Study Identifies State Auto Opportunities (550)

KNOXVILLE, Tenn. — Counties seeking auto manufacturing jobs would do well to target segments of the industry that don’t already have a presence in the region, a University of Tennessee economist said Tuesday.

Dr. Matthew Murray of UT-Knoxville’s Center for Business and Economic Research identified 11 industry groups as underrepresented in the mix of activities that supply the state’s prosperous auto industry. His work was done for the state’s Department of Economic and Community Development.

“Filling the supply gaps by recruiting underrepresented industries could enhance the competitiveness of Tennessee’s automobile industry,” Murray said. “Automotive stamping, vehicular lighting fixtures, and paints and allied products are the three most noteworthy gaps.”

Other possible opportunities for recruiters include companies that manufacture automotive parts and accessories, trim and apparel, and miscellaneous plastic products.

Gaps in a second tier of suppliers include blast furnaces and steel mills, nonferrous wiredrawing and insulation, sheet metalwork, engine electrical equipment, and chemical preparations.

Murray said he found that a few industries–especially glass and tires–were overrepresented in the region. His study looks at industrial clusters, the complex of suppliers and services that are necessary to make a product from start to finish.

The Nissan plant in Smyrna and the Saturn plant in Spring Hill are the core of Tennessee’s automotive cluster, but the location of other carmakers in the Southeast, such as Toyota in Georgetown, Ky., contribute to the strength of the state’s and the region’s automobile industries.

“Tennessee’s concentration of employment in the auto industry is eight times the national average,” Murray said. “It larger than any of the other Southeastern states in the study.”

Economic development recruiters will have to study the automotive cluster not only in Tennessee but also in surrounding states before targeting a specific firm or business activity, he said.

“The decision to target any of the identified industries requires additional knowledge of the changes taking place in the automotive supplier market,” Murray said. “It may be that these firms are not in the region because of factors the developers can’t control, such as the absence of key natural resources or a constraining regulatory environment.

“But when gaps exist without any ready explanation, developers should consider targeting those industries.”

According to the 1998 edition of the Directory of Tennessee Manufacturers, Lake, Wayne, Meigs, Moore, Cannon, Stewart, Houston and Grainger counties have no auto-related industrial activities.

Jobs in the automotive industry are desirable because they typically are higher paying and create spin-off businesses.

In 1996, the average salary of a Tennessean working in the motor vehicle and equipment industry was $41,494, compared to only $25,095 for the average job in the state economy, the study says. Because most of the products are typically sold outside Tennessee, the car industry results in a net gain for the state’s economy, Murray said.

But auto-related manufacturing may not be a cure-all for local economic woes, Murray said.

“An overreliance on producing specific products can lead to a decline in a region’s economy if it loses its competitive advantage to another region or nation that has lower wages or newer technologies,” he said, using as an example the migration of the textile industry out of the South.

“The best approach is to have a balanced set of industrial clusters so that one industry does not dominate a region’s economy.”

Contact:    Dr. Matthew Murray (423-974-5441)

                  Bill Dockery (423-974-2225)