Major Industries and Commercial Activity
The stable economy of the Greater Knoxville Area is one of the region's major assets. It is highly diversified with no one employment sector accounting for more than 22 percent of the area's total employment. Recent years have seen substantial growth in the areas of trade, transportation, utilities, and financial activities.
Knoxville's economy is bolstered by the presence of the Tennessee Valley Authority headquarters and the University of Tennessee at Knoxville. Added benefits accrue with the location of ORNL, a major U.S. Department of Energy facility, in nearby Oak Ridge. Scientists and engineers at ORNL labs do research and development work to bring scientific knowledge and technological solutions that strengthen U.S. leadership in the area of science; increase the availability of clean energy; restore and protect the environment; and contribute to national security. These institutions provide unlimited education and training opportunities for area businesses and are active in a cooperative technology transfer program that has successfully spawned many spin-off companies. The Spallation Neutron Source (SNS) project, based in Oak Ridge, is scheduled for completion in mid 2006. SNS development is carried out by collaboration of six national laboratories, and is based at an 80-acre site at ORNL. The $1.4 billion project will produce the most powerful pulsed neutron sources in the world for scientific research and industrial development, making the region a world leader in technology. The project is expected to have applications in the areas of chemistry, physics, biology, genetics, semiconductors and aerospace engineering.
As another nurturing aspect of the local business climate, the area features an unusually high number of incubator facilities, particularly in Oak Ridge—a city whose roots can be traced to the Manhattan Project of the late 1930s and early 1940s.
Through the assistance of the ORNL and University of Tennessee (UT), spin-off companies have been formed. UT, Lockheed Martin Energy Systems, and TVA, have been successful in recruiting national high-technology consortiums. The city itself is very technology-forward, with fiber-optic lines threaded throughout its downtown core. Knoxville Telecommunication infrastructure is a critical factor in the site selection process of relocating companies, and Knoxville's state-of-the-art telecommunications structure has helped the city attract several telemarketing divisions of large corporations.
Another key element in the Greater Knoxville area's economic prosperity is location. Knoxville is at the center of the eastern half of the United States and within one day's drive of three-fourths of the U.S. population. Location is one important reason why many manufacturing businesses have relocated or expanded in the area. In 2004, new or expanding industrial businesses in the Knoxville Metropolitan MSA invested $283,345,000; those investments were made by 4 new businesses and 16 existing companies. Location is also a factor in the area's booming tourism industry, particularly in nearby Sevier County, where approximately 10 million people annually visit the Great Smoky Mountains National Park—the most visited national park in the United States—and the many other attractions in Gatlinburg, Pigeon Forge and Sevierville.
Knoxville remains an urban center for mining in the Cumberland range. Zinc and coal mining are carried on in the region. Burley tobacco and a variety of food crops are harvested on farms just outside the city, and livestock and dairy products are also important to the local economy. Knox County ranks fifth in the state of Tennessee for visitor expenditures; in 2001 tourism brought the county $549 million.
Items and goods produced: motor vehicles supplies, manufactured housing, aluminum products, clothing, computer peripherals, electrical equipment, plastics, pleasure boats, processed foods
Incentive Programs—New and Existing Companies
Knoxville has a Foreign Trade Zone, is an inland Port of Entry, and has a U.S. Customs Office. The city and county offer sales tax exemptions on new equipment and special revenue bond financing programs. Knox-ville's Jobs Now! campaign, launched in 2003, aims to attract new businesses to the Knoxville area and encourage expansion of local businesses, primarily through marketing, via advertising, trade show exhibitions, distribution of brochures, and calling on prospects. The city of Knoxville and Knox County have been the campaign's biggest backers, with annual contributions of $400,000 each; approximately 200 other backers bring the annual figure to $2 million.
Tennessee is a right-to-work state and its overall state and local tax burden is among the lowest of all 50 states. Tennessee has no personal income tax on wages or salaries. Finished goods inventories are exempt from personal property tax and industrial machinery is totally exempt from state and local sales taxes. Manufacturers receive other tax exemptions and reduced property assessments under specified circumstances. State-administered financial programs for businesses include: the Small and Minority-Owned Business Assistance Program, currently being developed by the state Treasury Department and expected to provide assistance to small and minority-owned businesses through loans, technical assistance, and program services; the Small Business Energy Loan Program, which helps qualified Tennessee-based businesses upgrade their level of energy efficiency in their buildings and manufacturing processes; the FastTrack Infrastructure Program, which assists in the funding of infrastructure improvements for businesses locating or expanding in Tennessee; and the FastTrack Training Services Program, which helps companies provide training for their staff.
