Foreign Investment into Tennessee 3rd Quarter 2013
Tables and Graphs
Last year's foreign investment was higher than for 2008, 2009, and 2010 combined.
Twenty foreign firms either initiated new operations or significantly expanded existing ones over the past year. (We do not include outright purchases of existing facilities.) This was roughly one-third more than in 2012. Indeed foreign investment in the state has substantially bounced back from its collapse in the wake of the global economic crisis of 2008-2009. Last year's foreign investment was actually higher than for the years 2008, 2009, and 2010 combined, whether measured in terms of announcements or in terms of anticipated new employment.
The largest single investment was Hankook's announcement of a new tire plant scheduled to open in 2016 in the Clarksville area. The operation is expected to employ 1,800 workers at an announced cost of $800 million. The plant will mark the eighth South Korean firm active in the state. The map indicates the location and size of the year's foreign investments. As can be seen, the majority of investments were in middle Tennessee. Twelve of the new investments or expansions are in automotive-related industries, accounting for the geographical concentration.
The size of announced investment is a bit volatile because of the (happy) possibility of sizable individual investments. The two 2009 billion-dollar-plus polycrystalline silicon investments skew comparisons with that year, while Nissan's Leaf lithium battery operation and JX-line expansion similarly inflate the 2012 numbers. But if we take into account these exceptional investments, we see a solid trend line since 2008, with the 2013 figures looking very healthy. New employment, on the other hand, has grown in a more regular fashion over the past six years. Announced jobs were up 13% from 2012. The new jobs amount to an increase of just over 4% of total employment in Tennessee's foreign-owned firms, substantially outpacing overall state employment growth.
Tennessee International Trade Report
On the whole, it was not a bad quarter. After a year of virtually no growth, Tennessee exports gained 5.9% in the third quarter of 2013. At $8.2 billion, it was the second consecutive quarter that the state's foreign shipments crossed the $8 billion barrier. Though this export performance still pales in comparison to a couple of years ago, Tennessee's rate of export growth was more than double the nation's for the quarter.
Much of this relatively good news was driven by a few spectacular export performances. And "driven" is the word, because most of them involved automobiles. Car exports increased by $183 million in the third quarter, a remarkable 47% gain. This was despite a relatively poor quarter in the Middle East, the state auto industry's largest market outside of NAFTA. Shipments to Canada were up over $25 million, but the real stories were China, the Netherlands, and Australia. In all three, exports of cars soared dramatically.
The lion's share of the remaining export gains were in the health sector. Exports of medical equipment were up about 10% to $884, and total healthcare-related exports gained more than $100 million. Orthopedics were particularly strong, increasing 22% to $270 million. It's interesting to note, and maybe a sign of the future, that Japan, not only the state's fourth largest market but the market with the most aged population, grew 15% for the quarter with almost all of the gains in the health sector.
Other strong third-quarter exports were cellulose acetates, polyesters, whiskey, and cotton. Cotton exports exceeded $225 million through an interesting rotation. Exports to China were off by almost half but were more than compensated for by large increases in shipments to Turkey, Vietnam, and Indonesia.
Geographically, the best markets were in Southeast Asia, Turkey, and Japan. Japan grew 15% for the quarter with almost all of the gains in the health sector.
The rest of the world was basically a wash. Both NAFTA partners, Canada and Mexico, grew by a very modest 3%. South America was an even more sluggish 2%. A 5% drop in shipments to Brazil undid strong gains in Chile and Argentina. The eurozone was for all intents and purposes flat, as exports barely budged from $988 million in the third quarter of 2012 to $995 million in 2013. Though the U.K. market was a bit better for the quarter, posting an 8% gain, this wasn't enough to reverse losses in that country earlier in the year.
Compared to the past few quarters, or compared to the rest of the nation, Tennessee exporters turned in a solid third quarter and are poised to do well over the coming quarters. However, the relative narrowness of the gains (just a few industries, just a few markets) shows that the world economy still is not out of the woods, and exporters have their work cut out for them in 2014.
Tennessee exporters turned in a solid third quarter and are poised to do well over the coming quarters. However, the world economy still is not out of the woods, and exporters have their work cut out for them in 2014.
