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TENNESSEE
From Site Selection magazine, January 2016
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We Can’t Wait!

TENNESSEE
by MARK AREND

Google’s Christmas present to Tennessee came on December 22nd, when it announced a $600-million data center at the former Hemlock Semiconductor site in Clarksville. The search engine giant’s eighth US data center will create about 70 jobs.

Why the Clarksville location?

“This site comes with the benefits of existing infrastructure, which we plan to reuse and recycle — for example, many of the office buildings will be used for Googlers when the data center is operational,” said Google Vice President for Data Center Operations Joe Kava. “At the same time, we have room to innovate and grow both as a data center and as a member of the Montgomery County community. We’re excited about the opportunity to experiment with new kinds of technology and design an impressive facility — we can’t wait!”

The roughly 1,300-acre (526-hectare) site will be powered 100 percent by renewable energy thanks to an arrangement with the Tennessee Valley Authority (TVA). Through the agreement, Google will be able to scout new renewable energy projects and work with TVA to bring the power onto the electrical grid.

Two weeks previously, on Dec. 7th, Under Armour opened its new, 1-million-sq.-ft. (92,900-sq.-m.) distribution and warehouse facility in Mount Juliet, near Nashville. With the establishment of the Nashville Distribution House, Under Armour will invest over $100 million and will create 1,500 new jobs in the area over the next five years. It’s the performance apparel manufacturer’s third US distribution facility.

New Focus on Rural Development

Can communities outside the metro areas of Memphis, Nashville, Chattanooga and Knoxville compete for capital investment effectively? Perhaps some can, but Gov. Bill Haslam and his economic development team are working to make sure they all can. In August, the governor and Economic and Community Development Commissioner Randy Boyd announced the creation of a Rural Development Task Force that will bring resources together from a wide range of organizations to advance rural communities and economic development throughout Tennessee.

“Tennessee’s rural communities are the heart of our state in so many ways, whether it’s our main streets, longstanding companies or as world-class tourist attractions, and we want to continue helping them thrive and grow,” Haslam said. “We’re pleased to announce this Rural Development Task Force, which will build on the work we’ve already been doing to create a measured, thoughtful approach to supporting economic development in our rural communities.”

Added Commissioner Boyd: “Tennessee is experiencing tremendous economic momentum, but unfortunately our success is not shared in many of our rural communities. Many are still suffering, and our state can only be great if all communities share in the success. At the Department of Economic and Community Development, we are doubling down on rural development efforts. However, to make a transformative difference, we need a holistic solution. It’s not just about recruiting a new business. It is about increasing educational attainment, supporting rural entrepreneurship, creating and promoting tourism, and of course, agri-business.

“Also, rural broadband is critical,” Boyd added. “Our new Rural Development Task Force brings together all key departments in state government along with our legislative leaders and many other public and private partners. The challenge is great, but so are the combined resources of this team. Together, we can make a major impact.”

The Bike Arch with Knoxville in the background.
Photo by Heather Overman

The Task Force will develop and adopt an initial three- to four-year strategic plan that will include a comprehensive vision for rural development. In order to do this, the taskforce will convene issues forums, identify and engage stakeholder groups and look to the successful ThreeStar program as a way to identify gaps, challenges and opportunities.

In October, the governor and commissioner announced the state is investing $8 million in a new Rural Economic Development Fund “to build capacity for transformative economic development strategies in rural Tennessee.” The Fund will provide an initial $6 million for Site Development Grants for communities to help move economic development sites to shovel-ready status as part of the state’s nationally recognized Select Tennessee Site Certification program.

The new initiative will also fund $1 million in grants for the enhancement of tourism sites in rural communities, as well as $600,000 for additional ThreeStar community grants including a Main Street Business Incubator program for downtown business districts.

“Tennessee has embraced real change in our approach to workforce readiness with programs like the Tennessee Promise, and these new initiatives led by TNECD will help build capacity in rural areas and get them ready for investment and economic success,” Haslam said.

The Rural Economic Development Fund will also provide $250,000 in funding for a statewide survey of broadband capacity in rural Tennessee — a direct result of feedback from rural community leaders.

