Major Industries and Commercial Activity
Nashville's strength as a community truly rests on one solid foundation—its economic diversity. The city is a great "neighborhood" of private and public business and industry, where people are as likely to go to work each morning in banks, hospitals, or government offices as to drive trucks, punch cash registers, or work on assembly lines. The area has benefited from low unemployment, consistent job growth, heavy outside investment and expansion, and a broadening of the labor force. Although the city's economy is not reliant on any one area of production, Nashville is a leader in finance and insurance, health care, music and entertainment, publishing, transportation technology, higher education, biotechnology, plastics, and tourism and conventions. In June 2003, Moody's Investors Service placed Nashville 8th in a ranking of the top 10 most diversified local economies. Also in 2003, Nashville ranked 25th in Forbes magazine's May issue listing top places for business and careers.
Health care is one of Nashville's top industries; according to the Nashville Health Council, the city is known as the nation's health care center. Twenty-one healthcare companies are based within the city; in total 350 health care companies have operations here. Many service firms specializing in the industry (including accounting, legal, and others) are based in Nashville, including 12 investment and venture capital companies dealing primarily with health care. Health care services companies based in Nashville control more than 2,400 operations outside the city, as well. In 2002, almost 90,000 people in the Nashville metro area worked in the health care industry, earning more than a $4 billion payroll.
Nashville is the largest publishing center in the Southeast and one of the top ten largest in the country. Some of the nation's leading printers operate alongside scores of small, family-owned shops. The city is home to Thomas Nelson, the world's foremost publisher of Bibles, and two of the country's largest religious publishing houses. Nashville is also becoming a major distribution center for books and other print media.
Of all of the products manufactured in the city, music is what makes Nashville most famous. The local recording industry and its offshoots have not only brought worldwide recognition to what was once a sedate southern city, but they have also pumped billions of dollars into the local economy, created a thriving entertainment business scene ranked behind only New York and Los Angeles, and given the city a distinctly cosmopolitan flavor. Nashville music—country, pop, gospel, and rock—generates well over a billion dollars in record sales each year. As a result, spinoff industries have flourished: booking agencies, music publishing companies, promotional firms, recording studios, trade publications, and performance rights associations such as BMI, the Broadcast Music Inc. There are approximately 200 recording studios in Nashville, and most major record labels have offices on Nashville's Music Row, Sony, RCA, Mercury Nashville, MCA, Warner Brothers, Capitol, and Columbia. As Nashville remains a center for the music industry, it continues to draw support businesses and industry to the area. Local music-related advertising firms (especially jingle houses) bring in vast revenues, music video production in the city is at an all-time high, while a burgeoning radio, television, and film industry has enticed some of the country's top producers, directors, and production houses to set up shop in Nashville. The music industry in Nashville is responsible for a good chunk of the city's tourism activity.
An influx of new industry in recent years has resulted in hundreds of jobs and on-site training opportunities for local actors, editors, artists, technicians, and other production people. Nashville's entertainment scene brings in more than revenue, however. It draws millions of people to the city each year as well. Tourism is one of Tennessee's biggest businesses with annual revenues of $2.2 billion, and Nashville is known as the hottest spot in the state.
New technology is a burgeoning factor in the Nashville economy. Dell Computers operates a manufacturing and technical support center near the airport, which opened in 1999 and employs about 3,000 people. The plastics industry is growing here, as is the biotechnology (including pharmaceuticals and life sciences) industries.
Partnership 2010 (formerly Partnership 2000) was created as a regional, public-private economic development initiative for the region. The four cornerstones of the program strategy are business recruiting of corporate headquarters and administrative offices, retention of existing businesses, entrepreneurship through fostering growth and supporting start-up businesses, and community improvement. By 2005 the initiative has resulted in more than 350 companies relocating their corporate headquarters to Nashville. Expectations for the initiative include a $10 billion impact on the region's economy as well as the creation of 50,000 new jobs. Partly as a result of the initiative, Nashville ranked among Expansion Management's 2005 "America's 50 Hottest Cities."
Items and goods produced: printing and publishing, automotive products, trucks, automotive parts, clothing, shoes, lawnmowers, bicycles, telecommunications equipment, aerospace products, thermos bottles, kerosene lamps, computers
Incentive Programs—New and Existing Companies
The One Stop Business Assistance Program helps new and expanding businesses avoid delays by expediting their dealings with local, state, and federal government offices regarding regulatory permits, and by assisting with any problems they may have in the process. The Payment in Lieu of Tax (PILOT) program offers qualifying businesses a property tax freeze or reduction on projects involving a large capital investment or creating large numbers of new jobs. Requests for PILOT assistance are considered on a case-by-case basis by the city and county. Industrial Revenue Bonds are available to eligible companies for land, building, or equipment purchases.
The Jobs Tax Credit incentive provides qualified new or expanding businesses with a $2,000 tax credit when the business creates at least 25 new full-time jobs and makes a capital investment of $500,000. The Corporate Excise Tax Credit allows companies a one percent tax credit on industrial machinery for new or expanding businesses. Sales tax exemptions or reductions are available to qualified companies purchasing industrial machinery, or products used in the manufacturing of resale items. The program also offers credits of 5.5 percent towards building materials, equipment, and machinery for company headquarters with a construction price tag over $20 million. The Economic Development Loan Fund assists new and expanding industrial companies with loans for up to $2 million.
