costs. It is very economical for any manufacturers in our state to get their raw materials into their facilities in a very cost effective manner then also get their finished goods and products out to their markets in a very cost-effective manner. This comes into play on almost every manufacturing project we have worked on here in the state.”
Cities across Tennessee have learned to use their location as a powerful recruitment tool.
Located less than 20 miles from Tennessee’s border with Arkansas and Missouri and less than 40 miles from the Kentucky border, the city of Dyersburg is in a good location for interstate commerce. Mayor John Holden said interstates help connect the city to major commercial hubs.
“We aren’t far from I-40 and I-55, which makes it easy for distributors to access a lot of different areas,” he said. “We are eight hours from Chicago, eight hours from Dallas, and seven hours from Atlanta. We really have a prime location in the eastern U.S. and especially in the southeast. One of our major employers is DOT Foods, which is a food redistribution company. We also have automotive parts companies who have to meet their distribution deadlines.”
Melinda Keifer, economic development coordinator for Cookeville, said the city’s location in central Tennessee has also been a boon to recruiting industry.
“We are located on I-40 and we have that north-south corridor Highway 111 that runs from Kentucky to Georgia,” she said. “We are four hours from Atlanta, four hours from Cincinnati and between Nashville, Chattanooga, and Knoxville. Academy Sports and Outdoors decision to locate here is just a prime example of our accessibility. A lot of companies looking for sites are trying to find ground zero — the area where their transportation costs are as low as they can be — and we were very close to ground zero because of our infrastructure. From a municipal standpoint, we are rural community and we are a prime example of how infrastructure can bring good momentum.”
The ability of Tennessee and its cities to meet the logistics needs of manufacturers is one reason many industries are growing in the state. The ability to ship to multiple markets is one of the reasons why the automotive industry has transitioned to Tennessee and the southeast.
Borden said the logistics are also one of the reasons why Memphis is considered by many to be the logistics and shipping capital of the U.S. The city is located 500 miles from the mean center of U.S. population through roadways, the Port of Memphis on the Mississippi River, and the Memphis International Airport – the second busiest cargo airport in the world after Hong Kong.
“Behind manufacturing, warehousing, distribution and logistics continues to be one of our major clusters,” Borden said. “Memphis is extremely strong in that particular area due to its location. Memphis is a global distribution center for air and trucking, especially with I-40. It’s the second most heavily traveled interstate on a trucking basis, and Memphis is about halfway across from that standpoint. That helps manufacturers and retail distribution centers have a choice when it comes to shipping their goods. Plus, we have the benefit of those warehousing and distribution companies located in our state. Most major retailers have very large distribution centers nowadays. We have five Amazon fulfillment centers in our state.”
While Detroit was once known as the Motor City for its wealth of automotive manufacturers, Tennessee has been touted as the new center of vehicle manufacturing in the U.S. Borden said every part of the state has seen some sort of impact from the industry, whether from vehicle companies themselves or the suppliers who make parts and products for assembly.
“The automotive cluster is the No. 1 industrial cluster for the state of Tennessee,” he said. “There three OEMs operating in our state: Volkswagen in Chattanooga, Nissan in Smyrna and Decherd, and General Motors in Spring Hill. The Nissan plant in Smyrna is the largest auto manufacturing plant by volume in America. We also have a lot of OEMs surrounding our state. The great thing about the automotive industry is there is a very diverse and robust supply chain that goes along with the OEMS. There are more than 925 automotive supply companies located through our state.”

ECONOMIC DIVERSITY
While the auto industry is one of the state’s largest employers, the departure of much of the industry from Detroit and surrounding communities in southeastern Michigan should still serve as a lesson to other cities about the dangers of relying on a single industry for support.
Borden said Tennessee has worked to ensure its economy isn’t relying on all having all its eggs in one basket. He said the state has electronics companies, the home appliances manufacturers, food and agribusiness industries, and medical device manufacturing.
“After the automotive industry, if you look around, Tennessee really is a diverse state economically,” Borden said. “I often go places and ask if anyone knows what the No. 1 export in Tennessee is. Most people think its Jack Daniels, but it’s actually medical devices. Nashville has actually gotten the nickname of the Silicon Valley of Healthcare.”
