Tennessee is second fastest-growing state for foreign investment in the past five years

Staff photo by Troy Stolt / The Novonix sign is seen on the facility in Chattanooga that the company is retrofitting at The Bend on Riverfront Parkway. Novonix is spending about $160 million in its Chattanooga expansion.

The number of Tennesseans working for foreign-based employers jumped by more than a third in the past five years, placing Tennessee as the second fastest-growing state for employment from foreign direct investment, according to a new report.

The Global Business Alliance, a business coalition that advocates for international investment and trade, said Thursday that Tennessee ranked No. 2 behind only Minnesota in the growth of jobs in the state from foreign-based employers. Driven by the growth in Tennessee's global automotive industry and as major global shipping center, Tennessee has more than 203,000 workers - including 92,300 employees of manufacturing plants – employed by businesses headquartered outside of the United States.

"As the home of the Western Hemisphere's busiest cargo airport, Tennessee is a natural magnet for investment from global companies looking for a combination of skilled workforce, strong business climate, and unmatched commercial infrastructure," said Nancy McLernon, CEO of the Global Business Alliance.

According to the latest government data, the number of Tennesseans employed by foreign-headquartered companies investing in the U.S. grew by 33.4% over the past five years and Tennessee is now home to more than 860 global companies operating plants, offices, and other facilities across the state.

Although many of Tennessee's top elected officials have complained about immigrant workers illegally coming into the state, the Tennessee Department of Economic and Community Development, the state's business recruitment agency, courts foreign direct investment with offices in Japan, South Korea, Ireland, France, Spain, Austria, Germany, Switzerland, Italy, and the United Kingdom.

photo Staff Photo by Robin Rudd / Tennessee Department of Economic and Community Development Commissioner Bob Rolfe

Bob Rolfe, the commissioner for the Tennessee Department of Economic and Community Development (ECD), said Thursday he regularly travels around the globe working to convince businesses to locate in Tennessee.

"Historically, one out of three projects that we incent have been foreign direct investments," Rolfe said. "We have ECD employees in country in 10 different offices around the world so we have people on the ground telling the Tennessee story. Part of the reason for our success is that we try to meet these companies and their leaders, as I like to say, in their living rooms. We take that extra step to personally recruit them and aggressively work with those interested in expanding their operations and we also try to work very hard to make sure once they locate in Tennessee they are successful and continue to grow."

Much of Tennessee's growth in foreign investment has come since 1983 when former Gov. Lamar Alexander recruited the first auto assembly plant to the state when Japan-based Nissan opened what has become America's biggest automotive assembly plant in Smyrna, Tennessee. The German-based Volkswagen picked Chattanooga for its only U.S. assembly plant in 2009 and in September a joint venture between Ford Motor Co. and Korean battery maker SK Innovation announced plans for the biggest investment ever in Tennessee - a $5.6 billion battery and electric vehicle plant near Memphis that will employ over 5,700 workers.

"Our economy has a higher concentration in sectors where there is a higher level of foreign investment, such as the automotive and battery industries," said Steve Livingston, the associate director of Middle Tennessee State University's Business and Economic Research Center and editor of Global Commerce magazine. "We continue to see a high level of foreign direct investment in Tennessee from all around the globe."

Top countries for foreign direct investment in Tennessee

1. Japan, 192 establishments with $19.6 billion in total investments2. Germany, 129 establishments with $6.6 billion in total investments3. United Kingdom, 115 establishments with $1.7 billion in total investments4. Canada, 80 establishments with $3.1 billion in total investments5. France 78 establishments with $945.9 million in total investmentsSource: Tennessee Department of Economic and Community Development as of July 2021

photo Staff photo by C.B. Schmelter / People applaud as the walk behind vehicle rolling off the assembly line at Volkswagens plant in Chattanooga in 2020.

According to the Global Business Alliance, 7.5% of all workers in Tennessee are employed by a foreign-based company. In the Southeast, only Kentucky where Toyota has its biggest North American plant has a higher percentage of workers employed by international companies at 8.2%.

In Chattanooga, both the German-based Volkswagen and the Spanish-based Gestamp are expanding their automotive plants and adding hundreds of more workers. Also in the past year, the Canadian-based battery parts maker Novonix and the Spanish-based Sese Industrial Services announced two of the biggest new investments of the year in Chattanooga.

Because foreign direct investments are often in more advanced and capital intensive industries, the average pay for workers employed at foreign-owned companies is 18% more than the U.S. average, according to the Global Business Alliance. Most small businesses and service industry jobs that tend to pay less remain more local and don't compete so much in the global marketplace, Livingston said.

With many foreign names on products now made in Tennessee, determining the origin of a product is not as easy as it may have once been.

"As we talk about what it means to 'Buy American," 'we need to remember that includes products manufactured right here in Tennessee by the American workers of global companies," McLernon said.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

photo Staff photo by Troy Stolt / The Novonix sign is seen on the facility in Chattanooga that the company is retrofitting at The Bend on Riverfront Parkway. Novonix is spending about $160 million in its Chattanooga expansion.