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Brookings Institution Report Declares Tennessee Automotive Manufacturing More Competitive Than Ever

Friday, October 04, 2013 | 10:04am

NASHVILLE— The Brookings Institution Metropolitan Policy Program today released a new report focused on the Tennessee automotive industry. “Drive! Moving Tennessee’s Automotive Sector Up the Value Chain,” shows Tennessee emerged from the Great Recession with considerable momentum and a robust automotive industry.

That growth led the state’s post-recession economic recovery and grew its share of North American motor vehicle manufacturing employment by 3.3 percent from 2010 to 2012, an all-time high.

The report also offers recommendations on how Tennessee, as well as other advanced industries throughout the United States, can adapt to new challenges from an evolving automotive industry.

The report, a collaborative effort between the Brookings Institution and the state of Tennessee, was presented at the 60th Annual Governor’s Conference on Economic and Community Development by Bruce Katz, Brookings Institution vice president and director of the Metropolitan Policy Program, and Mark Muro, report co-author and senior fellow and policy director of the Metropolitan Policy Program.

“This report is the result of a collaborative effort between the Brookings Institution and the state of Tennessee. We welcome their work on the automotive sector in our state as it is a bell-weather for advanced manufacturing on a broad-scale basis,” ECD Commissioner Bill Hagerty said.

“Over the last three decades, Tennessee has developed and continued to grow one of the most sophisticated and complex supply chains in support of the automotive manufacturing industry. Our state’s central location, solid logistical advantages, combined with considerable momentum in automotive manufacturing, also fosters our leading position as a state able to support a wide variety of advanced manufacturing,” Hagerty continued. “These recommendations from the Brookings Institution provide us with a solid framework for going forward with developing a plan for reevaluating our strategies to ensure Tennessee remains a top global competitor.”
In Tennessee, the automotive industry represents the single largest component of the state’s advanced industry production base.

Now the largest in the South in terms of employment, Tennessee’s auto sector has led the state’s post-recession economic recovery, having generated more than 12 percent of all job creation in the state since the recession and more than one-third of the manufacturing sector’s output growth since 2010. What is more, the state’s share of North American motor vehicle manufacturing employment increased from 2.9 percent in 2010 to 3.3 percent, an all-time high, in 2012, suggesting that the state industry grew even more competitive as it weathered the economic crisis. The sector’s strength has traditionally been due to its strategic geographical location, strong transportation infrastructure, and competitive cost structure.

In the report, Brookings makes recommendations for targeted interventions that will advance the Tennessee automotive industry, as well as other advanced industries in the state, based on a number of challenges in the years ahead. Brookings cites increased cost pressures as Tennessee competes between other states and Mexico for new investment, the demand for uniquely skilled workers and regulatory and consumer demand for constant technology and process innovation.

“At a time when wages are converging across all U.S. locations, competing on wages alone will be a losing proposition,” Muro said. “Tennessee needs to complement its cost appeal with new production efficiencies, top-flight workforce training, and a flare for product and process innovation.

“The far-sightedness of Tennessee’s leaders a generation ago helped make the state a destination for automakers and suppliers alike,” Muro continued. “Now, the state needs to innovate again and update its offer to industry.”

Brookings’ broad range of recommendations calls on the private sector and the public sector to work together to drive continued industry growth, develop the workforce pipeline to strengthen Tennessee’s advanced industry skills base, and focus on innovation among firms of all sizes throughout the supply chain.

The report’s recommendations are applicable not just to the automotive industry in Tennessee, but to other advanced industries throughout the United States.   

In developing the Tennessee report, the Brookings team conducted a series of one-on-one interviews and in-state listening sessions with a broad array of private- and public-sector stakeholders. In-depth engagement with business, policy, labor, and other stakeholder communities helped the research team determine the specific elements required for an effective federal-state-local policy agenda to support the automotive industry.

Click here to read the full report from the Brookings Institution.

The Metropolitan Policy Program at Brookings provides decision-makers with cutting-edge research and policy ideas for improving the health and prosperity of metropolitan areas, including their component cities, suburbs, and rural areas. To learn more, please visit: Follow us on Twitter at    

About the Tennessee Department of Economic and Community Development
The Tennessee Department of Economic and Community Development’s mission is to develop strategies, which help make Tennessee the No. 1 location in the Southeast for high quality jobs. The department seeks to attract new corporate investment in Tennessee and works with Tennessee companies to facilitate expansion and economic growth. Find us on the web: Follow us on Twitter: @tnecd. Like us on Facebook:


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