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Tennessee manufacturers 'anticipate a labor gap'

Hank Hayes • May 28, 2017 at 9:30 PM

KINGSPORT — No doubt about it, Tennessee makes stuff.

And the Tennesseans who make stuff have one major worry: Developing a next generation workforce.

“It’s probably no surprise to anybody that workforce is the No. 1 concern that came out of our survey,” Tennessee Manufacturers Association (TMA) Director Denise Rice recently told a Kingsport Chamber of Commerce roundtable discussion. “We anticipate a labor gap. … every plant tour I go to, this is the No. 1 issue.”

Tennessee’s unemployment rate was 11.2 percent in January 2010, but was at 4.7 percent as of May 18 this year.

Rice noted up to 75,000 people will retire in the state’s growing auto manufacturing sector by 2025.

“The real issue is how do you manage this?” she asked. “The Baby Boomers are at retirement age. … With the economy doing well, they are in a pretty good spot to go ahead and retire out of the workforce. … For every four retirees, there’s only one (new worker) coming in. … We’re in a really tight spot.”

TMA has embarked on a “Dream It. Do It. TN” campaign to promote and encourage careers in the manufacturing sector.

Rice noted the automotive industry in Tennessee, in particular, is really growing.

“Tennessee has been ranked No. 1 in automotive manufacturing strength five of the last seven years,” she pointed out. “We have more than 910 automotive suppliers. Almost 7 percent of the cars produced in the U.S. in 2016 were made in Tennessee. The Nissan plant in Smyrna was deemed the most productive plant in America. Japan has invested $16 billion and Germany has invested $2.9 billion.”

Tennessee has more than 5,000 manufacturers employing more than 141,500 workers, Rice said.

“The average wage for someone in manufacturing is $66,000 a year,” she continued. “We have $30.2 billion in manufactured goods exported. … We’re in the top five for foreign direct investment.”

Tennessee’s manufacturing sector, she noted, has grown because of the state’s business friendly environment.

“There is no personal income tax. … We’re a right-to-work state, a very low union participation,” Rice explained. “We have a long history of fiscal responsibility. We have the lowest state debt per capita in the country. We’re the second lowest in the U.S. for state and local taxes per capita. We have a Triple-A (bond) rated state. The most recent bond sale had the lowest interest rate in history.”

With Republican Donald Trump in the White House, Rice said most manufacturers are feeling good with tax reform and the rollback of federal regulations on Congress’ agenda.

The other major concerns manufacturers have, according to Rice, are transportation and infrastructure, health care insurance costs, federal regulations and taxes.

“Tennessee is a long, skinny state that is very diverse,” she said. “There’s a lot of differences throughout that state. Some of the issues you have in manufacturing could be totally different than the greater Memphis area or upper Cumberland area.”

TMA is part of the Tennessee Chamber of Commerce and Industry and is a member of the National Association of Manufacturers.

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