Why are Companies Relocating to Tennessee?
Tennessee is a state soaring in popularity due to favourable tax incentives and strong logistic strength. With key players in the tech and electric vehicle industry making the move, we decided to find out a little bit more about why Tennessee is an attractive state to do business.
We spoke to Adam Breeze, the Director of Business Development for the UK & Ireland at the Tennessee Department of Economic and Community Development to find out why are companies relocating to Tennessee.
What makes Tennessee such an attractive state for businesses?
Location
“As with any successful location, Tennessee has a rich mix of advantages”
Tennessee offers quite a unique location, which means that businesses can reach customers and suppliers more easily when operating in the US market.
The state is situated towards the south-east of the United States while remaining on the verge of the north-eastern states and the Midwest.
Tennessee offers great connections to markets within other states. As a matter of fact, no US state borders more other states than Tennessee.
Tennessee’s unique location puts it within an 11-hour drive time of 60% of the US population. No wonder why FedEx, a global leader in express distribution services, chose Memphis as the ideal base location for their headquarters.
Rich logistic strength
“If you’re looking to serve the US market, this is pretty much the optimum place to be”
With a relatively central location, it is unsurprising to hear that Tennessee offers rich logistic strength through land, water and air.
Memphis International Airport is one of the busiest cargo airports in the world, even surpassing Hong Kong to take the top spot in 2020. Tennessee state also boasts the third largest rail centre in the US, and the nation’s fifth largest inland port.
With a direct flight from Heathrow to Nashville, and a plethora of connecting flights available, travel between offices in the UK and Tennessee can be done with relative convenience.
Pro-business state
“Tennessee has been avowedly a pro-business state for a long time”
Tennessee is certainly a state that fosters a business-friendly environment. The low cost of living coupled with investment in infrastructure and workforce development has made it an ideal spot for the relocation of some of the biggest companies in the world. These relocations only serve to strengthen the economy of Tennessee bringing in thousands of new jobs.
With no personal income state tax on wages and salaries, a reasonable corporation tax of 6.5%, and some of the lowest property tax rates in the US, it is not difficult to see why some businesses and talent have made the move to Tennessee. Furthermore, Tennessee’s pro-business stance is strengthened by its status as a right-to-work state.
Quality of Life
“Whether it's Memphis, Nashville, Knoxville, the minute you touch down and feel that traditional southern warmth and hospitality, you’ll not want to leave”
One aspect that shines through in Tennessee is the quality of life that the state offers, while maintaining a lower than average cost of living in the US, as well as lower than average housing costs.
There is a mix of vibrant cities with a rich history of sports and music entertainment like Nashville and Memphis, along with beautiful countryside and scenic landscape like the Smokey Mountains, which is the most visited national park in the US. As a result, it is no surprise that the state attracts 120 million visitors per year.
Tennessee offers a mild climate in comparison to some of the extreme weather seen in other parts of the US. The state gets slightly more than average sun a year whilst getting about 5 inches of snow per year (well below the US average of 28 inches!)
In our discussion with Adam, he commented that during lockdown, there was a huge increase in people moving into Tennessee, perhaps where they could access a different pace of life while still being close to active cities, all while enjoying a lower cost of living.
Talent Pool
“One of the first states in America to offer free college tuition after high school”
The population of the whole state is approximately 6.9 million, which makes it more populated than countries such as Denmark, Finland and Norway.
Adam comments that traditionally, the work-ethic in the state is very strong, particularly in rural areas which has been “a major magnet for manufacturers from all over the world.”
In more recent times, mobile millennials are moving into key cities such as Nashville and Memphis, but also smaller cities including Knoxville, Chattanooga and Clarksville. As Knoxville is home to the main campus of the University of Tennessee, it provides access to a wide range of graduates looking to enter the workforce.
Almost 2 million people in the state have an associate degree and this is aided by the Tennessee Promise, an initiative that offers graduating high school students two years of community or technical college absolutely free of tuition fees. Introduced in 2015, this program has contributed to the development of a highly skilled workforce.