Job training programs
Tennessee's FastTrack Training Services Program is Tennessee's primary source of financial support for new and expanding business and industry training. FastTrack staff work with businesses to plan, develop, and implement customized training programs. Training may be done in a classroom setting, or on the job. The Southeast Tennessee Industrial Training Service provides specialized services at low or no cost to employers, including task and job analysis, training program design and material development, coordination of programs with employee recruitment activities, provision of facilities and equipment for developing specific job skills; and provision of funding. Pellissippi State Technical Community College offers technical programs, and the Knoxville State Area Vocational Technical School offers career-oriented programs.
Knoxville's healthy economy is exemplified by the many renovation and expansion projects underway or recently completed around the city. The newly-expanded Knoxville Convention Center, opened in July of 2002, is a sparkling, technologically-advanced facility boasting a 119,922 square-foot exhibit hall, a 27,300 square-foot divisible ballroom, 14 functional meeting rooms seating attendees in theater style, a lecture hall with seating for 461, and three luxury conference rooms. The East Tennessee Historical Center's Museum of East Tennessee History, McClung Historical Collection, and Knox County Archives will double in size upon the completion of a $20 million expansion in 2005. This will bring more exhibit and collection space to the museum; more space for growing number of books, manuscripts, and microfilm of the McClung Historical Collection; and more room for the Knox County Archives' permanent records of historic Knox County. An extensive $23.5 million restoration of the magnificent Tennessee Theatre was completed in January of 2005, returning the 1928 theatre to its former glory. Several new exhibits have opened at the Knoxville Zoological Park in recent years, including an elephant preserve and African grasslands exhibit, both opened in 2002, and a meerkat exhibit opened in 2003; the zoo's Kid's Cove, a fun environment designed for children, is scheduled to open in April of 2005.
Economic Development Information: Knoxville Area Chamber Partnership, 601 West Summit Hill Drive, Suite 300, Knoxville, TN 37902; telephone (865)637-4550
All major air shipments in Knoxville originate out of McGhee Tyson Airport. A new cargo facility was constructed in the early 1990s, more than doubling the airport's cargo capacity. In the fall of 2000, McGhee Tyson Airport completed a $70 million renovation and expansion project of its main terminal and concourses. Rail is another option for those needing to transport freight to and from the Greater Knoxville area. Main rail service is provided by the Norfolk/Southern and the CSX rail systems. Fifty-seven regular-route, common-carrier truck lines have terminals in Knox County. Many irregular routes and special-contract carriers also supply the area with efficient ground freight services.
Because of navigation improvements made by the Tennessee Valley Authority on the Tennessee River system, Knoxville enjoys barge commerce with 21 other states on the Tennessee, Ohio, and Mississippi Rivers. This interconnected inland water system runs from the Gulf of Mexico to the Great Lakes, allowing shipments on water to such distant points as Houston, Tampa, Pittsburgh, Minneapolis, and Little Rock.
Labor Force and Employment Outlook
The Knoxville area labor force is drawn from a nine-county region in eastern Tennessee. The presence of a variety of instructional centers, combined with the city's proximity to key U.S. markets and the state's commitment to nurturing research and development firms, has made Knoxville a considerable force in the world of high-technology industry.
The labor force has one of the lowest turnover and absenteeism rates in the country.
The following is a summary of data regarding the Knoxville metropolitan area labor force, 2003 annual averages.
Size of nonagricultural labor force: 355,400
Number of workers employed in. . .
trade, transportation and utilities: 74,700
financial activities: 18,000
professional and business services: 40,400
educational and health services: 37,600
leisure and hospitality: 45,800
other services: 14,800
Average hourly earnings of production workers employed in manufacturing: $14.10
Unemployment rate: 3.3% (December 2004)
Cost of Living
Knoxville's overall cost of living, assisted by low taxes and low utility charges, is among the most reasonable in the country. Home buyers everywhere in the Greater Knoxville Area benefit from housing prices that are lower than the national average, as well as low taxes and low utility bills. Electric power rates here are among the lowest in the nation. The Tennessee Valley Authority, a publicly owned utility, is headquartered in Knoxville and generates much of the electrical power used in homes.
The following is a summary of data regarding key cost of living factors for the Knoxville area.
2004 (3rd Quarter) ACCRA Average House Price:$192,000
2004 (3rd Quarter) ACCRA Cost of Living Index: 87.8 (U.S. average = 100.0)
State income tax rate: Limited to dividends and interest income
State sales tax rate: 7.0%
Local income tax rate: None
Local sales tax rate: 2.25%
Property tax rate: $2.96 per $100 assessed value in Knox County, $3.05 per $100 assessed value in city of Knoxville (2004)
Economic Information: Knoxville Area Chamber Partnership, 601 West Summit Hill Drive, Suite 300, Knoxville, TN 37902; telephone (865)637-4550
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