A decade ago, companies considering an expansion or relocation were not flocking to Nashville. In fact, most were not even considering the metro.
Even city leaders thought Nashville was a minor league Southern community.
The perception of Nashville began to change when Nashville-Davidson County, along with nine other counties in the region, pooled their resources together to create a regional economic development initiative, Partnership 2000.
Since the partnership (since renamed Partnership 2010) began, the region has seen a radical transformation in economic development. That transformation has resulted in more than 350 companies relocating their corporate headquarters to Nashville; numerous high-skill and high-wage manufacturing projects, including several automotive plants, have relocated to the metro; the population of the region has risen from No. 53 in the country to No. 38; and income growth has risen from No. 138 to No. 49.
By any benchmark, Nashville has had a decade that any metro area in the country would envy.
Its success has propelled Nashville to the No. 1 Ranking in Expansion Management’s 2005 “America’s 50 Hottest Cities” ranking. This is the seventh year that Expansion Management has conducted the survey.
“Nashville is attracting companies because it is a city where people want to be,” said Janet Miller, senior vice president of economic development for the Nashville Area Chamber of Commerce. “There is energy and creativity here.”
Last year, the metro ranked No. 2 behind Atlanta. This year, Atlanta ranks No. 2, followed by Kansas City, Mo.; Charlotte, N.C.; and Indianapolis. Rounding out the top 10 were Phoenix; Albuquerque, N.M.; Oklahoma City; Dallas-Fort Worth; and Jacksonville, Fla.
Expansion Management surveyed more than 80 of the industry’s most prominent site location consultants in order to find out which cities their clients find most attractive when it comes to actually selecting an expansion or relocation sites.
The consultants, whose identities remain confidential, were asked to list their top city choices for relocating and expanding companies, taking into consideration such factors as the business climate, work force quality, operating costs, incentive programs, and the ease of working with local political and economic development officials.
Metros in the southern and western United States dominate this year’s “Hot Cities.” Of the top 25 cities, only two are not from those regions —Indianapolis (tied for No. 4) and Pittsburgh (No. 23).
Texas has five “Hot Cities” metros, while South Carolina had four cities. Five states — Alabama, Florida, New York, Virginia and Tennessee — each had three cities.
A Diverse Economy
At a time when many cities are struggling to create new jobs, the Nashville metro added more than 11,300 jobs to its work force in the fiscal year ending in July 2003. Of cities of similar size, only Orlando, Fla., (20,364) added more jobs, according to the Bureau of Labor Statistics.
Many of the new jobs being created in Nashville come the relocation of corporate headquarters. The metro has put headquarters projects, and their high-skill, high-paying jobs, at the tope of its economic development priorities.
“When you land a headquarters, you are bringing to the community executives who are making the decisions for the entire company,” Miller said. “That impacts everything from the investments they make to corporate philanthropy.”
In the past 18 months, the following companies have relocated their corporate headquarters to Nashville:
* Pharmaceutical services company Caremark, a Fortune 100 firm with $6.8 billion in annual revenues, relocated from Birmingham, Ala., bringing 50 jobs.
* Louisiana Pacific, with $2 billion in annual revenues, moved 225 employees in headquarters and research and development positions from Portland, Ore.
* Clarcor, with $750 million in annual revenues, relocated 75 jobs to Nashville from Rockford, Ill.
* Wireless communications company Asurion, with $250 million in annual revenues, brought 1,350 employees when it moved its corporate headquarters from Silicon Valley, Calif. The company has since added 600 employees in headquarters, customer care and technical positions.
* Big Idea, a producer of animated films for children with $50 million in sales, moved its headquarters from Chicago, bringing 30 employees.
But the metro is not putting all its eggs in one basket. Aside from the corporate headquarters, Nashville has lured six distribution expansions (each more than 500,000 square feet) and six manufacturing investments. There have also been expansions involving customer care and data centers.
“We are not a one-trick pony community,” Miller said.
