The state of Tennessee’s economic development effort outside the U.S. has returned formally this week to where it was in 1997 with overseas offices pushing Tennessee exports and foreign investment in the state.
Tennessee Gov. Bill Haslam and Economic and Community Development Commissioner Bill Hagerty announced Monday, Feb. 11, the new set of eight offices in Mexico, the United Kingdom, China and Germany.
Four of the offices will work on recruiting direct foreign investment in Tennessee while the other four will work on export promotion.
Hagerty, who was in Memphis last week to talk with the editorial board of The Daily News, said Tennessee exports have grown from $10 billion to $30 billion in the last decade because of the currency exchange rate.
“Over the same period, the euro has increased its purchasing power from a dollar perspective by 50 percent,” Hagerty said. “The yen’s purchasing power has increased by 25 percent.”
Hagerty wants to extend export opportunities to small and medium-sized Tennessee businesses with state help in figuring out the export market.
“Tennessee’s unique advantage is our location as a logistics hub,” Hagerty said, noting the return trip for containers that come into Memphis, in particular, by air, rail, truck and river. “The opportunity for us is to leverage the favorable backhaul economics that occur when you’ve got to send those containers back to their home. I think that’s the unique advantage that Tennessee has.”
A transcript of state Economic and Community Development Commissioner Bill Hagerty’s discussion with The Daily News editorial board will be published in the upcoming edition of The Memphis News.
A transcript of Hagerty’s discussion with The Daily News editorial board will be published in the upcoming edition of The Memphis News.
Hagerty, who founded his own merchant bank and private equity firm, said small- to medium-sized businesses will also get assistance from the state in negotiating something that can be trickier than a language barrier or a foreign culture – Washington.
“It’s challenging for a small company to go up there and navigate the halls of Washington,” he said. “What we are going to do as a state is serve as a stand-in or intermediary for our small companies.
“The federal government can deal with us fine. We’ll be able to figure out how to leverage and tap those resources for a small or medium-sized company and really sort of serve as a go-between and demystify the process of exporting, so it’s not a bridge too far.”
Hagerty was appointed when Bill Haslam took office as governor in 2011 and began decentralizing the state office from what had been an operation that was based in Nashville.
“What we’ve done is focus on the strategic reasons for companies to be in Tennessee as opposed to using incentives to get them to do something that is not strategic,” he said of the administration’s economic development pursuit strategy. “The result is we have now got our incentives cost per job down to the lowest level in a decade on top of two record-breaking years. That I think shows that we are moving in the right direction.”
Hagerty’s comments come as the debate about incentives and tax breaks and freezes offered by local governments is again coming to life.
“Unilateral disarmament while laudable is sometimes challenging from the competitive standpoint,” Hagerty said as he talked of competition with other states offering similar incentives. “Each mayor, each city council is challenged to deal with the matrix of different tools that different jurisdictions use to compete against them.
“What I would say to any mayor or city council is this: Your locale has certain strategic advantages. There are reasons for a company to be there beyond the incentive. If the incentive is the only reason the company is coming, be aware of what happens when the incentive burns off.”