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Tennessee Can Become Premier Global Destination for Auto Production

New Brookings Report Offers Recommendations to Strengthen Tennessee's Automotive Industry

Newly released research from the Brookings Institution finds that the Tennessee automotive industry must develop a first-rate workforce and an innovation-nurturing environment to become a premier global destination for automotive production now that peer states and low-cost countries can compete on costs. A new report from the Metropolitan Policy Program at the Brookings Institution, “Drive! Moving Tennessee’s Automotive Sector Up the Value Chain,” provides insight into Tennessee’s competitive position and offers recommendations for the public and private sector designed to advance the Tennessee automotive industry, as well as other advanced industries in the state.

“At a time when wages are converging across all U.S. locations, competing on wages alone will be a losing proposition,” said Mark Muro, a co-author of the report. “Tennessee needs to complement its cost appeal with new production efficiencies, top-flight workforce training, and a flare for product and process innovation.”

Tennessee’s auto sector has led the state’s post-recession economic recovery, having generated more than 12 percent of all job creation in the state since the recession and more than one-third of the manufacturing sector’s output growth since 2010. Tennessee’s auto sector is the largest in the South in terms of employment, and its share of North American motor vehicle manufacturing employment increased from 2.9 percent in 2010 to 3.3 percent, an all-time high, in 2012, suggesting that the state industry grew even more competitive as it weathered the economic crisis. The sector’s strength has traditionally been due to its competitive cost structure, strategic geographical location, and strong transportation infrastructure.

The new Brookings report recommends targeted efforts to address specific challenges facing the auto industry. The recommendations call on industry and the public sector to work together to 1) drive continued industry growth, 2) develop the workforce pipeline to strengthen Tennessee’s advanced industry skills base, and 3) focus on innovation among firms of all sizes throughout the supply chain.

“Drive!” explains that the private sector must take the lead in growing both the Tennessee automotive industry and advanced industries in general. By establishing a robust industry association, seeking out opportunities for expansion in new markets and adjacent industries, developing collaborative solutions to workforce development needs, and boosting innovative activity through increased R&D investment and greater engagement in the innovation commons, firms at all levels of the Tennessee auto supply chain can work to strengthen this critical advanced industry.

Meanwhile, the public sector, particularly state government, must create a supportive environment in which automakers and their suppliers can flourish. The report’s recommendations range from placing greater attention on the auto supply chain and renewed emphasis on international engagement to creating a skills challenge grant to strengthen the Tennessee advanced industries workforce, to encouraging technology development and diffusion and supply chain collaboration.

The report also outlines actions the federal government could take that would help provide a solid national platform for advanced industry growth. The federal government should promote trade liberalization and expanded market access to increase exports, create a “Race to the Shop” competition challenging states and regions to develop cohesive programs to develop the manufacturing workforce, and invest in R&D for cross-cutting advanced industries technologies.

“States and regions are on the front lines in working with their local advanced industry clusters to build competitive advantage but they can’t do it alone—they need a modicum of help from Washington,” said Muro.

Tennessee’s automotive industry is not alone in the challenges it faces. The report’s recommendations are applicable not just to the automotive industry in Tennessee but to other advanced industries throughout the United States.

“Drive!” is the second release in the Brookings Advanced Industries Series, a new effort by the Metropolitan Policy Program to define and highlight the critical role of advanced industries. Advanced industries are characterized by a strong orientation toward R&D activity and a large concentration of STEM workers. Advanced industries generate 11 percent of the nation’s output, 46 percent of goods exports, and over 16 million skilled direct and indirect jobs.

To develop “Drive!,” the Brookings team conducted a series of one-on-one interviews and in-state listening sessions with a broad array of private- and public-sector stakeholders. In-depth engagement with business, policy, labor, and other stakeholder communities helped the research team determine the specific elements required for an effective federal-state-local policy agenda to support the automotive industry.

The Brookings Institution released the first Advanced Industries Series report, “Launch! Taking Colorado’s Space Economy to the Next Level” in February. In addition to highlighting the strategic advanced industry sector, Brookings is working to identify, seed, and capture state and metropolitan innovations in advanced industry productivity-building, skills-building, and technology innovation. Ultimately, Brookings plans to articulate a national agenda for the advancement of advanced industries.

The report’s findings and input from stakeholders in Tennessee will inform the development of a framing paper on the importance of advanced industries to the national economy and the steps that federal policymakers can take to bolster the nation’s strength in these critical industries. This paper will be released in winter 2014 at a public forum in Washington that will also highlight the efforts of both Colorado and Tennessee to strengthen their advanced industry sectors.

About the report’s authors: Mark Muro is a senior fellow and policy director at the Brookings Metropolitan Policy Program. He leads the Program’s advanced industries activities. Scott Andes is a senior policy analyst, Kenan Fikri is a research analyst, Martha Ross is a fellow, Jessica Lee is a senior policy analyst and associate fellow, Neil Ruiz is a senior policy analyst and associate fellow, and Nick Marchio is a research assistant.

The Metropolitan Policy Program at Brookings provides decision-makers with cutting-edge research and policy ideas for improving the health and prosperity of metropolitan areas, including their component cities, suburbs, and rural areas. To learn more, please visit: Follow us on Twitter at

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