+
+
Posted on: Wednesday - Jan 11, 2017

From new job commitments, to existing company expansions to businesses moving to the state, to hundreds of entrepreneurs starting new businesses, to dozens of communities making important strategic investments in themselves, 2016 was a great year for Tennessee! These are the key metrics we are tasked to achieve, and the team has had outstanding success. However, when I was recently asked by a teammate what I’m most proud of from these past two years, my spontaneous but sincerely held belief is that our greatest accomplishment is having built a team and culture that will continue long after my tenure and those in the room that day. There is an energy, passion, openness, transparency and desire to make a lasting impact that defines our new culture. From our new INSPIRE values visible not just on our walls and coffee mugs, but in our actions and our hearts, to the new open offices that not only are 55 percent more space efficient, but symbolize the collaborative open transparency we strive for internally and externally. This will be what sets our state on a path of continued success for the next decade.

A list of accolades follows but the one I believe is most important is one by The Pew Charitable Trusts in a report released in September. Tennessee’s median household income grew 6.4 percent in 2015, which ranks as the No. 2 greatest rate of growth in the nation after Montana’s growth of 6.7 percent. Not only has unemployment dropped, but more Tennesseans are working in our state’s history and they are making more money than ever before.

Accolades and Awards

Tennessee had many accolades in 2016. We were ranked No. 1 for foreign direct investment (FDI) job commitments in 2015, according to the 2016 IBM Global Location Trends report. Foreign companies can choose any state in the country to locate and by showing preference to Tennessee, it speaks volumes to the positive environment in our state, from skilled workers, to efficient government, to a business friendly culture. 

The Brookings Institution ranked Tennessee No. 1 among U.S. states for advanced industry job growth. From 2013 to 2015, Tennessee’s advanced industry jobs increased by an average of 4.6 percent annually, which outpaced the national average of 2.46 percent.

Also this year, Southern Business and Development magazine named Tennessee the 2016 State of the Year for Economic Development based on its project totals and the variety of the industry sectors that invested in the state and created jobs. Nashville was also named “Co-Major Market of the Year” by SB&D with honorable mentions to Knoxville and Chattanooga.

In June, Tennessee was named recipient of Area Development's 2016 Gold Shovel Award in recognition of projects undertaken in 2015, which created a significant number of high-value-added new jobs as well as investment. This is the second consecutive year Tennessee has received a Gold Shovel Award. In addition to 2015, the state also received Gold Shovels in 2012 and 2009.

There are so many accomplishments in 2016 that in spite of serious editing, I will have to apologize for the length of this summary. Hopefully, you will, as I do, feel proud and thankful for all the men and women on the team that have worked so hard to make our state great for everyone. We are excited about the past year, but even more excited about the future.

Business Development

The primary job of business development is job creation, and this team delivered effectively and efficiently thanks to the great leadership of Allen Borden and the truly 24/7 team of professionals in the department. Business Facilities magazine ranked the General Motors expansion, which resulted in 1,431 new jobs and a $1.02 billion investment, as the second largest project in the country. We had 21,063 new job commitments in 2016 for a total of $5.311 billion dollars in capital investment. Neither are records; those were set in 2015. Businesses don’t always commit to our calendar year, but the good news is we finished the year with a record possible jobs in our pipeline, 41,197, and on a rolling 12-month basis we have closed on 73.9 percent of our pipeline projects! However, for each of the 21,063 families with great new jobs and better lives as a result, it was great year for them and their families.

This past year we were the most effective and efficient than ever. The cost per job dropped to a super-efficient $3,006, the lowest that we have recorded. 

We measure fiscal effectiveness and return on investment by projecting the tax revenues that will be returned back to the state as a result of the direct project activity we incentivize and the supporting indirect and induced economic activity that results. We forecast that 2016 projects that have received FastTrack or Capital grants will have a payback period of 2.2 years with a 47.2 percent annual rate of return. I don’t know about you, but this is much better than I did on my personal 401k! If we were just investing the state’s reserves this would have been a great investment, but the best return is on the impact in the lives of the nearly 21,000 people that have the opportunity for new jobs.

Our philosophy has evolved from any jobs anywhere to “the right jobs in the right places,” meaning where we have close to full employment we only want to bring in higher paying jobs and then really focus on attracting more jobs to those places with high unemployment. To do the latter, we have to invest more proactively in site and community development, but more on that later. One key measure is the percentage of jobs committed that will pay over the county median wage. Our target for the year was 55 percent, but we exceeded it by finishing the year at 55.3 percent. In 2015, 28.1 percent of the jobs were in rural communities, but in 2016 this share increased to 40.3 percent. This is not by accident.

The business development team worked 159 projects to get to these totals. Just as any business knows, our best return on investment comes from working with the customers we already have and they contributed 123, or 77.4 percent, of all projects for a total of 15,836 jobs. Our team made nearly 4,200 existing company visits in 2016. We are also excited to see so many new companies start in our state. This year, the business development team supported the creation of 10 new companies, which committed 806 jobs and $784 million in capital investment. Our business development team also recruited businesses from around the world to Tennessee, making 76 recruiting trips. There were 26 such companies committing 4,421 new jobs.

