VOL. 6 | NO. 32 | Saturday, August 3, 2013
Made in Memphis
By Andy Meek
Memphis’ geography is limited to roughly 300 square miles, but its identity stretches beyond the city limits, resonating to the far corners of the globe.
Greg Mitchell mills the frets on the neck for a cigar box guitar at St. Blues Guitar.
(Daily News/Lance Murphey)
The city’s brand has obvious cornerstones, such as its place in the nation’s cultural topography. But setting aside those no-brainers, like the rock ‘n’ roll innovator whose mansion in Whitehaven still attracts gawkers from around the world, a lot of what makes Memphis’ story is the story of what’s made in Memphis.
In Memphis, “We Grind Here” doesn’t have to be a rallying cry restricted to the basketball arena. Indeed, the city abounds with businesses and entrepreneurs grinding out the product of commerce that gets stuffed into FedEx planes, the culinary delights served to global audiences dining on Memphis specialties and the mishmash of goods that get stocked on the world’s shelves.
Greater Memphis Chamber president and CEO John Moore likes to say the largest industry sector in Memphis is “miscellaneous,” and he’s happy that’s the case. Other cities, he explains, are racing to tie their identities to specific industries.
Memphis, though, sits in a nice, diversified sweet spot.
The city that’s been the home of innovators like Fred Smith (FedEx), Kemmons Wilson (Holiday Inn) and Clarence Saunders (Piggly Wiggly) is home to a different and newer class of businessman. They aren’t necessarily replicating what made FedEx a game-changer – they start with something simple, carve a niche and nurture it here – then abroad.
From manufacturing to corporate icon to small-business entrepreneurship, what follows is a curated sample of what’s going on in and coming out of Memphis.
Any such sample will be an incomplete snapshot, but collectively the list helps tell the tale. It’s a list that includes companies like American Paper Optics, whose founder John Jerit talks at a fast clip, like he’s trying to hurry before some unseen buzzer announces that time is up.
That’s because his 3D glasses manufacturer, based in Bartlett, has so much going on, so he naturally has a lot to tell.
In a typical year his firm, which employs about 40 people, is cranking out about 100 million glasses, little slabs of wonder that get sent around the world and have been used at everything from holiday events to the Grammys.
“We’re in the middle of the Halloween season right now,” Jerit said. “We’re getting ready for orders and manufacture of glasses that get used in haunted houses around the country. We get orders from Universal Studios, parks and traditional outlets around the country that use our glasses to do things like enhance black light effects. We’re kind of in that mode for the next couple of months. We’re also in the midst of manufacturing and shipping all of our Christmas glasses.”
The company’s holiday glasses are used to do things like show the wearer Christmas images when they’re looking through them at Christmas lights.
The firm’s products will be in some 15,000 retail stores this year. Jerit said the company just signed a deal to be in 2,000 stores in Germany.
That’s a representation of why Moore believes Memphis represents a launching pad for companies to not only thrive here but to springboard into the collective conscience far beyond Memphis.
“Memphis really has the perfect combination of resources that can make any business work,” Moore said. “We have valuable strategic assets in runway, road, river and rail. We have our central geographic location, a favorable business environment, low cost of labor and our energy costs are lower than in most cities in the U.S.”
Memphis-based St. Blues Guitar Workshop is a boutique guitar maker that operates out of a warehouse and attached storefront space near Downtown Memphis. The front of its building includes a small gift shop component, which peddles items like cigar-box guitars and washboards and knickknacks like harmonicas and vials of dirt from Mississippi’s famed Crossroads.
On a tour of the space, St. Blues CEO Bryan Eagle talks about things that make the company distinctive, like the company’s hometown that gives its product a distinctive resonance.
The city is such a magnet for St. Blues customers, in fact, that Eagle said the business’ international buyers have been known to hop a flight to the States and turn right back around to carry their respective axes back home – just so they can say they bought their guitar in Memphis.
