Tennessee Continues to Make Foreign Direct Investment a Priority
Tennessee has created a business environment unbound by state borders. With a commitment to investing in a broader international footprint, Tennessee is firmly entrenched in the new global economy.
The Volunteer State is home to 971 foreign-based businesses that have invested more than $37.3 billion in capital and employ more than 147,000 Tennesseans. The State continues to proactively identify and recruit new foreign direct investment (FDI) to the state alongside efforts to increase Tennessee exports. With offices courting FDI in Japan, South Korea, China, Netherlands, Germany, Italy, Spain, France and the United Kingdom, Tennessee works closely with federal partners to promote exports, which totaled more than $33.2 billion in 2017. This investment demonstrates Tennessee’s commitment to compete globally for business and jobs, which is not something that most states can claim.
Allen Borden, deputy commissioner of business, community and rural development for the State of Tennessee Department of Economic and Community Development, said, “If you’re not in the global game, then you’re not in the game at all.”
Tennessee is certainly in the game. Last year, the Tennessee Department of Economic and Community Development (TNECD) received 40 project commitments from foreign-owned businesses, resulting in nearly 7,000 job commitments and $2.58 billion in capital investment. This FDI accounted for nearly one-third of all Tennessee’s new jobs committed in 2017 and 56 percent of all capital investment committed in the state.
Just this past April, Van Hool NV, a family-owned Belgian manufacturer of buses, coaches and industrial vehicles, announced it will locate its first U.S. manufacturing operation in Morristown, TN. The manufacturer’s investment totals more than $47 million while also creating nearly 640 new jobs for its 500,000-square-foot facility in Morristown’s East Tennessee Progress Center, a Select Tennessee Certified Site.
Van Hool CEO Filip Van Hool said, “The presence of highly-regarded technical schools and well-trained workers in Hamblen County, together with the support and cooperation of all local parties involved, convinced the Van Hool executive board to make the largest investment outside Belgium in Van Hool’s 71-year history. The investment of more than $47 million reaffirms the more than 30-year presence of Van Hool in the U.S. market. Since 1987, we have supplied more than 10,000 vehicles in North America. We’re really looking forward to building a state-of the-art bus factory in Morristown to supply the entire North American market with high-quality buses and commuter coaches for transit agencies from 2020 onwards.”
Just a couple of weeks following Van Hool’s announcement, West Tennessee boasted another company’s first U.S. operations. South Korean Dong-A Hwa Sung Co., LTD., a supplier of rubber and plastic components for the home appliance and automotive sectors, announced it will create approximately 220 jobs and invest $13 million in Martin, TN, which represents the largest and only FDI in Weakley County’s history. The new operations will consist of a 100,000-square-foot facility that will serve as a supplier for LG as well as other companies in Tennessee and North America, positioning Dong-A to be better equipped to serve its North American customers.
Week after week, Tennessee is seeing these international businesses set up their first U.S. facilities in the state, locating strategically to play on Tennessee’s already thriving industries.
Mobile Mentor, Inc., part of Mobile Mentor Limited, which develops, secures and manages mobile solutions for health care, banks, airlines, utilities and government organizations and offers application development, mobile security and mobility management, now calls Tennessee home in the state capital of Nashville. The company was founded in 2004 and is headquartered in Auckland, New Zealand with locations in Wellington, New Zealand and New South Wales, Australia. Mobile Mentor cites the proximity to the leading health care service providers as the reason for its late April announcement to create 110 new jobs and invest approximately $2 million in Davidson County, with a focus solely on health care for the first few years.
Mobile Mentor CEO Denis O’Shea said, “Mobile Mentor has chosen Nashville as the base for our U.S. business due to the proximity to the leading health care service providers. We are delighted to be part of the thriving community of health care innovators, and we look forward to working closely with the industry leaders.”
Tennessee’s foreign projects include a high percentage of businesses in the transportation, distribution and logistics, manufacturing and automotive industries with parent country leaders including Germany, United Kingdom, France, Canada, Sweden, Ireland, Italy and Brazil to name a few.
However, Japan tops the charts as a parent country when looking at Tennessee FDI, with nearly 52,000 jobs in 190 Tennessee establishments. The State continues to be one of the main destinations for Japanese investment in the U.S., bolstered by a large cluster of Japanese-based companies such as Nissan, Bridgestone, DENSO, Calsonic Kansei, M-Tek and Yorozu.
According to the fDiMarkets database, Tennessee ranks third in the nation for Japanese FDI projects. Of the 123,000 Tennessee jobs created by foreign-owned companies, 39.8 percent were jobs created by Japanese-based firms. In addition, Japanese-based companies account for 53.3 percent of total foreign-owned company investment in the state.
TNECD’s Japan office has played an important role in Tennessee’s efforts to attract and support Japanese investment in the state. Noting the success of the TNECD office in Japan, the department has added additional offices across Europe and Asia and now has a presence in 11 countries to ensure that Tennessee continues to be one of the leading destinations for FDI in the nation.
Tennessee anticipates seeing an economic impact and a return on this investment thanks to FDI. TNECD’s Center for Economic Research in Tennessee led an analysis of the commitments of foreign investments from fiscal year 2016 to estimate the impact the projects will have on the state during a 10-year period. The 30 FDI projects included in the analysis projected to create 11,100 jobs for Tennessee residents, including 4,100 direct jobs created directly through the expansion and relocation activities of companies analyzed, and an additional 7,000 induced and indirect jobs created in the regional economy in support of the direct growing business activity. These jobs are projected to generate $4.2 billion in new income for Tennessee workers in a decade.
In addition to job creation, the foreign-based companies will make significant capital investments in the state. An estimated $1.2 billion in new capital investment is anticipated by the time each project is fully operational. FDI projects are estimated to generate $117.6 million in net fiscal benefits to the state over a 10-year period—representing additional tax revenue generated, and reducing the costs of additional services to new residents and businesses.
The attraction of FDI to Tennessee is a well-leveraged opportunity for the state to strengthen its economy with thousands of Tennessee jobs supported by foreign investment. For decades, Tennessee has been successful in recruiting new companies that provide strong economic and fiscal impacts to the state. The state will continue pursuing projects that afford new opportunities for Tennesseans with a significantly-positive impact on the state. Tennessee is a destination of choice for companies, with its strong workforce, logistical advantages and ideal location, making it a win-win location for businesses across the globe to locate.
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