Many of the manufacturing expansion are logistics-driven. The metro lies at the crossroads of three interstates and its location puts it within 650 miles of 50 percent of the nation’s population. The metro is a transportation hub with air, rail and highway access.
“Never underrate a location in the middle of the United States,” Miller said.
Producing Tomorrow’s Work Force
And never underrate a metro that has tens of thousands of students preparing to enter the work force.
The Nashville metro is home to 19 colleges and universities, including Vanderbilt University, Middle Tennessee State University and Tennessee State University, educating 86,000 students.
Outside of its logistics/location asset, the quality of its higher education institutions is Nashville’s leading advantage, Miller said.
The three largest private universities in the metro created 1,000 jobs and had $267 million in capital investments during fiscal year 2004.
“They are a driver for white-collar businesses,” she said. “Companies can get entry-level job candidates up to Ph.D.s in engineering from Vanderbilt.”
Community colleges in the region will help companies with work force training.
One company, with the need for highly skilled technical workers to perform electronic circuitry work, is partnering with a community college to design a course to train employees.
“If you are going to try to attract companies to your community you have to be sure that you have a pipeline of employees with the right skill sets,” Miller said. “Our community college system is a good complement to our four-year colleges.”
A city with major colleges and universities was a major reason why Clarcor decided to relocate to Franklin in the Nashville metro from Rockford. The move was made in June.
Clarcor, a manufacturer of filtration products, as well as consumer and industrial packaging products, has experienced substantial growth during the past 20 years. In 1983, the company had sales of less than $175 million. In 2003, sales were at $750 million.
When the company decided it was time for a new headquarters building, it decided to relocate, said Norm Johnson, chairman and CEO of Clarcor. The company looked at 10 cities of similar size to Nashville before making its decision.
“Nashville offered us a central location with a professional and well-educated work force, major colleges and universities, and access to a large international airport,” Johnson said. “The city offers our employees a good quality of life and a positive business climate.”
Plus, Nashville is centrally located to Clarcor’s operating facilities in eight nearby states. Half of Clarcor’s corporate staff (40) made the move to Nashville, and the remaining positions were easily filled from the metro’s work force, Johnson said.
Atlanta Metro Stays Hot
The Atlanta metro continues to attract companies with its business environment. With 13 Fortune 500 and 24 Fortune 1000 headquarters, Atlanta can attract the industries that will result in high-paying jobs.
That’s a significant reason why the metro was No. 2 this year.
The Atlanta metro has emerged as a headquarters center for U.S. and international companies. These firms need to reach their customers globally, be able find quality talent, and offer their employees an environment with a good quality of life. Atlanta satisfies these needs.
Rayovac Inc., the world’s No. 3 seller of batteries, has relocated its headquarters from Madison, Wis., to Atlanta. Twenty-five positions in executive management, finance and other corporate administrative functions have been relocated.
Rayovac wanted its headquarters in a more central geographic location that is “closer to regional headquarter locations,” according to the company.
“This move to Atlanta improves our access to all global customers and moves us closer to our global markets,” said Dave Jones, chairman and CEO of Rayovac.
The headquarters move is one of the changes the company announced as it integrates Remington Products’ shaver screen manufacturing operations into its own facilities between March and November. Rayovac acquired Remington last September.
In December, the newly created company of Novelis announced that it will site its corporate headquarters in Buckhead in the Atlanta metro. Novelis is a spinoff from Canada-based Alcan Inc. Based on 12-month revenues of more than $7 billion and about 13,500 employees, Novelis would rank 270th on the Fortune 500 list, according to the company. It will operate 37 facilities in 12 countries throughout the Western Hemisphere, Europe and Asia.
The company produces food and beverage packaging, construction materials and aluminum foil.
The new global headquarters is scheduled for completion by March and represents a $2.5 million investment. It will employ more than 50 people with a payroll of about $15 million.
Pirelli Tire North America and retail giant Wal-Mart Stores Inc. were among the companies site distribution centers (DCs) in the Atlanta metro last year.