It’s not the kind of business that would have the same attraction in a random town like Cincinnati or Kansas City. Moreover, according to Eagle, musical instruments happen to be on the few things made domestically that carry a premium over versions made elsewhere.
And for the cherry on top, his company’s guitars – which are emblazoned with the city of their birth – carry even more of a premium than those simply made in the U.S. No wonder, then that on every headstock, on its logo, on basically everything the company does, the word Memphis is stamped.
No discussion of those businesses for which Memphis is known would be complete without the purple-logoed package delivery giant that every day literally puts Memphis on the map.
Wunderlich Securities Inc. recently added FedEx Corp. to its stock coverage universe, initiating coverage of the package shipping giant with a “buy” rating and a $120 price target. According to Wunderlich, FedEx is well-positioned to benefit from long-term trends like increased global sourcing and selling, more sophisticated supply chain management and growth in e-commerce.
“While slow global growth, yield pressure from overcapacity, and international services trade-down remain near-term headwinds, we expect internal initiatives will drive substantial margin improvement and (earnings per share) leverage at (FedEx) Express and Freight over the next two to three years,” Wunderlich writes in the firm’s first comments about the company. “(FedEx) has a successful history of flexing its portfolio of networks to meet market conditions. We are confident that management’s strategic plan will result in reaching its goals.”
The investment firm goes on to do a dive into FedEx’s various business units. FedEx Express, Wunderlich writes, is in the middle of a multi-year turnaround that seeks to cut costs, make efficiency improvements and broadly reposition the service. Electronic documentation, high fuel prices, overcapacity and a trade-down in service are some of the factors currently squeezing the traditional air cargo market, according to Wunderlich, but FedEx is managing the cycle.
American Paper Optics owner John Jerit, left, looks over an order with Blake Sutherland at the company's Bartlett manufacturing plant.
(Daily News File/Lance Murphey)
Meanwhile, FedEx has targeted $1.7 billion in annual profit improvement through a variety of initiatives. According to Wunderlich, “The program consists of five categories: $500 million from efficiencies of staff functions/processes; $300 million for aircraft modernization; $350 million for U.S. domestic transformation; $350 million for international profit improvement; and $150 million for targeted growth/yield management. (FedEx) expects the program will cost roughly $600 million.”
On the financial services front, several Memphis-based firms have big, national profiles.
FTN Financial is the capital markets subsidiary of First Tennessee Bank. Its chief economist Chris Low is a regular commentator for Bloomberg, Reuters, National Public Radio and CNBC, and FTN Financial offices can be found in major markets like New York City and San Francisco.
Same goes for Wunderlich and Duncan-Williams Inc., investment banking firms whose businesses range from municipal banking to fixed income. They both are opening offices around the country, and Duncan-Williams has been particularly aggressive about recruiting new hires and bringing them to Memphis.
The Memphis brand also can be savored as a communal experience around a meal, and there’s plenty the city has to export in that regard, as well.
A few months ago saw the first sale of “Cookin’ With Corky’s,” a 240-page cookbook with 165 recipes and 200 photos including vintage pictures from the collection of the barbecue eatery founded in Memphis. Pre-sale numbers had reached nearly 30,000 before the publication date of May 1.
Other eateries, like the Rendezvous, are similarly popular Memphis ambassadors. Rendezvous highlights have included playing host in 2006 to then-President George W. Bush and Japanese Prime Minister Junichiro Koizumi. In 2009, Rendezvous co-owner John Vergos sent a shipment of barbecue to Broadway producer Sue Frost, one of the lead producers of the musical “Memphis” that opened in 2009.
In mid-July, the New York Times called East Memphis’ Hog & Hominy “a sibling rivalry worth jumping into,” describing the restaurant as a kind of sibling to one its owners opened previously, Andrew Michael Italian Kitchen.
The writer humorously takes his waitress to task, saying if he’d taken her suggestions he “wouldn’t be sitting here now daydreaming about Hog & Hominy’s fryer rabbit” and how he “might have left Memphis without knowing the blissful burn of Hog & Hominy’s fried sweetbreads.”