Location, economy may bring record business investment for TVA

Location, economy may bring record business investment for TVA

June 5th, 2016 by Dave Flessner in Business Around the Region

FILE In this May 20, 2009, file photo, Jeff Arnett, the master distiller at the Jack Daniel Distillery in Lynchburg, Tenn., drills a hole in a barrel of whiskey in one of the aging houses at the distillery. The sponsor of a bill seeking to repeal the Jack Daniel's-endorsed law establishing requirements for which spirits can be sold as Tennessee Whiskey withdrew the measure on Tuesday, April 7, 2015. (AP Photo/Mark Humphrey, File)

Photo by Mark Humphrey

Gallery: Location, economy may bring record business investment for TVATennessee Valley investment growsA mountain of Valley investment

+2
more photos

Biggest investments in 2016

* General Motors expansion in Spring Hill, Tenn., $788 million and 781 new jobs

* Google data center in Clarksville, Tenn., $600 million and 70 new jobs

* Advanced Munitions International in Alcoa, Tenn., $553 million and 605 new jobs

* Bowling Green Metalforming in Kentucky, $261 million and 450 new jobs

* JTEKT Automotive in Vonore, Tenn., $218.5 million and 50 new jobs

* Jack Daniel Distillery in Lynchburg, Tenn., $140 million expansion and 30 new jobs

Source: Tennessee Valley Authority

More Info

Business investments in the Valley

2006 - $4.2 billion and 53,000 jobs

2007 - $5.6 billion and 45,300 jobs

2008 - 5.5 billion and 42,000 jobs

2009 - $4.2 billion and 26,000 jobs

2010 $4.3 billion and 41,000 jobs

2011 - $4.9 billion and 43,000 jobs

2012 - $5.9 billion and 48,500 jobs

2013 - $4.1 billion and 39,000 jobs

2014 - $8.5 billion and 60,300 jobs

2015 - $7.8 billion and 76,200 jobs

Source: Tennessee Valley Authority

The favorable location and lower costs for businesses in the Tennessee Valley are helping attract a record level of new investment to the region.

Despite sluggish capital spending by many businesses across the country, the Tennessee Valley Authority is on pace to lure a record volume of business investment in its 7-state region during the current fiscal year.

In the first half of the current fiscal year, TVA attracted $6.1 billion and at least 50,000 jobs to the Tennessee Valley. That pace exceeded last year's record high job generation and the recent announcement by General Motors of a $788 million expansion at its Spring Hill, Tenn., — projected to add at least 781 jobs — pushes the investment this year already to nearly $7 billion.

"We're having another good year, but the only caution I would have is that businesses are sometimes reluctant to make capital investment decisions in a presidential election year when there may be some uncertainty about the future," said John Bradley, TVA's senior vice president of economic development for the past 14 years. "There could be some slowdown until after the election and businesses have a better idea about the future."

But Bradley said one of the key attributes of the TVA region isn't changing — its central location within a day's drive of nearly half of the U.S. population. As more manufacturers and suppliers move toward just-in-time inventory, being centrally located and able to deliver your products to major U.S. markets quickly is a definite asset, even in an increasingly digital and information age where work can be done most anywhere.

"From a logistics standpoint, you can't beat our location and access," he said.

The Tennessee Valley also boasts relatively lower state and local tax rates, business regulations, labor costs and union participation than most manufacturing states to the north. Those factors have helped draw more automotive manufacturing to the region, including more than $2 billion of announced investments by Volkswagen in Chattanooga, Nissan in Smyrna, GM in Spring Hill and all of their suppliers.

Tennessee has historically not fared as well as many states in the education and skills of many of its workers , but Bradley said the Tennessee Promise of two years of free community college is helping improve the reputation of the Volunteer State to business prospects.

A new study by the University of Tennessee Center for Business and Economic Research said the top states for economic momentum so far in 2016 include Tennessee, ranked No. 6, and Georgia, ranked No. 8, among the 50 states.

"Tennessee is surging ahead of the nation's pace of growth," said Dr. Matt Murray, associate director at the UT Center Business and Economic Growth. "We're seeing broad-based growth across the board and there is a greater degree of economic confidence in the state."

Business investment isn't faring as well in the oil patch or in some farm areas where falling commodity prices have hurt many producers. In the first quarter of 2016, the U.S. Department of Commerce reports that demand for durable goods — a barometer for business investment — was down slightly from a year ago.

Manufacturing has been under pressure as weak global demand and a strong dollar have hurt exports and falling oil prices have triggered cutbacks at energy companies.

"The consumer seems to be spending freely, but business investment in the economy's future is not so hot right now," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York. "The economy is not firing on all cylinders if business investment spending in capital equipment is so weak."

But Bradley said the Tennessee Valley, which is not as dependent upon energy production as states like North Dakota or Texas, is faring much better. As more businesses move into the Valley, Bradley said the word is getting out about the region's comparatively low energy and tax costs and its attractive lifestyle options.

"The momentum we've seen from having continuous years of success seems to be building on itself and getting better all the time," Bradley said. "We're seeing more activity and we're seeing more deals."

Since 2006, TVA has helped attract more than $60 billion of new business investments that collectively have added nearly 500,000 jobs, according to TVA's compilation of business investments.

Bradley is quick to call the economic recruitment in the Tennessee Valley "a team sport" among state and local governments, local chambers of commerce and other utilities.

For its part, TVA has cut its operating expenses by more than $600 million a year and revamped its industrial power rates to be more attractive with other utilities. TVA rates now rank No. 16 among the 100 largest electric utilities in the price of its power, Bradley said.

TVA's economic development program receives about $16 million a year and employs 54 workers. TVA offers both direct and indirect incentives to businesses and works with local agencies to help market sites and communities for new and expanding business. But Bradley said the federal agency doesn't disclose details of its individual incentive packages given to industry.

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340\

Box

=

Biggest investments in 2016

* General Motors expansion in Spring Hill, Tenn., $788 million and 781 new jobs

* Google data center in Clarksville, Tenn., $600 million and 70 new jobs

* Advanced Munitions International in Alcoa, Tenn., $553 million and 605 new jobs

* Bowling Green Metalforming in Kentucky, $261 million and 450 new jobs

* JTEKT Automotive in Vonore, Tenn., $218.5 million and 50 new jobs

* Jack Daniel Distillery in Lynchburg, Tenn., $140 million expansion and 30 new jobs

Source: Tennessee Valley Authority


Loading...