Holden said a diverse economy is becoming more and more important, especially for smaller communities.
“It’s important to have someone there to pick up the slack,” he said. “We have a wealth of industries in Dyersburg ranging from food to automotive parts to distribution and logistics companies to ERMCO, which manufactures electrical transformers and NORDYNE, which makes air conditioning parts. We are fortunate that we have had folks with the foresight to see that and take steps in that direction.”
Keifer said leadership is key to providing opportunities to diversify the local economy.
“Leadership is key to diversifying, and we are blessed that our past leadership knew that,” she said. “We have always had a kind of broad and diverse industry, especially from a manufacturing standpoint. A lot of our successful smaller businesses started here and grew. I think it’s very important to have a broad base, especially for rural communities.”
The more modern challenge is that what draws diverse companies to an area is often changing.
“It’s a moving target, constantly,” Keifer said. “Maybe 20 years ago everyone was looking for the same thing, but I don’t think it will ever go back to that. There is a new normal. Even companies that are reshoring are coming back for a whole different set of reasons than they left for. You have to be very intuitive and tap into those needs. Even the recruitment of foreign direct investment as changed.”
Diversity can also mean companies from different countries. Dyersburg has industries with parent companies based in Japan and Germany,
“Develey is a company that makes mustard and has been looking to expand its lines in our area,” Holden said. “We were where they chose to open their first North American facility, which is a big deal for a town like Dyersburg. I’ve meet with their CEO several times and he even came up with us to the governor’s economic development conference to talk.”
Foreign investment is becoming just as important for rural communities as it is for urban ones as the economy becomes more globalized.
“We will soon be closing on our second foreign-direct investment in our business park,” Keifer said. “Who knew that little Cookeville could be the home for their first U.S. company. Their key grabbers were totally different than Ficosa, who already had a North American hub. This company literally had to create a U.S. company to move here.”

GUIDING INDUSTRY
While municipalities can’t exactly pick and choose what industries decide to open up in their area, Borden said the state wants to work with cities and towns to make sure they have the resources they need to be competitive. Programs like Workforce 360, the ThreeStar program, Select Tennessee Certified Sites, and site development grants work with communities to give them the best chance to compete economically.
“Whereas we would love to be able to have the latitude to place these projects in different areas across the state, the fact of the matter is that we don’t drive the projects locations; the company’s drive that,” Borden said. “With that said, what we try to do in working with our regional partners, especially TVA, is have a number of different programs as they invest in themselves. We want to partner with our communities all across the state, join arms with them, and help them develop these industrial sites.”
Borden said meeting workforce needs of companies may become a challenge in the future.
“On one hand, we have been blessed to have the lowest unemployment in the Southeast right now,” he said. “Still, we have to continue to deliver that workforce so our existing companies can continue to grow and thrive as well as for other companies to invest here.”
Holden said there are ways local leaders can help guide industries and target companies they feel would be an asset for their area.
“We do try to target certain industries by seeing what sort of resources they are looking for,” he said. “Nowadays, a company may check you off the list without you even realizing they’re looking at you. It’s more of an elimination process than an inclusion process. Because of that, we try to always make sure we have our websites updated and information out there and easy to access for companies to look at. It can be a little easier to recruit retail than major manufacturing, but it can be done. We also try to be honest and tell companies what we can and can’t do for them. It doesn’t work to bend the truth. You have to be honest and open.”
Keifer said the city has tried to target certain industries by producing an economic development guide, joining the four-county Highlands Economic Partnership, and going to trade shows for industries they are hoping to see grow in the community.
“From a municipal standpoint, I think the key factor for leadership is to be able to determine where that tipping point is,” she said. “They are looking for reasons to eliminate you. We aren’t exactly a secondary city; I would call us a tertiary city. We are the largest micropolitan in the state. Big cities are seeing great growth, but if you look at communities like us, Maryville, Jackson, Cleveland, and others are seeing that trickle down growth. When you see that communities like us are seeing that success, it shows how well the state as a whole is doing.”
