By John Lawrence
Despite possessing unparalleled infrastructure for international trade, the Memphis Region rarely promotes this infrastructure strategically and provides little export business assistance.
An export plan is needed to take greater advantage of assets, help companies start exporting and reach additional markets, and market regional assets externally. However, the first step is to establish a team of comparable size and strength to peer regions.
The Memphis MSA ranks 28th among U.S. metropolitan areas for growth-rate of export related jobs at 32.4% between 2003 and 2010. Total export output growth over the same period has been 50.4% compared to 43.7% for the top 100 metros.
This is a Great Opportunity
More than 9% of regional output is in exports. Almost 7% of regional employment is related to exports.
The most obvious connection to foreign markets rests with Memphis International Airport. As the original hub for FedEx operations, Memphis International is the world’s second largest cargo airport. Products can be delivered to and from over 375 destinations daily.
Major highways serve the coasts, Canada and Mexico from Memphis. The Port of Memphis provides access to traffic leading to and from the Port of New Orleans’ Gulf of Mexico exit point. And, five Class 1 railroads could be critical to future connections for exit points to Asia, to Europe and to South America.
Large and growing regional export industries include: machinery, chemicals, medical equipment & sporting goods, paper, business services, travel & tourism, royalties and food. Medical equipment and HVAC equipment are products with particularly robust growth.
Grain, fertilizer, petroleum products, dry bulk commodities including cement, sand, stone and steel products comprise the largest amount of cargo handled at the Port of Memphis on the Mississippi River.
The Memphis region’s largest trading destinations are Canada, Mexico, Japan, The United Kingdom, China and Germany. Over 50% of all exports from the area go to these countries. However, destinations with high market potential are also importing U.S. products that could originate from the Metro-Memphis area.
Machinery, Electronic Equipment, Medical Equipment and Chemicals are in high demand. Countries like Brazil, China, India, Russia, Thailand and Turkey are importing from the United State but not necessarily from the Memphis region.
We Must Engage Our Assets
The region has extensive exporting infrastructure assets in road, river, rail, and runway. Exporting output and exporting employment is growing faster than the top 100 metros and US average. However, exporting still lags as a percentage of the total local economy. The region has very slow export growth to high-growth economies such as BRICS nations. The Memphis region has very limited export assistance resources and marketing capability.
|
Exports |
Memphis MSA |
Top 100 Metros |
USA Average |
|
% of Total Economy 2010 |
9.1% |
9.9% |
10.8% |
|
Output Growth 2003-2010 |
50.4% |
43.7% |
43.2% |
|
Job Intensity 2010 |
6.5% |
7.6% |
8.3% |
|
Job Growth 2003-2010 |
32.4% |
19.2% |
Beyond companies with specific exporting knowledge, much of the regional export activity is driven by wholesalers or exporting services. And, there are fewer public export assistance representatives here than competing metros, national exporting centers and in-state rivals.
The Greater Memphis Chamber of Commerce’s International Business Council, State of Tennessee Department of Economic & Community Development and the Memphis U.S. Export Assistance Center conduct some promotional trade missions. However, there is little definable external market promotion tied to international capabilities.
The State of Tennessee Office of Economic and Community Development recently re-launched an International Division with offices in Mexico, the United Kingdom, Germany and China. Three development and assistance officers are working across the entire state. But regular and aggressive attention to southwest Tennessee’s potential is needed.
There is one U.S. Department of Commerce Trade Officer assigned to the region, representing the only public sector official providing business assistance to small and medium sized businesses with exporting potential. In a market with such strong assets and with existing exporting output ranging from $5.4 billion (as defined by Brookings) to $11.1 billion (as defined by the International Trade Commission), one business assistance professional is far too few.
The Series:
Part One: Creating a Process on Economic Development
Part Two: Securing the Global Logistics Brand
Part Three: Diversifying the Economy Beyond Logistics
Part Five: Building a New Manufacturing Economy Workforce – Thursday (10/3/13)
Part Six: Organizing for Innovative Entrepreneurial Growth – Monday (10/7/13)
Part Seven: Connecting Jobs, Workers, Institutions & Activity Centers – Wednesday (10/9/13)
Part Eight: Tracking the Market to Understand Emerging Opportunities – Monday (10/14/13)
Part Nine: Prioritizing First-Step Initiatives – Wednesday (10/16/13)
John, it’s your involvement that has most of us feeling optimistic that this may amount to something. Otherwise, it all feels so Brookings – lots of numbers and acting like they’ve come up with something revolutionary .
Do you know the real world results that other cities have had from being in this somewhat laborious process?
Too early to gauge at this point. Some other regions who used this model before we did have launched initiatives and are meeting process goals. However, it is too soon to measure results.
World Business Chicago (admittedly VERY different resources and environment) went through a similar process and seems to make the news weekly with something tied to the plan.
The bottom line for us… we need a Regional Economic Development Plan. The plan needs to be as inclusive and overarching as possible. It needs to have implementable pieces.
We could have hired an outside consultant to produce one for us. We could have relied on our own internal capacity. Metropolitan Business Planning presented an interesting opportunity to receive guidance and resources from Brookings while leaning on local participants to create something well thought out, achievable and hopefully unique to us.
We like the researched based approach which has already proven extremely beneficial to cutting through history and opinion in order to get to the facts of our situation.
Can you provide a source for the 32.4% employment growth figure. I’m sorry, the government is closed down and I cannot check my data, but the 2001-2009 change that I have shows a 20.5% decline in manufacturing jobs in the Memphis MSA.
