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VOL. 129 | NO. 159 | Friday, August 15, 2014

Local Leaders Work to Keep Cummins in Memphis

By Amos Maki

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(Cummins Inc.)

Memphis and Shelby County are preparing to fight a border battle with Mississippi to keep hundreds of jobs inside the city.

The state of Mississippi is aggressively courting diesel engine manufacturer Cummins Inc. to move most of its Memphis operations south of the state line to DeSoto County, according to sources familiar with the effort.

It isn’t clear precisely how many jobs are at stake, but sources said local officials believe a significant number of the 700 to 1,000 full- and part-time jobs the Columbus, Ind.-based company has in Memphis could be at stake.

Cummins. Inc. produces diesel engines and has significant distribution operations in Memphis.

Memphis Mayor A C Wharton Jr. and Shelby County Mayor Mark Luttrell have been in discussions with the company and its consultants, and staff at the city-county Economic Development Growth Engine are preparing tax incentives to fend off Mississippi, which has been very aggressive in recruiting companies with operations in Memphis and Shelby County.

The two mayors have also asked the state of Tennessee to join the fight. Wharton and Luttrell met with Gov. Bill Haslam in Nashville Thursday, Aug. 14.

Cummins spokesman Jon Mills said he could not comment on Mississippi’s recruitment efforts. Mills said at this time the company is only contemplating expanding distribution operations in Mississippi.

“Memphis and the state of Tennessee have been great places to do business, offers us a great place for our employees to live and work, and we look forward to a great future in Tennessee, but we are still evaluating opportunities regarding the distribution part of the business,” Mills said.

The situation highlights the intense competition Memphis faces as a border city and comes as the long-simmering debate over the use of tax incentives in the city and county heated up during the city budget season, when Memphis leaders approved a series of benefits cuts to employees and retirees.

The payment-in-lieu-of-taxes, or PILOT, incentive program – the main economic development tool offered by Memphis and Shelby County – has come under fire for years from critics who contend it is corporate welfare that erodes the local tax base.

The debate over incentives exploded after the City Council voted in June to slash some benefits to city workers and retirees, igniting a backlash of criticism over the PILOT program and other incentives.

On the flip side of the economic development coin are business officials who have argued for years that the city and county don’t offer a broader package of incentives or that the current program is too cumbersome.

Officials in Memphis are increasingly fending off business recruitment efforts from Mississippi, which boasts lower property taxes, proximity to all the infrastructure and amenities in Memphis and a wide array of incentives.

The Greater Memphis Chamber reports nine major companies are moving distribution or manufacturing operations to the Magnolia State, resulting in a loss to Memphis and Shelby County of roughly 2,300 jobs and $500 million in investment.

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