Notable Projects of 2015

In addition to Google’s data center announcement in December, Tennessee won some significant projects in 2015 in several key sectors. These include:

  • Lifetime Products, Inc. will locate new manufacturing and distribution operations in the former GE building in Knox County. The existing building is 360,000 sq. ft. (33,400 sq. m.), and the company plans to double the size by adding a new building to the existing structure. The manufacturer of blow-molded plastic products — including basketball hoops, outdoor sheds, kayaks and paddleboards — will invest $115 million and create 500 jobs. “We spent over a year researching different locations on the East Coast. After meeting with local state and economic groups, Tennessee was obviously the best option,” said Richard Hendrickson, president and CEO Lifetime Products. “We are excited to facilitate the creation of U.S. manufacturing jobs and opportunities for the people of the Knoxville area and the state of Tennessee.”
  • Sinomax Group will locate new manufacturing operations in La Vergne. The foam products manufacturer and distributor will invest $28 million and create 350 jobs in Davidson County, the largest jobs commitment made by a Chinese-owned company in Tennessee’s history. “Through our new facility in La Vergne, we will be able to better serve our North American customers with our diverse offerings of high-quality foam bedding products,” said Sinomax USA President and CEO Frank Chen. “We anticipate significant growth as demand for localized manufacturing continues. We chose the Nashville area for its pro-business environment, its talented workforce and its welcoming spirit.”
  • Wonderful Group has selected Lebanon as the site of its first US operations. The manufacturer of porcelain tile will invest $150 million in the Lebanon facility and create 220 new jobs in Wilson County. The Lebanon manufacturing facility will be located in the Cherry Farm Industrial Site. Construction on the 500,000-sq.-ft. (46,450-sq.-m.) plant is currently underway, and it is expected to be operational in late 2016.
  • Regal Entertainment Group announced in October that it will locate its new corporate headquarters on Knoxville’s South Waterfront. It expects to create 75 new jobs. The new headquarters will occupy a nine-story, 178,000-sq.-ft. (16,540-sq.-m.) building at the east end of the former site of Baptist Hospital along Knoxville’s rapidly redeveloping South Waterfront. South Waterfront redevelopment efforts began in 2007 with a public planning process initiated by Gov. Haslam during his tenure as mayor of Knoxville. In recent years, the city has invested in a new riverfront park, and the waterfront corridor has begun to attract new businesses and residential development. “Regal Entertainment Group has been a part of the Knoxville community since its inception, and we are excited about the opportunity to design a new modern space that will create an inviting atmosphere to meet our business needs for many years to come,” said Amy Miles, CEO at Regal Entertainment Group.
WHERE TO LOOK
FOR EMPLOYMENT GROWTH IN 2016

Tennessee’s professional and business services sector will see the strongest employment growth in 2016 — of about 4 percent — according to the fall 2015 Tennessee Business and Economic Outlook report prepared by the Center for Business and Economic Research at the University of Tennessee’s Haslam College of Business. The education and health services and government sectors will also see employment gains, but by more modest rates. The only sectors forecast to see job losses in 2016 are information and other services.

“Manufacturing employment is expected to average 1.9-percent growth in 2015 and 1.0-percent in 2016,” according to the report. “Statewide manufacturing employment growth will be driven by employment gains in the durable goods manufacturing sector, which will expand by 3.2 percent in 2015 and 2.0 percent in 2016. Within the durable goods sector, all broad sectors will see job growth except nonmetallic mineral products and computers and electronics. Employment in nondurable goods manufacturing is projected to fall by 0.3 percent this year and 0.8 percent in 2016. Within the nondurable goods sector, food, beverage and tobacco, plastics and rubber, and miscellaneous nondurable goods will experience some job gains in 2015. In 2016, food and plastics and rubber are the only two broad sectors that will enjoy employment growth.”

Mark Arend
Editor in Chief of Site Selection magazine

Mark Arend

Mark Arend has been editor in chief of Site Selection magazine since 2001. Prior to joining the editorial staff in 1997, he worked for 10 years in New York City at Wall Street Computer Review, ABA Banking Journal and Global Investment Technology. Mark graduated from the University of Hartford (Conn.) in 1985 and lives near Atlanta, Georgia.

 



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