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On the eve of the Civil War, only 1% of Tennessee's population was employed in manufacturing, mostly in the iron, cotton, lumber, and flour-milling industries. Rapid industrial growth took place during the 20th century, however, and by 1981, Tennessee ranked 3rd among the southeastern states and 15th in the US in value of shipments. Tennessee's four major metropolitan areas, Memphis, Nashville, Knoxville, and Chattanooga, employ about half of all the state's industrial workers.

From 1987 to 1992, 54 industrial and commercial machinery manufacturers announced new plant locations in Tennessee while 366 existing companies in the industry expanded plant facilities. The state ranks 4th nationally in auto production. Automotive jobs went from 3,000 in the early 1980s to more than 22,000 jobs in 1996. The state is the leading noncoastal state for foreign investment; $14.5 billion in foreign investment entered the state in 1998. The total value of shipments for manufactured goods was $100 billion in 1997. In 1997, Tennessee was headquarters to four Fortune 500 companies: Columbia/HCA Health care, Federal Express, Eastman chemical, and Service Merchandise.

Earnings of persons employed in Tennessee increased from $93.3 billion in 1997 to $98.6 billion in 1998, an increase of 5.7%. The largest industries in 1998 were services, 27.1% of earnings; durable goods manufacturing, 12.4%; and retail trade,10.6%. Of the industries that accounted for at least 5% of earnings in 1998, the slowest growing from 1997 to 1998 was nondurable goods manufacturing (9.3% of earnings in 1998), which increased 2.0%; the fastest was finance, insurance, and real estate (6.2% of earnings in 1998), which increased 9.6%.