Memphis has missed manufacturing boom
out.
Ever since his foam pillow and bedding plant in China landed Walmart as a customer in 2006, he’d thought of expanding the business beyond China.
So when Walmart launched its Made-in-the-USA campaign in 2015, Chen was already thinking of locating in America to supply his largest customer’s U.S. stores. These days, he’s doing just that. Chen, a native of China, has opened Sinomax USA’s first U.S. plant, a 350-employee foam products line near Nashville.
Moving into Davidson County continues the employment surge in Middle Tennessee, where recent announcements by expanding companies include a $600 million Google data center, 1,000-employee Hankook tire plant, $600 million LG appliance factory and Sinomax’s $28 million plant at LaVergne.
Missed out
Nashville made the cut. Memphis didn’t. Frank Chen can’t remember why Memphis was ruled
Despite the rapid pace of investment in the United States by Chinese companies, and efforts by Walmart to boost manufacturing in the United States, Memphis has missed the boom.
While employers in the ninecounty metro area have hired more workers since 2012, putting the area 12,000 jobs over the level coming out of the recession five years ago, metropolitan Nashville, a region of 1.8 million residents, has gained 110,000 jobs in the last five years.
Metropolitan Memphis, a region of 1.35 million people, has recovered only slowly since the recession set off by Wall Street’s 2008 financial crash.
Many in Memphis contend the West Tennessee economy is held back largely for a single reason — too poor, and tied to that too few residents educated in college or trained for vocational work.
Yet, it’s unlikely the students coming out of Davidson County Schools, the largest district in Middle Tennessee, are powering the surge. The district is too small, graduating only about 7,000 students each year. And Nashville remains unbalanced economically. About 40 percent of the population was classified low income in a 2010 study by the think tank Brookings Institution.
So who filled the new jobs? Probably a lot of out of towners who moved from other cities. That’s a reason educational attainment in Nashville surpasses the state average. About 45 percent of Nashville and Davidson County residents ages 25 to 64 have a twoyear degree and 38 percent graduated a four-year college.
Memphis and Shelby County also surpass the state average but are closer to the norm. Here, about 38 percent of residents 25 to 64 here hold a two-year degree and 31 percent a college degree.
Business leaders in the city have tried to boost those numbers. But enrollment in Southwest Tennessee Community College still has plunged about 30 percent since the financial crash, despite efforts such as Harvard Tech, a blue-collar training initiative that has met only modest success since its launch four years ago by the Greater Memphis Chamber.
Boom town
Just why Memphis didn’t stand out, Chen said he can’t recall, noting a site selection firm recommended 60 locations in eight states. Memphis made that list.
Chen, a Louisiana State University engineering graduate, distinctly remembers meeting Nashville Mayor Megan Barry in China when she arrived on a trade mission organized by Tennessee’s Department of Economic and Community Development.
He met with Gov. Bill Haslam and Randy Boyd, then the head of economic and community development, and when he chose LaVergne, even Mayor Barry came out from Nashville to welcome the new company’s arrival.
“It was absolutely the right decision for us to locate here,” Chen
said, noting the access to the airport, interstate highways and rail line.
In the Nashville area, state and local tax breaks for new offices and plants have surpassed $1.5 billion in recent years, compared to $876 million in the Chattanooga area and $352 million in the Memphis area, according to the Beacon Center, a libertarian think tank in Nashville.
While the tax incentives underscore the vitality in the Nashville economy, Chen said he was not overly concerned about finding workers.
Boom towns draw plenty of people in simply looking for jobs. They boom because they are booming. That makes
Skills shortage
Before the Made-in-the-USA campaign was launched, Walmart executives met with Boston Consulting Group.
The analysts estimated 1 million new jobs throughout the nation could emerge as vendors answered Walmart’s call to source $250 billion more merchandise in the United States within a decade.
The Arkansas retailer already bought two thirds of the food and goods in its stores in the United States. Officials figured more domestic goods would cut shipping costs and get more items onto the shelves sooner. And customers would appreciate more U.S. products.
“Second to price, our customers tell us they want to know where the products came from,” said Walmart U.S. manufacturing vice president Cindi Marsiglio, noting baby, pet, sporting and home goods are priorities to make in the United States.
“We’re seeing a great reshoring of product,” she said. “We’re right on track.”
But the campaign has revealed the national skills shortage.
“Workforce development is one of the top challenges that suppliers share with us as it applies to manufacturing,” Marsiglio said.
Throughout the country, investors and manufacturers had closed plants, automated or moved production abroad, displacing a generation of baby boomers who started new careers or retired as five million industrial jobs vanished after the 1990s.
In Memphis, the Walmart campaign has produced jobs. Kruger moved a paper towel line from Quebec to its renovated mill, which already supplied the retailer with White Cloud toilet paper. Walmart stocked the Chef Jenn line of frozen seafood dishes. Impact Innovations added workers for its holiday wrapping paper line.
But in many ways Memphis resembles the country.
Walmart is trying to set off a manufacturing surge.
Some cities, like Nashville, are lucky.
Many, like Memphis, are unprepared. They have too few skilled workers. Ted Evanoff, business columnist for The Commercial Appeal, can be reached at evanoff@commercialappeal .com and (901) 529-2292.