Borden said a good, ready site that meets a company’s needs can often mean the difference between landing an industry and losing out on one.
“The truth of the matter is when these companies are out looking at sites for their facilities, you are not only in a competition with other communities within the state but also states in five, six, seven even as many as 10 different states we compete with,” Borden said. “We call it a site selection game, but at the end of the day it’s more like a site elimination game. The idea to be the winner of this game is to have the site and be the last person standing, so to speak, that meets the criteria these projects want the best. You can have great inventory from a site standpoint, but if you don’t have a good workforce, you aren’t going to be successful. We encourage all communities to invest in their workforce and talent. You have to link economic development with education.”
Holden said education is a major way smaller communities can both invest in themselves and create a needed workforce to attract diverse companies.
“We have really invested in education, and it says a lot that our state has invested in education,” he said. “Now with Tennessee Promise and Tennessee Reconnect, people can go to a TCAT or vocational technical school and get a certificate or degree, which will then help you in the workforce. I think it says a lot about our state and about Gov. Bill Haslam that we are making this possible.”
Keifer said smaller municipalities often face the challenge when it comes to competing for industry.
“From a rural perspective, you have to be good at all of it. It is not as easy for companies to locate in smaller communities,” she said. “Because some of the larger cities in the state have grown so fast, it is appealing to some but not to others. Being able to capture those key drivers for a company has been critically important for our growth and partnerships with our new companies and existing and expanding companies as well. You have to provide that good solid community development piece whether its education or parks or health care.”
Despite the challengers, Keifer said small communities can still find their own niche and what works for them.
“We are the smallest city in the state with a symphony,” she said. “We have two great farmers markets. The city still owns its hospital, which has an impact. We also still own all our utilities, which is great for ease of construction and begin able to hit timelines. It can become a huge barrier just dealing with the utility piece of a new or expanding company.”
In addition to recruiting new industries, Holden said it is essential to retain good relationships with established companies. Those relationships can be what keeps a company in town or helps them expand.
“Maintaining relationships with existing industries is key,” he said. “We try very hard to make sure we have good relationships with our existing industries and their executives. New companies are exciting, but we also have some companies that have been in our community since the 1940s. We don’t want to forget them or ignore their needs. We have an existing industry roundtable that meets to discuss what we can all do to foster industry and growth.”

EMERGING INDUSTRIES
To maintain this economic diversity, investing in new and emerging industries is also important. Borden said the state has seen trends for industries that are starting in or coming to the state.
“We are certainly seeing more healthcare information technology,” he said. “I think we will see more and more IT jobs coming to the state. The great thing about them is those are high-paying jobs. I also think the metro areas will see the financial services industry continue to grow.”
Tile is becoming big business in Tennessee as well.
“We have been very successful in recruiting several ceramic tile companies to the state, mainly from Italy, but we have also recently located a Chinese tile company,” Borden said. “They want to get more involved in the U.S. market and have landed here. Part of the reason for that is the logistics and the geographic location. Ball clay is another reason ceramic and porcelain tile makers are locating here. It is the primary raw material thhey use, and we have an abundance of it in Tennessee.”
Tile is one of the emerging industries Keifer said Cookeville has been exploring.
“From a sector standpoint, we are seeing an industry in tile-manufacturer,” she said. “They are similar to the automotive industry in that the tile industry has to be close to suppliers, and they have Tier I and Tier II suppliers. We have a relatively large tile manufacturer located in the state, which is helping bring other related industries to the area.”
Cookeville also recently became the home of SAIC, a global company headquarters in Virginia that does government contract work on the federal level.
“It’s a very nice wage and average salary with the facility here; it’s about $60,000 a year,” Keifer said. “You want your citizens to have that extra money so they can take a vacation, take care of an elderly parent or a special needs child or just go to the movies. I think we are very conscientious and our leadership is very conscientious of that. It’s great to see an increase in that per capita income, because our job is to increase that per capita income in Tennessee. We want to create an opportunity for everyone in Cookeville to be paid well.”