Speaking of the right places, one area of focus continues to be the Memphis Regional Megasite (MRM).  In 2016, 96 presentations were made to site consultants and prospective companies about the MRM. 

Community Development

When I first came to TNECD, while I knew we worked with companies near and far to create jobs, I wasn’t quite sure what the “community” part of our title was all about. I quickly learned how critical having a livable, sustainable community is not just attracting businesses, but insuring a great quality of life for our citizens.

Our three federal programs contributed significantly to the state’s infrastructure with the Appalachian Regional Commission (ARC) supporting more than 30 projects for $7 million, the Delta Regional Authority (DRA) supporting 10 projects for $1.4 million, and Community Development Block Grants (CDBG) contributing $750,000 for nine projects to improve downtown façades and other CDBG grants supporting 73 projects totaling another $29.4 million.

We are excited that all of our 95 counties are now ThreeStar Communities. More than 70 percent of these counties received ThreeStar grants to assist in achieving the goals set by their community leaders. Also during 2016 we have four new Main Street qualifiers for a total of 34 Main Street communities. We awarded $300,000 for entrepreneurship projects in Main Street communities and 12 additional communities are participating in the Tennessee Downtowns program. 

A key metric for our communities is developing our industrial sites – this is where our Select Tennessee suite of programs come into play. This year we had 13 counties participate in our Property Evaluation Program (PEP) to help them determine where the best sites are and how to enhance them. We have five new certified sites and those sites are considered “shovel ready.”

Rural Development

Nearly every economic measure out there will tell you this is the best time in Tennessee’s history from the number of Tennesseans employed, to educational attainment, to median household income and state GDP. However, these are all averages, and averages hide tremendous disparity. At the same time, we have 17 counties that are considered “distressed,” meaning they are in the bottom 10 percent of counties in the country for poverty, income and unemployment.  

We are only as rich as our poorest neighbor, and we have some neighbors who are struggling. For this reason, the department created a rural development team in 2015 and appointed our first assistant commissioner, Amy New, to lead it. While we have only just begun and there is so much more to do, 2016 was a catalytic year with tremendous focus on rural development. More importantly, there is a pervasive statewide sense of optimism and hope that the Tennessee “Rural Renaissance” will soon be a reality.

Rural Economic Opportunity Act

This year with unanimous support from the legislature, we passed the Rural Economic Opportunity (REO) Act, which better aligned our job incentives to support rural communities and provided $10 million in funding for rural development. This builds on the $8 million of departmental funds committed in fiscal year 16 and our longstanding community development programs like ThreeStar and Community Development Block Grants. All of these programs are designed to spur long-term, sustained economic growth in our rural communities.

Broadband 

One need still existing in our rural communities is broadband access. Too many Tennesseans still lack the connectivity they need to grow their businesses, educate their children and help their communities thrive. While 13 percent of Tennesseans lack broadband, there is huge digital divide between rural and urban: 2 percent lack access in our cities while 34 percent, on average, lack it in rural communities. In order to determine the areas of need and options to address these gaps, the department launched a Statewide Broadband Assessment in early 2016. Almost 24,000 Tennesseans made their voices heard on this issue, nearly quadrupling the expected response rate. Knowing the importance of this issue to Tennesseans and with the information gathered from the report, Tennessee is poised to take action early next year to ensure all Tennessee communities can thrive in an environment increasingly dependent on broadband.  

TNECD Broadband Release and Report link: http://www.tnecd.com/news/316/broadband-study-finds-13-percent-of-tennesseans-without-access/

Rural Task Force

To identify areas of additional need and implement holistic programing designed to build a stronger rural Tennessee, I had the honor of co-chairing the Governor’s Rural Task Force with Agriculture Commissioner Jai Templeton and Tourist Development Commissioner Kevin Triplett. Our mission is to have zero distressed counties by the year 2025, but hope to achieve this much sooner.  

We are doubling down on the efforts of the REO Act by increasing the funding available for existing programs and adding new programs designed by stakeholders across the state as a part of the Rural Task Force. These new programs are targeted at developing our workforce, supporting small businesses, strengthening the unique assets in our communities, promoting agricultural enterprises and equipping local leadership.  

Governor’s Rural Taskforce Release and Report: https://www.tn.gov/ecd/news/46047  

Communications and Marketing

In an effort to help ensure that all of Tennessee’s 95 counties can compete when it comes to business recruitment and expansions, TNECD created the Marketing Assistance Program. Launched in 2015 and offered at no cost to qualifying communities, the program helped give 12 distressed counties the resources and deliverables needed to gain additional economic development opportunities. Each county received an up-to-date website complete with content, video and photography specific to each community. The program also included a training session that showed each county how to operate, manage and update their website. 

