Foreign Investment into Tennessee 2021
Tables and Graphs
Tennessee gained $8.6 billion in new foreign investment in 2021. This far surpassed last year’s 900 million and indeed far surpassed that of any other recent year. This investment led to an announced 10,719 jobs. This again far exceeded any recent year – it is more than 4,000 more jobs than foreign investment generated in 2015, the previous top year. These numbers resulted from 25 new investment projects from 11 different countries. This was not an unusually large number of investments, so the story for 2021 has more to do with the size of these investments, rather than their sheer number. Some of this investment, presumably, was delayed from 2020, although, in fact, 2020 foreign investment was by no means unusually low. Covid notwithstanding.
Two Massive Investments
In April, the South Korean company LG Energy announced its intent to locate an electric vehicle battery plant in Spring Hill. This is a joint venture with GM. It is a gigantic investment, over $2.3 billion, and is expected to employ about 1,300 people. It was the largest foreign investment in Tennessee ever, and the first billion dollar plus investment since 2017. But five months later another South Korean company, SK Innovation, announced a joint venture with Ford, also involving batteries for electric vehicles, that is more than double the size of the LG Energy/GM investment. To be located near Memphis, in Stanton TN, the investment is for $5.6 billion, with employment of 5,800. These two enormous investments account for the remarkable foreign investment numbers of 2021.
Automotive Investment Again Dominates
The third largest 2021 foreign investment was also in the EV battery sector: Novonix’s $160 million investment for a new Chattanooga plant manufacturing materials for EV lithium batteries. These three investments tell us how important electric vehicles are likely to be for the Tennessee auto industry. However they also point to the continued dominance of this industry in the state’s foreign investment flows. Over this past year, 11 of the 25 foreign investments were automotive related. What is relatively new, though, is the significant number of service-sector investments. These generally relate to IT activities. Seven investments were made in the service sector in 2021.
South Korea: A New Investing Powerhouse
South Korea was easily the largest source of foreign investment into Tennessee. However it was not just these giant EV plants. There six separate South Korean investments in 2021. The other four contributed over $160 million to the Tennessee economy, along with over 500 jobs. Behind South Korea was Canada. The three Canadian investments combined to about $100 million and new employment of about 560. Japan, still by far the state’s leading foreign investor, only accounted for two new investments this past year. Nine investments came from six different European countries.
Into the Future
It is most unlikely we will see the sort of massive investments that occurred in 2021. The landscape of foreign investment is changing rapidly. Only a few years ago, China was the future. It’s now definitely in the past. Changes in supply chains may have the biggest influence on foreign investment trends in the near future. But so long as Tennessee remains at the forefront of the global auto sector, we can probably expect the state to attract more than its fair share of the foreign investment coming into America.
