As a San Diego-based manufacturing recruiter, I’ve spoken with a number of California-based executives who are either considering a location change or have already made the move to a manufacturing hotspot. Their destination: Tennessee.
For industry insiders, this isn’t a total surprise. Tennessee’s manufacturing industry has experienced steady growth since 2009. The state is now home to 6,517 manufacturers employing just shy of 400,000 workers. Many of these jobs are in the auto industry and transportation equipment, along with fabricated metal, electrical components and chemical products. There are four distribution centers of at least 1 million square feet in Nashville alone, serving major corporations including Under Armour and Amazon.
From its convenient geographic location to affordable cost of doing business, here’s why Tennessee is quickly becoming the go-to destination for manufacturers:
Convenient location near major cities and manufacturing hubs ideal for supply and distribution.
Tennessee occupies a unique location in American geography, stretching from Missouri and Arkansas to North Carolina and Virginia. It’s just a two-hour drive from Nashville to Huntsville, AL, home to thriving aerospace and automotive industries. Chicago, St. Louis, Atlanta and Charlotte are all a short hop away. Companies with headquarters in these cities benefit from being nearby their plants and distribution centers.
Tennessee’s central location has made the state especially popular with automotive manufacturers. Tennessee has received the top ranking in automotive manufacturing strength from Business Facilities magazine five times since 2009. 87 of the 95 counties in the state have automotive plants – and we expect the number of automotive jobs to continue rising.
The state’s central southern location also means that outside the Smoky Mountains, winters are rarely harsh and summers don’t hit triple-digit extremes. These moderate weather conditions are appealing to manufacturers who need consistent, year-round, reliable shipping.
Attractive US destination as an alternative to Chinese air freight.
Amazon Prime has conditioned consumers to expect free, 2-day shipping on virtually every product purchased online. Disappointed when a purchase shows up late or damaged? You’re not alone. I’ve spoken with original equipment managers and aftermarket manufacturers who are under extreme pressure from their primes to deliver products on short notice.
This pressure means we’re seeing a significant increase in air freight coming from China. But manufacturers are also seeking alternatives to this air freight, such as increased capacity within the United States. While a few manufacturers are turning to robots to help, others are looking at new places to set up shop. A number of factors impact this location decision, including workforce availability and costs, transportation and logistics, and utilities and infrastructure. Per Site Selection Group, which ranks all 50 states based on weighted site selection variables, Tennessee ranked above the national average in every category.
The third lowest tax burden in the country helps companies hold the line on employee compensation and invest more in business growth.
When assessing location affordability, an important consideration is a state’s tax burden, which measures the proportion of personal income residents pay toward state and local taxes, including sales and real estate tax. Looking at a state’s overall tax burden gives a realistic understanding of how much it actually costs to live there.
In Tennessee, residents benefit from the third lowest tax burden in the country when adjusted for cost of living, according to Wallet Hub. This means companies can invest more of their resources into R&D, production, and expansion while offering salaries that are competitive by local standards.
What’s Next for Tennessee Manufacturing?
Tennessee’s total manufacturing output hit $53.1 billion in 2016 and shows no signs of slowing down. For an industry that’s struggling with talent recruitment, Tennessee’s low cost of living certainly makes the state an attractive relocation option.
Have a question manufacturing sourcing talent in Tennessee or another state? Contact us and we will get you in touch with the right recruiter.