Job training programs
The State of Tennessee FastTrack Job Assistance program offers training assistance for new or existing businesses that are investing in facilities, equipment, or new jobs. FastTrack utilizes educational facilities and FastTrack staff to develop and implement customized training programs. The Tennessee Job Skills program is a work force incentive grant program for new and existing businesses that focuses on elevating employees skill levels.
Nashville's aggressive Partnership 2010 program was responsible for a flurry of business activity in the early part of the new century, including company relocations, expansions, and new corporations. According to the Partnership 2010 annual report for 2003-2004, Asurion relocated its corporate headquarters to Nashville in 2003, creating 800 jobs by late 2004. In that year, 90 companies announced expansions or relocations to the Nashville region.
A major private investment in Nashville marks Dell's first U.S. expansion outside of Central Texas. In fall of 2000, Dell opened new manufacturing and office facilities in Nashville, and has since increased its Tennessee workforce from approximately 200 to nearly 3,000. Nashville has been building upon its considerable cultural cache in recent years, with the opening of the First Center for the Performing Arts, and a new main public library four times the size of the former library. Nashville expects to reap significant benefits when the state completes I-840, a limited-access highway that will form another outer ring of roadway around the city. The new highway, partially complete at the end of 2004, had already influenced business location decisions in Middle Tennessee.
Economic Development Information: Nashville Area Chamber of Commerce, 211 Commerce Street, Nashville, TN 37201; telephone (615)743-3000
Nashville's central location has made it one of the busiest transportation centers in the Mid-South. Today more than 80 miles of interstate highways weave in and out of the city, making Nashville a vital link to every corner of the region.
The bulk of local transportation services are designed to move freight. For high priority or overnight deliveries Nashvillians often turn to the rapidly expanding air freight industry. However, Nashville's strength as a distribution center for the Southeast still lies in the traditional and highly competitive industries of trucking, rail freight, and river barge.
Millions of tons of goods are moved through the city each year via truck by a multitude of motor freight lines serving the area. Nashville has become a regional headquarters for the trucking industry primarily because of its tight, efficient network of accessible interstate highways, its conveniently centralized location, and the fact that approximately 150 local terminals provide easy break-bulk distribution and specialized services for products such as produce (refrigeration), gasoline, and hazardous waste.
Since the turn of the century, Nashville has historically been considered the hub of railway activity for the Southeast. The local division of CSX provides service over 2,700 route miles to 23 states, the District of Columbia, and two Canadian provinces. An average of 90 trains pass through Nashville each day. The CSX Intermodal provides Nashville with a piggyback loading/unloading system that is one of the most modern in the nation, handling about 8,300 containers or trailers each month. Rail service is also provided by the Nashville Eastern and the Nashville Western short line railroads.
The Cumberland River, an artery of the Ohio River that weaves in and out of the Nashville Metropolitan area, links the city to points on the Mississippi River and the Gulf of Mexico coast. More than 30 commercial operators operate barges on the river. The distance to Gulf ports was cut by 563 miles in the mid-1980s when the United States Army Corps of Engineers opened its $1.8 billion Tennessee-Tombigbee Waterway, connecting the Tennessee River in northern Alabama with the Tombigbee River of southern Alabama 234 miles away. This ambitious man-made water route connected Nashville to the port of Mobile, resulting in an estimated savings of millions in shipping costs.
The Nashville Air Cargo Link is designated as foreign trade zone and is an all-cargo complex serving the Nashville International Airport. In 2003, more than 65 thousand tons of cargo was shipped through Nashville.
Labor Force and Employment Outlook
Nashville has experienced significant economic expansion in recent years, to the extent that employers in certain sectors, such as skilled production and the hospitality industry, are experiencing labor shortages. Population growth continues, however, especially in suburban Nashville, which offers a long-term solution to the labor supply problem. With the influx of expansions and new businesses, and in concert with Nashville's diverse and stable economy and growing population, continued economic expansion is predicted.
The following is a summary of data regarding the Nashville metropolitan area labor force, 2003 annual averages.
Size of nonagricultural labor force: 680,800
Number of workers employed in . . .
trade, transportation and utilities: 139,000
financial activities: 44,300
professional and business services: 82,600
educational and health services: 93,100
leisure and hospitality: 71,000
other services: 30,200
Average hourly earnings of production workers employed in manufacturing: $14.44
Unemployment rate: 3.5% (December 2004)
Cost of Living
The following is a summary of data regarding key cost of living factors for the Nashville area.
2004 (3rd Quarter) ACCRA Average House Price: $194,533
2004 (3rd Quarter) ACCRA Cost of Living Index: 94.5 (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: For 2005 the tax rate was $2.52 per $100 of assessed value; residential property is assessed at 25 percent
Economic Information: Nashville Area Chamber of Commerce, 211 Commerce Street, Nashville, TN 37201; telephone (615)743-3000
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