State Cautious About More Auto Industry Inducements
KNOXVILLE, Tenn. — Tennessee probably will be cautious about offering more incentives to recruit more auto industry firms, a University of Tennessee economist said Tuesday.
”There is a concern that the state is becoming too dominated by auto-assembly and parts-manufacture,” said Matt Murray of UT-Knoxville’s Center for Business and Economic Research.
”We really enjoy having the new capital investment, the higher-paying jobs, and we need to continue those job opportunities,” Murray said.
”But there is concern that, as the state pursues more auto-type industry, what we do is put more of our eggs into a single basket, and we eliminate or reduce much of the diversification that is already an inherent aspect of our state’s manufacturing sector.”
Tennessee already has Saturn and Nissan assembly plants and a large and growing number of auto-parts manufacturers serving those and other plants in the region, Murray said.
”If we push too far in one direction, we might have a less diversified portfolio that puts the state at increased financial risk, the state’s economy at greater risk should we experience a downturn in the auto industry,” Murray said.
”Another factor is that the State of Tennessee does not have the financial resources…that could be used for financial inducements.
”Thirdly, the (auto) industry is going to continue to expand in Tennessee without any direct financial inducements offered by the state.”
Tennessee will continue to enjoy a migration of auto-supplier plants into the region to support the assembly plants in Tennessee and the Mercedes-Benz, BMW and Toyota plants in other states of the region, Murray said.
”Tennessee is at the heart of the new auto-alley and is going to continue to enjoy growth in the industry without taking much of a proactive stance to induce that kind of growth,” Murray said.
Sweden’s Volvo has indicated it might build a new assembly plant in the Southeast.
Contact: Matt Murray (423-974-5441)