Bill Haslam, Governor of the State of Tennessee, speaks during a press conference at Volkswagon's Chattanooga production plant to announce a third shift and addition of 1,000 new jobs in the 2012 year.

With its advanced road and communications network and relatively cheap cost of living, Texas was rated the best state for business in this year's CNBC ranking of state business climates.

But in the Southeast, the top state for growing jobs was captured by another state with a big orange T.

Since the start of 2011, Tennessee has led the Southeast in employment gains, adding 67,000 jobs since January 2011 for the fastest pace of job states in the region, according to the U.S. Bureau of Labor Statistics.

In the new ranking of state business climates, CNBC upgraded Tennessee's climate from No. 18 to No. 16 among the 50 states. While the Volunteer State benefited by its relatively low cost of living and transportation, Tennessee had the 48th lowest quality of life, in part, because of its above-average crime and higher rates of pollution and health ailments.

CNBC downgraded Georgia from its lofty fourth place finish among the 50 states last year to No. 9 this year. Georgia ranked best for business among the states for its workforce, based upon worker skills, training programs, lack of unions and number of available workers. But the economic slowdown in the Peach State has hurt its economic vitality, education and quality of life.

Texas has been rated best of all states three times in the six-year history of CNBC's ranking of states, which is based upon 51 measures of competitiveness.

Since the start of 2011, Texas also has enjoyed above average employment growth of better than 3 percent, adding more than 317,000 jobs in the past year and a half.

Tennessee's 2.5 percent growth in jobs was not as robust as Texas, but it still topped its eight neighboring states, including three rated higher in the CNBC business climate study.

"There are a lot of business rankings and we're glad that Tennessee usually shows up among the better states," said Clint Brewer, assistant commissioner for the state's Department of Economic and Community Development. "But what we're most focused upon is growing jobs and that's where we continue to have success and see a lot of future hope with what is in the pipeline."

From January 2011 when Gov. Bill Haslam took office through May of this year, Tennessee placed eighth place among all 50 states in the share of new jobs added in the state. Tennessee's chief business recruiter, Economic and Community Development Commissioner Bill Hagerty, said about 29,000 of the 67,000 jobs added in the past year and a half stem from business relocations or expansion projects aided by his department.

"Tennessee's unemployment rate has also been reduced under Gov. Haslam's watch at nearly twice the rate of the national reduction" going from 9.5 percent in January 2011 to below 8 percent in May, Hagerty said. The better results have come despite a $1.5 million reduction in Hagerty's department budget and with 42 employees on his staff.

"We decentralized the management of our department and fielded executive teams in nine new regional Jobs Base Camps around the state - feet on the street interacting with local businesses to help find ways for them to grow and expand," he said.

On Friday, the state announced another new automotive supplier, TPR Federal-Mogul Inc., is building a plant in Lawrenceburg, Tenn. The plant will employ 72 workers making cylinder liners for aluminum block engines.