The Tennessee Valley Authority announced another successful year in economic development activity by stimulating $8.3 billion in capital investment and growing or retaining 70,000 jobs in the TVA service territory in fiscal year 2017.
More than 220 companies announced plans to locate to the Valley or expand existing operations in FY17, while boosting economic growth across the Tennessee Valley.
FY17 TVA Economic Development Year-End Results
Region
Jobs Attracted/Retained
Capital Investment
Alabama
10,700 jobs
$1.3 billion
Kentucky
6,000 jobs
$ 1.1 billion
Middle Tennessee
22,700 jobs
$2.8 billion
Mississippi
6,870 jobs
$520 million
Northeast Valley
7,760 jobs
$1.1 billion
Southeast Valley
6,990 jobs
$790 million
West Tennessee
8,260 jobs
$540 million
“The true value of public power is our ability to enhance quality of life through our economic development efforts that lift up communities as a whole,” said TVA President and CEO Bill Johnson. “Our economic development team’s effort to attract and retain top-tier companies continues our mission to serve the nine million residents of the Tennessee Valley.”
Three key factors give the Tennessee Valley an advantage in attracting new business over other areas of the country:
Lowest industrial electric rates among peer utilities—This gives companies choosing to relocate to the Valley an immediate cost advantage through lower energy costs.
Environmental stewardship—Companies want to reduce their carbon footprint and TVA’s cleaner, reliable public power model provides them a carbon advantage.
Strong partnerships—TVA’s economic development professionals work as a unified team with local power companies and local, regional and state development teams.
Since 2011, TVA’s economic development team has worked with local, regional and state partners to attract and retain more than 418,500 jobs and over $48.1 billion in capital investments.
For these efforts TVA received national recognition in 2017: Site Selection magazine recognized TVA for the twelfth consecutive year as one of the Top 10 utilities in North America for economic development, and Development Counsellors International honored the team as one of the top five economic development teams in America.
The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power distributors serving more than nine million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.
There’s no doubt about it: Sustainability is hot. In a recent survey on the subject, a full 90 percent of corporate real estate executives indicated that sustainability is an important consideration in their clients’ location decisions.
Communities that actively embrace sustainability are viewed as more progressive and competitive than those that don’t. That’s why all economic development organizations—whether at the local, regional or state level—must be prepared to demonstrate the role sustainability plays in their areas as they work to draw new companies and keep existing ones.
Recognizing the importance of sustainability, TVA Economic Development joined with Boyette Strategic Advisors in 2012 to create the Valley Sustainable Communities program. A first-of-its-kind effort, the program offers Valley communities assistance in developing and implementing sustainability initiatives designed to make participants more competitive for attracting jobs and investments. Communities who participate in the program earn points for implementing specific practices in 15 different areas that contribute to overall sustainability.
To date, there are 29 designated Valley Sustainable Communities. Among them, they have amassed an impressive list of sustainable assets, including:
58 brownfield/grayfield redevelopments (unused land or buildings repurposed and redeveloped)
37 buy local campaigns
61 farm-to-table programs, allowing customers to purchase food directly from local farmers
38 alternative energy programs
40 community gardens
18 “Tree Cities” & 36 tree plans
23 business recycling collection programs
63 wastewater/storm water plans21 sustainable housing programs
300-plus electric vehicle charging stations
37 community trail programs
For John Bradley, TVA senior vice president of Economic Development, the importance of sustainability in today’s economic climate cannot be understated. “Environmental sustainability continues to be one of the most important factors when a company chooses to invest or relocate to a community,” he said. “Our VSC program aligns closely with TVA’s mission to serve Valley communities by helping them showcase their strengths, including their sustainability efforts in order to stimulate economic development.”
LG Electronics a global electronics and appliance company, announced plans to locate its new U.S. manufacturing operation in Montgomery County, Tennessee. The facility will be LG’s first washing machine manufacturing facility in the United States. The project plans to create 600 new jobs and $250 million in capital investment.
“Today, the world knows Detroit, Michigan, as the center of the automotive universe, but if Henry Ford had had his way, the nation’s auto hub would have been the Tennessee Valley,” says Chris Berryman, target market specialist for TVA Economic Development.
It was 1921, and Ford saw in Muscle Shoals, Ala., the opportunity to snap up cheap and plentiful power from a dam still under construction—Wilson Dam, to be precise—and build an automobile-manufacturing city that would forever change the course of a sleepy corner of North Alabama.
In 1922, the New York Times jumped on the story, publishing an article called “Rush for Muscle Shoals.” It read, in part, “The dream city reared suddenly at Muscle Shoals by Henry Ford somewhat after the fashion of Aladdin with his wonderful lamp is already being proposed.”