One more thing, how is export growth measured? Does that include all of the exports which are flow thru at FedEx?
CA reports today: Memphis biotechnology GTx Inc. on Tuesday notified 53 employees — 60 percent of the firm’s workforce — that they will be laid off as the company moves to conserve cash following failed drug trials announced in August.
Here’s the real headline: More white collar jobs lost…what will replace them? where will this talent land (inside or outside of Memphis?
I know you talked about this the other day, but the exodus of white collar workers is killing us.
and will white collar jobs replace these?…or will we do more ribbon cuttings for more blue collar jobs that pay half of what these do and call it progress ?.. Not that it’s either one or the other …but I can’t be the only one who sees an ominous pattern here
George: On my mobile and cannot access exact sources but may be able to provide part of the answer. The growth is in Export jobs not manufacturing. Your manufacturing # decline sounds correct. When referring to exporting output there are a few numbers floating around. Both claim to limit the influence of freight just passing through without a value-add. Brookings analysis has the most conservative estimate and that is what we use to produce % change over time.
Service exports $1,958M 2009 41.6% of exports
Manufacturing exports $2,749M 2009 58.4% of all exports
Total exports $4,707 2009
Memphis GDP $63,826 for 2008
1.8% real growth from 2001-2008
Manufacturing exports represents 4.3% of our GDP. Room for growth. Lets target that because we have an airport that isn’t being used.
The BLS data lumps Transportation, Trade, and Utilities together, in the only data available during the shutdown, and there are 160K jobs in Memphis. I would suggest most of these are in transportation (which plays a major role in exports). This is a 5.6% decrease from 2003-2013. The data I see suggests that this is one more magic bullet that may not fire in our gun.
I hope this plan is regional in its name alone. There hasn’t been a regional plan that’s ever benefited Memphis. It’s the core that matters and research shows that plans to generate growth in the region don’t produce any meaningful number of jobs in the core.
Gwyn: Many of the Metropolitan Business Plan regions are, in fact, large regions. Some are huge. We are approaching this more like Chicago and Phoenix/Maricopa County.
We are researching the entire Metropolitan Statistical Area as best we can. In some cases smaller and in some cases bigger, but roughly MSA. We need to know the performance of the region and what is happening where.
Implementation, however, will be Memphis & Shelby County based. I think many involved would like to see this be a catalyst for dialogue in the larger region. Others have a very core-city focus. Bottom-line for now, where cooperation and partnerships exist within Shelby County, this is how we envision implementation beginning.
I think you will see when attention turns to discussion of implementable initiatives, the majority are sector based or service based or workforce based. Few ideas are geographically oriented alone. But you will also notice that accessibility and proximity are important themes.
The location of initiatives will be driven by assets to maximize for the sector. This bodes well for Shelby County and positions Memphis particularly well in many cases.
A question I have is what sector initiatives the informed public thinks will be most successful? Not just any initiative and not initiatives that are purely community development or geographically focused.
While geographically based community development is in many ways very important and may be part of this plan. We really want to start with building “traded-sectors”. Not plumbers or retailers or general healthcare workers. How do we build businesses and employment and connections for trading products and services that originate here but have markets in other cities or countries?
We can no longer shift the ingredients around. We can no longer cut the pie in smaller slices and tell ourselves we have more pie. We have to build business that brings revenue into this community to ensure that we do grow the pie.
When this happens, community development is more successful as demand grows. More locally serving businesses begin to open as demand for plumbers and retailers and nurses grows. And opportunity for existing citizens increases.
George: Analysis our team produced looks at it this way.
Transportation & Logistics = 127,000 Jobs (20%) & $15 Billion Economic Output (28%)
Manufacturing = 44,600 Jobs & $6 Billion Output
Healthcare and biomedical provide 74,000 jobs.
– Specialized medicine and medical technologies provide 44,000 jobs and $3.4 billion in output.
– Medical technologies alone have grown from 2,000 jobs in 1980 to 8,000 today.
More than 10% of our economy is driven by Exports and this is growing. Our existing exporting output ranges from $6.7 billion (as defined by Brookings) to over $11 billion (as defined by the International Trade Commission).
Our export services numbers are closer to 35% according to the way Brookings sliced it. Which puts us even more heavily weighted on the production side.
Being the hub for innovation, production and export of goods and services in targeted core industries is one of the four goals of this plan.
How many cities has Brookings recommended Exports to over the past three or four years?
I don’t know an exact number but in one way or another, I’d bet all of them. A premise of Metropolitan Business Planning and an idea that is supposed to permeate the plan is positioning the region for participation in the global economy. This is as much about using metropolitan assets to boost the national economy as it is about improving the metros themselves.
I think they have worked with at least 12 regions on specific Export plans outside or beyond the MBP work.
That being said. The Memphis & Shelby County Regional Economic Development Planning Process is the FIRST of the MBP plans to have a dedicated Exports & International Business Workgroup that is equal to the other five market lever workgroups.
In addition to:
Enhancing industry clusters and concentrations
Developing and deploying human capital aligned with jobs
Fostering innovation and entrepreneurship
Improving spatial efficiency and
Creating effective aligned public and civic institutions…
We felt Exports were far too important to our market to leave to chance, hoping the Brookings philosophy would sink in. So we created a sixth workgroup to supplement the Clusters and Concentrations lever.
Increasing Exports and International Business is a critical piece of our plan whether or not other regions are embracing it (although many are).
LOL!