Panera Bread, one of the many new businesses in town, is nearing completion in the Reedy Creek Terrace along Eastman Road. Erica Yoon photo.
KINGSPORT — Kingsport may have hit a few economic bumps in the road in recent months, but the city is a long way from recession.
“We have felt all along that we would be doing better than the rest of the country, and so far over the last six, seven months, it appears that that’s very much the case,” said City Manager John Campbell.
Moody’s Economy.com suggests that nearly two-thirds of the nation, based on economic data, is in or near recession, which is defined as a decline in real gross domestic product for two or more consecutive quarters.
In comparison, Kingsport is in growth mode, and it’s experienced two straight months of sales tax growth. “And we expect this month to be pretty good, too,” Campbell said.
On the manufacturing front, the city has benefited from Eastman Chemical Co.’s “Project Reinvest,” a plan to pump $1.3 billion into the Kingsport headquarters and manufacturing complex over the next few years to modernize the facility and ensure its viability into the future. Eastman is expected to invest about $265 million every year through 2011 into the Kingsport operations.
Meanwhile, the company is hiring young professionals to replace retiring employees, which brings in more people to the city.
FedEx established an $8 million distribution facility at Gateway Commerce Park and expects to employ 80 people there. Plus, the company plans to establish a FedEx Freight site in Kingsport as well, bringing more new jobs to the city.
On the downside, AGC — formerly AFG Industries — cut production at the Greenland plant in Hawkins County and eliminated more than 200 jobs earlier this year. The company also cut another 100 positions in its Corporate Services unit on Lincoln Street in Kingsport.
Statistics show that Kingsport has lost jobs overall. The city lost 174 jobs in the first quarter this year and 188 jobs in the second quarter vs. the same time last year, according to the labor report from East Tennessee State University.
Regardless, Campbell said some industries and businesses are still in the hiring mode.
“We still hear a lot of employers are looking for workers. We could have more people employed if they would just prepare to be employed. That’s what’s behind a lot of our thrust in terms of higher education,” Campbell said.
To help better prepare its people for the labor market, the city of Kingsport is now constructing an “Academic Village” consisting of several buildings designed to train students in various fields. Construction has started on the 54,000-square-foot Kingsport Center for Higher Education, which will offer degree programs from various colleges in the region. Work is also progressing on the 41,000-square-foot Regional Center for Health Professions at Kingsport, which will train students in the medical field. And construction will begin soon on a 30,000-square-foot Regional Center for Applied Manufacturing, which will train students in manufacturing trades.
The new buildings will join the Regional Center for Applied Technology, which opened five years ago to train students in technology fields.
“So basically we’ll have three brand new education-type buildings in the Academic Village and one that’s only five years old, dedicated to different types of training,” Campbell said. “That’s really the key to making sure we sustain this kind of positive growth — to make sure we do have an educated work force to be able to supply the people for the quality jobs.”
He said the new Academic Village will not only make it easy for students just graduating high school to attend college classes, but will help the older, non-traditional students return to school.
He said the city hopes to boost its college graduation rate from 23 percent today to 30 percent in the next five to six years.
“That’s a pretty ambitious goal, but hopefully with what we’ll have here and the ease of access, we’ll be able to reach that. And if those numbers go up, there will be businesses that take notice of that,” Campbell said.
He said Tennessee’s average college graduation rate is about 20 percent, while the average national college graduation rate is 28 or 29 percent. “The idea is to get above the national average,” he said.
The new higher education buildings are scheduled to open next fall. Once established, the higher education efforts are expected to help bring more business and industry to Kingsport, which will increase its economic base.
Health care is also boosting the city’s economy. Campbell pointed out that the city is home to two hospital systems, various large physician organizations, and smaller medical-related businesses that serve the hospitals and physician groups. “It’s a significant factor” in Kingsport’s economy, Campbell said.
In the housing market, which has taken big hits in many areas of the country, Campbell said Kingsport remains in a growth mode, as new subdivisions are being constructed in various areas. Kingsport’s housing prices were not inflated as much over the years as prices in other regions, making the city a more affordable place to live.
Campbell said the Board of Mayor & Aldermen’s decision to implement a materials agreement with home builders has helped boost residential construction. Through the agreement, the city provides water and sewer line materials to builders, who install the lines to new houses.
“If they put it in successfully, they get reimbursed for that. And in a lot of cases that may mean the difference whether it’s a successful project or not,” Campbell said. “It seems to be working very well. I think we’ll be up to 640 lots that have come under that agreement alone. It’s a boost.”
Retail has also been in a growth mode in Kingsport. Following the opening of East Stone Commons, the Kingsport Pavilion was constructed, bringing stores such as Target, Kohl’s and Old Navy. Just last week, Best Buy announced it would join the shopping center, and Decorator’s Warehouse also plans to open at the site.
Reedy Creek Terrace is also under construction along Eastman Road. Starbucks has opened there, and Panera Bread is nearing completion. Campbell said the shopping center faced a setback when Talbot’s, after announcing it would locate at the site, decided not to come to Kingsport. The company was undergoing tough times and cutting its expansion plans across the country.
Kingsport also lost Fred’s discount store in Colonial Heights and the Greenacres Shopping Center, and Goody’s closed its doors at East Stone Commons as part of a companywide plan to shut down certain stores.
A few shops have also closed in the Kingsport Town Center, formerly the Fort Henry Mall. But Campbell said that’s all part of a transitioning process. The new owners of the mall have changed the name and plan major renovations at the site. Campbell said the owners plan to pump more than $30 million into the mall, which was built in the mid 1970s.
“So when people go into the mall and they see empty store fronts, they shouldn’t be alarmed because the transitioning process is happening. And some of the tenants that are going to have trouble matching the expectations of the new owners have decided to go elsewhere,” Campbell said.
He said the mall owners “feel like they’re going to have a whole new set of tenants that are actually going to yield more dollars per square foot.”
“And I fully expect that. That’s a positive thing,” said Campbell, adding renovation work should begin in the next two months.
Campbell said the “staycation” phenomenon — where some people stayed home this summer instead of going elsewhere for vacations due to high gas prices — may have also boosted Kingsport’s bottom line.
“That probably helped in terms of our sales tax and people spending money here rather than elsewhere,” he said.
Overall, Campbell said he feels positive about Kingsport’s economy, today and tomorrow.
“We’re not a boom area like Texas, and I don’t have a crystal ball, but based on what I’ve seen over the years, if you’re doing the right things, you really can buck the national trend,” Campbell said.
“That’s what we’re doing.”