Ford submitted a proposal to congress to lease Wilson Dam for $5 million, promising to employ one million employees in Alabama. But it was not to be. Senator George Norris launched a fight to retain the dam as federal property. By 1926, Ford’s hopes had gone flat—though the seeds of the idea for TVA were planted. That year, Norris introduced a plan for the federal government to not only retain management of manage Wilson dam, but to build more dams like it.
“Although Ford never got his operations going in the Tennessee Valley, today—with four automakers calling the Valley home—our region is the second in the nation for auto manufacturing,” says Berryman. “And we’re making up for lost time.”
GM, Nissan, Toyota and Volkswagen call the region home, as do countless support and supply industries who’ve moved in to service the four giant manufacturers.
Driving Force
“Automotive is a benchmark industry for us here at TVA,” explains Berryman. “That’s not only because we were pioneers, but because we’re well placed to be a springboard for the entire southeast. In terms of jobs creation and economic stimulation, it’s just a powerhouse.”
Berryman there are 90,000 jobs in the automotive sector throughout the seven-state Tennessee Valley region. Widen your scope to include all transportation-related manufacturing, and you’re looking at 300,000 jobs. And these are only the direct jobs.
Consider the indirect jobs. A study at the University of Tennessee in Knoxville showed that while the Volkswagen plant in Chattanooga, Tenn., created 4,700 direct jobs, it had the economic impact of creating 12,400 full-time jobs and is responsible for $643 million in annual income apart from the direct salaries it pays its employees.
“It’s easy to see the economic impact is huge,” Berryman says. “The automotive industry is one of the most significant in terms of jobs creation, and it’s only getting stronger. We’re moving toward having four jobs created for every one job in the automotive industry. That’s why we play an active role in recruiting automotive companies to the Valley.”
Targeting the Supply Chain
Or maybe “did” play an active role might be a better way to phrase it. Whereas Berryman used to spend the better part of his day calling auto companies, now they’re calling him.
“The supply pipeline for these automotive OEMs is huge, and many companies want to move to the Valley to be a part of it,” he says. “I get calls from people who have already done their research and are sold on the Valley. They want us to verify what they’ve found out, or ask us for some site selection help.”
The region’s support and supply chain is—not to put too fine a point on it—awesome. Related OEMs include Bridgestone, Yokohama Tire, Hankook Tire, Titan Tire, Carlisle Tires, Komatsu, Caterpillar, PACCAR, Polaris and Cooper Tire and Rubber.
Other key companies include Magneti Marelli, Topre, RTI, Bilstein, Grammer AG, Bosch, Toledo Molding and Die, Yorozu, Shape Corp., North American Lighting, Denso, JTEKT, TRW, Komatsu, Calsonic Kansei, ThyssenKrupp, Magna, Hitachi Automotive, Rehau, Visteon, Comprehensive Logistics, Total Quality Logistics, Steel Dynamics and Gestamp.
And that’s just the short list.
“95 percent of our growth is in supply chain,” Berryman says. “We hear from companies who see what’s happening here and realize they need to come south to be a part of it. For suppliers it’s all about logistics—the closer they can get to the OEMs, the lower their costs. And that’s happening exponentially.”
Shifting Gears
Dedicated to the industry, Berryman lives and breathes statistics, and can rattle off impressive ones, the very factors that make the region such a draw for all things auto, and—to extrapolate—transportation.
“Number one: Logistics is a huge thing,” he says. “We have so much easy access to the eastern seaboard—and everybody cares about speed to market.”
“Number two: Our power is extremely reliable and our rates are more competitive than ever before—in the top quartile of the country,” he continues. “That’s been huge in moving the needle for improvement in the sector.”
TVA relies on a diverse portfolio of coal, nuclear, gas, hydro, renewables and energy efficiency to supply the Tennessee Valley with abundant and competitively priced power. Since the year 2000, TVA has maintained 99.999 percent reliability. With recent enhancements and flexibility improvements to its energy credit program, rates are more competitive than ever before.
“Number three: We have here a ready and available workforce,” he says. The Valley is home to 900,000 machine operators and 500,000 production workers, all at wages significantly lower than the Midwest and other parts of the country, according to a March 2012 U.S. Bureau of Labor Statistics report. TVA continues to invest in the workforce of tomorrow through supporting STEM education in schools, and sponsoring robotics programs.
Emissions Control
And then there is sustainability. “TVA is very green and can help manufactures meet their sustainability goals,” Berryman says. “By the year 2020, 60 percent of TVA’s electricity will be produced from non-carbon emitting sources. Companies can move here and cut their carbon footprint in half.”
What’s more, TVA offers a unique program that allows directly served customers to completely personalize their carbon numbers based on their operations.
Add to all of the above a suite of Economic Development services that includes site selection assistance, energy credits, technical and engineering services, incentives and more and—for anyone in the automotive sector—life is good in the Tennessee Valley.
“I can’t predict when we will become number one in the nation for automotive manufacturing, but that is my goal,” Berryman says.