TNECD saw such success from the pilot round that we recently launched a second round of the program. This time, we expanded eligibility by offering the program not only to Tennessee’s distressed counties, but also any county designated as Tier 4 or Tier 3. Online application submissions are being accepted now through January 20, 2017, and recipients placed in the program will be notified February 15, 2017.

In addition to the awards and accolades received by our department in 2016, our communications and marketing team secured a few more awards that we are very proud of.

  • The Memphis Regional Megasite promotional videos received three national Telly Awards. 
  • TNECD received five Excellence in Economic Development Awards from the International Economic Development Council (IEDC) for TNECD.com, Memphis Regional Megasite videos and collateral, “Mastered in Tennessee” campaign and the County Profile Tool.
  • TNECD.com was named one of the five "Most Admired Websites" in economic development in a survey conducted by Development Counsellors International (DCI).

TNECD is also the most “liked” economic development organization on Facebook, having surpassed the U.S. Economic Development Administration. With nearly 42,000 likes, the department reached 3,840,374 users in 2016 on Facebook.

The number of visits to TNECD.com increased an impressive 75.7 percent from 2015 with 294,252 visits during the past year and 197,946 video views.

Legislation

In 2016 we were fortunate as a department to enjoy steadfast support from our partners in the legislature. The Tennessee General Assembly has been among our strongest allies, thanks in large part to the great work of our legislative director, Sammie Arnold. The Rural Economic Opportunity Act (HB 2570) passed unanimously in both houses of the General Assembly with a whopping sixty legislators signed on as cosponsors. Gov. Haslam and the legislature approved $10 million in funding for this new tool. The bill also makes it easier for businesses in Tier 3 and Tier 4 counties to achieve tax credits for job creation.

The Angel Investor Tax Credit legislation (SB 2539) also passed unanimously in both houses. This new tool, effective January 1, 2017, will support Tennessee entrepreneurs and encourage investment in new and startup companies by allowing angel investors to receive a tax credit for their investment. Entrepreneurs are vital to the future of our economy, and we are committed to supporting them. We don’t want Tennessee to be a great investor; instead, we want to make Tennessee a great state for investors.

Research

During 2016, Sally Avery and the Center for Economic Research in Tennessee (CERT) team released several major reports, all of which are available at TNECD.com. In the Tennessee Workforce Disruption Index, CERT reported that 50 percent of Tennessee jobs have a high probability of automation. For each Tennessee county and region, CERT forecasted the likelihood of workforce changes (or disruptions) resulting from automation, shifts to smaller working age populations resulting from baby boomer retirements, and educational attainment trends in Tennessee. In the Economic Benefits of Postsecondary Credentials, CERT forecasted that achieving Tennessee’s Drive to 55 objective by 2025 would lend to an additional 528,630 college graduates working in the state with incomes for this group of graduates $9.3 billion higher than would otherwise occur. And this is for just one year! Part II of this report expands the results to a county-wide basis. CERT also reported on jobs across Tennessee with high employer demand in the 2016 LEAP Occupational Analysis—with spotlights on employer needs to fill IT, health care, engineering and production jobs and on the Tennessee colleges and universities that offer relevant programming.

A report on Foreign Direct Investment in Tennessee highlighted the 919 foreign-based companies doing business in Tennessee. The report forecasts that the 30 FDI project commitments during FY 2016 will generate 11,100 new jobs, $4.2 billion in new incomes and $19.2 billion in economic output over the next 10 years. Tennessee expects a 56 percent annual rate of return on the incentives offered to these 30 projects.

Economic impact analyses were also completed for the Memphis Regional Megasite, modeling different scenarios of land utilization and the associated economic impacts for the state. 

Conclusion

While we are excited about the past and proud of our teammates and our state for its success, we are more excited about our future. Gov. Haslam has set our state’s mission to have 55 percent of our citizens with some type of post high school certificate or degree to meet the jobs of the future. At 39 percent, we have made great progress through programs like the Tennessee Promise and Reconnect, but we have a long ways to go. Educational attainment is workforce development, which is economic development. The Drive to 55 is a critical part of our state's economic success.

In economic development, we want to be the No. 1 state in the Southeast for high quality jobs. Today we are No. 3 or No. 4, depending on the set of metrics you choose. With initiatives like expanding our industrial sites and increasing our international presence with six new FDI recruitment offices, we are advancing determinedly and inevitably toward our goal.

Lastly, we have gone from 21 distressed counties to 17 in the last year, and through initiatives like the REO Act and Governor’s Rural Task Force, there has been much progress in helping our neighbors and ensuring every Tennessean, regardless of where they live, has the opportunity to succeed and have a quality life. Still, there is much left to be done. We won’t rest until there are zero distressed counties and the Rural Renaissance we dream of is a reality.

We want to continue to make Tennessee the Opportunity State: Opportunity for a great education, opportunity for a great job, and opportunity for everyone.