Pirelli Tire opened a 247,000 square foot DC in McDonough. The project will generate 40 new jobs and mean an investment of between $5 million and $8 million. The DC will house more than $35 million of tire inventory and will receive more than 2,000 containers of Pirelli tires that annually arrive from factories in Europe and South America though the port of Savannah. The DC is part of Pirelli’s new ‘Logistics and Customer Care Action Plan,’ which aims to improve customer service, particularly in the eastern United States.
“We have a solidly growing business in North America and particularly in the Southeast, so our Georgia location is really working for us,” said Guy Mannino, president and CEO of Pirelli Tire.
Pirelli will partner with logistics provider Kuehne & Nagel Inc., which will provide third party distribution services.
Wal-Mart will create 200 new jobs by expanding its Monroe DC. Currently, 500 workers are employed at the facility. Construction of the expansion is to begin this year with planned service to store locations expected in 2006.
“The Monroe distribution center expansion will provide Wal-Mart the opportunity to better serve our stores in South Carolina and Georgia,” said Rollin Ford, executive vice president of logistics for Wal-Mart. “It is a significant project that represents our continued commitment to Georgia as a partner in both economic development and community.”
The metro is also trying to attract companies in the “Industries of the Mind.” These are companies that are heavily dependent on intellectual capital.
High Tech, Life Science Expansions
Many expansions in America’s Hottest Cities during the past year were in the high-tech and life sciences sectors. Among them were chipmaker Intel Corp., which is in the process of upgrading one of its Chandler fab plants in the Phoenix metro (No. 6).
While industry trends have seen semiconductor firms frequently outsourcing – oftentimes overseas – production of computer chips in efforts to trim costs, Intel has bucked the system, holding firm to its belief that making its own chips in-house is the way to go.
The Santa Clara, Calif.,-based company is investing $2 billion to convert its 210,000 square foot Fab 12 facility into a Pentium computer chip-making plant. The facility is currently the production site of computer chipsets based on 8-inch, or 200-millimeter, silicon wafers.
However, once converted, the facility will churn out chips based on 12-inch, or 300-millimeter, wafers and will be Intel’s largest plant to use the emerging technology.
The conversion process is underway and should be completed by late this year.
Charlotte (tied for No. 4) is adding to the state’s life sciences sector by beginning to attract medical device manufacturers.
“We are very keen on bringing medical device companies to Charlotte,” said Justin Hunt, a vice president for the Charlotte Camber of Commerce. “We see this as an upcoming industry.”
Saebo Inc., a manufacturer of rehabilitation products and treatment techniques for stroke survivors, relocated its operations to Charlotte in June.
The company has eight employees, compared with three at the beginning of 2004, and the company expects to turn its first profit in 2005. Its signature product is SaeboFlex, a device fitted to the hand that uses springs to help stroke patients unclench their fists and improve their ability to grasp and release objects.
Logistics also plays a big role in Charlotte. The metro is the sixth-large distribution center in the country, with about $30 billion in annual wholesale sales.
Blue Bell Ice Cream opened a 10,000 square foot DC in the metro, where it will employ 30 workers. The DC will handle shipments to supermarkets and other retailers within a 100-mile radius of Charlotte.
Towson, Md.,-based Black & Decker Corp. consolidated the operations of two DCs into a 354,900 square foot facility in Charlotte. The facility can be expanded by an additional 102,900 square feet.
Charlotte’s recruitment of medical device manufacturers and DC operations exemplifies why it, and the other 49 metros, made the “America’s 50 Hottest Cities” listing. There is a diversity in expansions and relocations — manufacturing facilities, DC facilities, headquarters, and customer care and other back-office operations. This diversity acts as a shield when the economy, as it always does, swings up and down.
Miller of the Nashville Area Chamber of Commerce said it is important not to be dependent on just one industry when building an economic development portfolio.
“There is variety in our expansions, and that will make us more resilient in times of economic slowdowns,” she said.
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