Companies and talent are moving away from the traditional states
“What we're finding is, the millennials have moved in and a lot of the tech companies are starting to follow them in as well”
Lifestyle choices and attractive tax benefits are just two of the reasons people are making the move away from the traditionally popular US states. This is a common trend we have witnessed in other states like Florida, Colorado, and North Carolina. Tennessee also offers significant pull to candidates and companies.
Nashville in particular has shined, growing at double the US average rate in the last decade, helping Tennessee become the 16th most populous state in the US.
This increase in population creates a positive relationship with business being done in the state. In 2022, Tennessee experienced their second largest number of new entity filings for Q2 in the history of data being collected.
From our own internal data here at PGC, we’ve witnessed Tennessee soar to become the 11th most popular state for worker onboards by our international clients so far in 2022, rising from 20th in 2021.
This growth follows a successful 2021, when the real GDP of the state increased by 8.6%, the most growth experienced in Tennessee’s GDP since 2000.
Key industries in Tennessee
“We’ve had two or three massive tech companies choose Tennessee in the last 12 months, totally changing the shape of the recruitment market here”
Tennessee may be culturally famous for its country music and whiskey, but these are far from the main industries in the state.
Healthcare/ Life Sciences
Forbes recently cited Nashville as the ‘health services capital of the US’. In middle Tennessee, and around the greater Nashville area, there are about 14 national headquarters for some of the biggest health care operators. A lot of start-ups have been created off the back of the growth of this industry, particularly those involved in procurement.
In addition to this, Memphis is home to one of the biggest medical devices clusters in the world, home to major manufacturers such as Medtronic and Smith & Nephew.
Memphis is also the location for St. Jude Children’s Research Hospital, University of Tennessee’s Health Sciences Centre and more than 50 life sciences companies.
Automotive
Big players in the automotive industry have plants in Tennessee including Nissan, Volkswagen, Ford and General Motors. These companies are investing significantly in electric vehicles (EVs). In 2020, General Motors announced plans to invest $2 billion into its Tennessee plant while Volkswagen and Nissan have unveiled expansion plans for their Chattanooga and Smyrna sites respectively. The automotive industry employs around 120,000 people in Tennessee, all of which has resulted in Tennessee becoming the major location in the south-east United States for manufacturing of EVs.
Technology
Although not traditionally a huge sector for Tennessee, the tech scene in the state is fast-growing. In CompTIA’s latest ‘State of the Tech Workforce’ report, in terms of percentage, Tennessee was the second-highest growing state for tech jobs in 2021. Furthermore, the only states to create more new tech businesses in 2021 were Florida, Texas, California, Colorado, and Massachusetts.
In the last two years, Amazon chose Nashville as one of its key corporate headquarters, creating 5,500 jobs in the process. In addition to this, Oracle have announced that they are going to replicate their headquarters in Austin, TX to create another HQ in Nashville, with the plan of creating 8,500 tech jobs over the next decade, investing a total of $1.2 billion.
Tennessee certainly has the capacity to deal with the increasing tech scene as Chattanooga boasts the fastest internet in the US thanks to its municipal-owned infrastructure, offering speeds of up to 25Gbps. To put that speed into perspective, it would allow you to theoretically download the entire Lord of The Rings film trilogy in under 10 seconds!
The dynamic of the state economy is changing as more and more major companies are deciding to open a HQ in Tennessee, including AllianceBernstein, a financial services company who are relocating from Manhattan to Nashville.
Ready to Start Doing Business in Tennessee?
If you are considering joining the host of companies relocating to Tennessee, TNECD can help you with your strategy, connections, and much more. For more information about the benefits of doing business in Denver, get in touch with Adam Breeze, the director of Business Development for UK & Ireland.
Additionally, if you’re ready to get your feet on the ground in Tennessee and start hiring employees, PGC has got you covered to ensure you remain compliant with the state's different employment benefits and requirements.
Disclaimer: PGC does not endorse any personal views or opinions of the interviewee. All information here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.