Ola, guten tag and bonjour: Chattanooga tops in foreign jobs in Tennessee, report shows

Ola, guten tag and bonjour: Chattanooga tops in foreign jobs in Tennessee, report shows

June 20th, 2014 by Mike Pare in Business Around the Region
Illustration by Laura McNutt /Times Free Press.

Illustration by Laura McNutt /Times Free Press.

Illustration by Laura McNutt /Times Free Press.


Regions and percent of jobs created by foreign-owned companies as a share of all private employment:

* Chattanooga - 6.4 percent

* Knoxville - 6.1 percent

* Memphis - 4.9 percent

* Nashville - 4.8 percent

* Atlanta - 6.8 percent

* Birmingham - 3.4 percent

Source: Brookings Institution

The Chattanooga region is among the top 20 metro areas nationwide - and the highest ranked in Tennessee - when it comes to the share of jobs created by foreign companies.

The six-county region is 19th nationally in the foreign employment category, with jobs in motor vehicles and meat and poultry leading the way, a new study by the Brookings Institution shows.

The study reports that 12,670 jobs in metro Chattanooga - or one of every 16 employees - are at foreign-owned businesses, according to 2011 figures of the top 100 metro areas in the U.S. That's up from only one of every 22 employees in 1991, when the region ranked 35th.

J.Ed. Marston, the Chattanooga Area Chamber of Commerce's vice president of marketing, said there's an opportunity for more growth. Germany-based Volkswagen has said its Chattanooga plant is the leading contender to produce a new sport utility vehicle, and an announcement is expected soon.

Not only would the city capture hundreds of new VW jobs, but the region has "a real opportunity" to woo more suppliers to not just the German automaker but others as well.

"We are the center of the automotive South," said Marston about Chattanooga's proximity to other foreign-owned assembly plants, including those owned by the German-based BMW and Mercedes Benz, the Japanese-based Toyota and Nissan and the Korean-based Kia and Hyundai.

While the auto sector appears bright, the meat and poultry segment is more problematic.

Pilgrim's Pride, owned by Brazilian beef producer JBS, has announced 600 job cuts in Chattanooga since 2012. The Chattanooga Chamber in its 2o14 major employee list has the company employing about 1,300 people.

Other foreign companies with a sizable presence in Chattanooga include heavy equipment maker Komatsu, power production manufacturer Alstom, and Chattem, the local health care products company that was bought by French pharmaceutical giant Sanofi.

Devashree Saha, senior policy analyst and associate fellow in the Metropolitan Policy Program at Brookings, said the impact of foreign direct investment goes beyond jobs.

Oftentimes, the companies bring higher wages and are export oriented, Saha said. Foreign-owned companies, on average, also spend more on research and development.

"These companies bring best practices and ideas and know-how," she said. Saha cited workforce training, mentioning VW and its Volkswagen Academy where it trains its employees in a partnership Chattanooga State Community College.

Tennessee overall ranks 18th in share of jobs from foreign enterprises, with motor vehicle parts and assembly at the top. Georgia is 11th while Alabama is 15th, according to Brookings.

Steven Livingston, a Middle Tennessee State University economist and editor of Global Commerce, noted Tennessee's central location to much of the U.S.

Tennessee also is considered low tax and a weak union state, which makes it attractive to a number of countries, he said.

"I see it continuing," Livingston said.

The Brookings report found that much of the foreign investment is located in the 100 largest metro areas of the country, which Saha said gives those region's "a good source of global engagement."

While the U.S. is still the No. 1 destination for foreign investment, the American share of all foreign direct investment has dropped to about 12 percent in 2012 from a high of 26 percent in earlier years as emerging nations capture more such investment, the study said.

"Past success does not guarantee it will attract further foreign direct investment," Saha said.

Still, prospects for more in the U.S. are high, she said. The senior Brookings analyst said the plentiful presence of shale gas has helped lower energy prices and that's prompting foreign companies to look at the U.S. "with fresh eyes."

Also, the U.S. is still pre-eminent in software development and application, she said. That's key in terms of production processes, Saha said.

She said that while new factory construction by companies is important, it's only "a small chunk" of foreign investment. Saha said the mergers and acquisitions account for a significant portion.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.