The Struggle Is Real, For Federal Contractors That Is – Part IV |
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The Struggle Is Real, For Federal Contractors That Is – Part IV

A Little Bit Country, a Little Bit (of Economic) Rock ‘n Roll

Pop quiz: What American metropolitan area led the country in job growth in 2015?

Hint: The answer rhymes with Nashville.

If you are late to the party in middle Tennessee[1], the robust job numbers are not the result of a sudden demand for country entertainments[2]. As it turns out, Nashville has one of the most diverse economies of advanced industries in the country.

The story of the Nashville metro area is a bit different than the tales we discussed in Silicon Forest and Pittsburgh. In each of those narratives, we learned how municipal leaders at the most local level had to take action to ensure their metropolitan areas would survive the economic turmoil of the late 20th century.

In the South, local power is more concentrated at the state level, and luckily for Nashville, state leaders sowed seeds in the 1970s that have blossomed in the decades since. In fact, it is the current Governor following up with that same mindset to reinforce the labor market that has kept Nashville strong all these years later. Let’s take a look at each of these accomplishments in turn.

 

Who Knew Long-Term Planning Had Such Benefits?

Nashville, like Pittsburgh but in the South, developed into a manufacturing hub during the Reconstruction era with its prime location on the Cumberland River and its many railroad tracks. Yet, like many American manufacturing cities in the first half of the 20th century, the city lost many of these jobs to the pressures of globalization.

The good folks of Tennessee benefited from having a governor who took action before most. “Starting in 1979 the state of Tennessee, recognizing before others that Asian investment in America could spark a U.S. manufacturing comeback, transformed its economic history by launching the Southern automotive tier.” Then Gov. Lamar Alexander (you likely know him as Senator Alexander, Chairman of the HELP Committee in the current Senate) flew to Japan to recruit the first of the many automakers to relocate to the American South.

That first trip brought Nissan’s first Tennessee plant to Smyrna. Present day, that plant produces more than 650,000 cars a year, and Nissan has even moved its corporate headquarters to the Nashville area. By 2015, there were more than 900 auto manufacturers in the state including V.W. recently. But just as important, the recruitment of automotive advanced industry attracted a wide array of other industries to come to Nashville to share the human capital.

To this point, Brookings analyzed the Nashville metro area’s largest advanced industries. The list of advanced industries employing more than 1,000 people include a wide range of industries including Motor Vehicle Parts, Architecture and Engineering, Household Appliances, Data Processing and Hosting, and even Manufacturing Ships and Boats.

Healthcare has provided the greatest source of growth. Business Facilities notes[3] that “Nashville-based HCA accounts for almost five percent of all in-patient care in the United States, one of more than 15 publicly traded health care companies located in Nashville. More than 250 health care companies have operations in Nashville and work on a multistate, national or international basis. Nashville also is home to more than 300 professional service firms (e.g., accounting, architecture, finance, legal) that provide expertise in the health care industry.”

 

There’s No ‘I’ in Education

How’s this for an enjoyable fact: Nashville has nearly one educational establishment for every two Starbucks in the city. And that’s only the beginning. Beyond a plethora of four-year colleges in the area, the state has made significant investments from secondary school to community college. All in the hopes of keeping and developing the advanced industries discussed above.

Brookings reports that the “Metropolitan Nashville Public Schools offers at least nine high school STEM academies and engages the Chamber of Commerce and other organizations to keep the curricula relevant.” That’s more than quite a few relatively larger cities. As we know, STEM education cannot begin at the college level.

Governor Haslam[4] has a plan. He is championing a “Drive to 55″ initiative “aimed at increasing the number of college graduates in Tennessee from 32% to 55% by 2025.” Even as a conservative, Governor Haslam has endorsed the “free college” ideas of the left, just to a more narrowly tailored degree. To his credit, Tennessee is now the first state in the nation to offer two years of free community college.

But does Tennessee and Nashville just have the benefit of a bunch of well-rounded individuals, or is there an economic payoff? “We know through our conversations with executives that our investment in education is giving them the confidence to locate and grow in Tennessee. In fact, General Motors executives told us this year that the Tennessee Promise and our state’s commitment to education is a primary reason they continue to invest in our state and create jobs.” Talk about empirical evidence.

Brookings[5] discussed the idea of 21st century cities strengthening what they call their “advanced industry ecosystems.” Nashville, and the Volunteer State generally, are doing just that by their initial recruitment of Asian capital to shore up their manufacturing sectors, and then protecting the investment with significant investments in education from STEM programs in the public schools to free community college.

But not enough people are thinking about the drawbacks of all this economic growth and success. What are all the country music folks going to write about in five years? “I lost my hound dog and inflation is eating up my 401k?”

 

[1] The area under discussion today is actually the greater Nashville metropolitan area of central Tennessee commonly referred to as Nashville-Davidson–Murfreesboro–Columbia.

[2] We hope to uncover much of how Nashville transformed itself in today’s piece, unfortunately we just may not have enough time to explain the relationship of the city’s hockey fans to flying catfish.

[3] Also of interest: “A survey of Nashville Health Care Council member CEOs shows great confidence in the Nashville market; 95 percent indicate that a Nashville headquarters location is important to their company’s positive performance.”

[4]We want to make a really loud and clear statement to everyone in Tennessee: ‘No matter who you are, no matter what your education path has been in the past, no matter what your income level is, you can go to college for free in Tennessee.”

[5] “Finally, firms, governments, and other relevant actors must work to strengthen the nation’s local advanced industry ecosystems—the regional industrial communities within which firms operate. Innovation and skills development do not happen just anywhere. They happen in places, most notably within metropolitan regions, where firms tend to cluster in close geographic proximity, whether to profit from local knowledge flows, access skilled workers, or tap regional supplier networks.”

 

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