When TVA was created back in 1933, it was—as much as anything—an economic development agency, meant to lift the hurting Tennessee Valley out of poverty and usher in an era of modernity, electricity and abundance. TVA went to work immediately, building dams to prevent flooding, create a navigable waterway and produce electricity; replacing topsoil to restore a legacy of agricultural stability; and creating an atmosphere conducive to industry.
Citing “service” and “savvy” among the soft criteria, the magazine also crunched some hard numbers to arrive at its list, including corporate facility project jobs and capex numbers from the previous year; straight totals and per-capita calculations; website tools and data; innovative programs and incentives for business; and the utility’s own job-creating infrastructure and facility investment trends.
TVA succeeds on all scores. Last year, TVA Economic Development racked up an incredible $7.8 billion in investment from 224 companies, and created 76,200 jobs across its seven-state, 80,000 square-mile service region.
In the savvy service arena, the magazine notes that the TVA Economic Development team launched InvestPrep™, a product-development program aimed at helping Valley communities market readied building and industrial sites. They created the Tennessee Valley Rural Leadership Institute to train leaders in rural and distressed communities to attract jobs in a challenging environment. And they continue with innovative programs like Valley Sustainable Communities, encouraging participating cities, towns and counties to work toward a triple bottom line: economic growth, environmental sustainability and high quality of life.
In summation, Site Selection quoted TVA CEO Bill Johnson as saying: “Economic Development is in our DNA, and has been right from the start. Some might say that everything TVA does funnels down to strengthening the economy of our region.”
President Franklin Roosevelt and Senator George Norris, at the signing of the TVA Act, might have said the same thing.
At 3:30 on the Tuesday afternoon the president of a rural chamber of commerce hangs up the phone. She knows the proposal deadline is Friday, and the deal could bring hundreds of jobs and millions in investment to her desperately poor county. With a deep breath, she grins and thinks, “We’ve got this!” Scenes like this play out across the Tennessee Valley every year, and it is the job of Aaron Stewart, senior program manager of rural strategies for TVA Economic Development, to make sure rural leaders are prepared to answer the call.
Stewart heads Tennessee Valley Rural Leadership Institute. The program is focused on helping the region’s most distressed communities—defined as those with populations of less than 5,000 or that fall in the bottom 25% in terms of unemployment, per capita income or poverty rate—by teaching leaders in small towns and rural communities the skills and techniques they need to attract the businesses and industries not only to survive, but begin to thrive.
Fighting the Good Fight In 2015, the TVA service area saw a 15 percent increase in new and expanding companies in the region and a 20 percent increase in new and retained jobs. That means $7.8 billion in direct investment in the Valley in FY2015 alone.
“Rural and distressed communities need to fight for these jobs,” says Stewart. “Jobs are the engine that reduces poverty, drives the tax base, funds schools and libraries, increase quality of life and make communities click.” TVA founded the Institute six years ago to combat the discrepancy between mid- to larger communities, which often have dedicated and well-trained economic development professionals and organizations, and smaller communities and rural areas, which are often filling in an economic development gap with chamber members or local power company officials wearing multiple hats.
“Economic development is an extremely competitive business,” says Stewart. “You have to build a mindset on how to be an effective and persuasive economic development leader. TVA Economic Development saw a real opportunity to make a difference by tailoring training for the needs of these multitasking professionals relying on volunteers, interested citizens, elected officials and businesses for support.” The Tennessee Valley Rural Leadership Institute—an annual set of courses—offers four two-day intensive workshops on these topics: 1. Developing leadership and interpersonal skills 2. Communications and networking 3. Understanding TVA’s role 4. Creating a compelling incentive package All three workshops have proven to be a big hit with participants.
Getting to Know You Tennessee Valley Rural Leadership Institute uses personal assessment tools to shed light on interpersonal as well as intrapersonal relationships. “I loved that personality assessment in the first session,” says program alum Jamie Troutman, business development manager with the Cullman Economic Development Agency in Alabama. “I’ve used things I learned from that in my personal and professional life, and I try to think about it when I’m working with others. It really helps.” The communications workshop covers sharing news good and bad, and includes media training. And of course, networking is a key focus—and that carries throughout the course of each class. “The Rural Leadership Academy has certainly allowed me to make many new business contacts who I now consider friends,” says Institute graduate James T. Bates, director of key accounts and economic development for Mount Pleasant Power System in Tennessee. “Sharing stories and common practices with colleagues has also given me many new ideas and allowed me to adopt more professional business methods. This makes me a more valuable team member in community development efforts.” Troutman agrees. “My professional network expanded because of this program,” she says. “I met people in other states and regions that I would feel comfortable calling on for advice or ideas.”
TVA Toolbox Understanding what TVA has to offer and how each community can use TVA’s tools merits its own session—and the information is always well received, says Stewart. “TVA is here to help,” Stewart explains. “From technical services to market research to incentives to product development, TVA provides a tremendous realm of services that communities
