EconSouth (Second Quarter 2005)
Tri-Cities Adjusting to
Nestled in the mountains of northeast Tennessee is an economic microcosm of the United States. Like many communities across the country, the Tri-Cities area—comprising Bristol, Tenn. and Va., Johnson City, Tenn., and Kingsport, Tenn.—is making the transition from a manufacturing-based economy to one increasingly reliant on service jobs.
Manufacturing still matters
Bristol-based King Pharmaceuticals represents a more recent success story. The company began operations in 1994 and now employs more than 1,500 people regionally. Other local manufacturers include Bristol Compressors (2,500 employees), Quebecor World (1,450), American Water Heater (1,200), and Exide Battery (1,000).
“People tend to think of this as a farming area with a bunch of Snuffy Smith types running around, but manufacturing accounted for a higher percentage of employment in the southern Appalachian region than any other part of the country, including Michigan in the mid-’80s,” said Dr. Steb Hipple, an economist at East Tennessee State University (ETSU) in Johnson City. “We’re much more reliant on manufacturing than most other areas, but we were starting out at a much higher point than most parts of the country.”
Data from the Bureau of Labor Statistics (BLS) bear out Hipple’s point. Manufacturing employment in the two metropolitan statistical areas that make up the Tri-Cities region—Johnson City (Carter, Unicoi, and Washington counties in Tennessee) and Kingsport-Bristol (Hawkins and Sullivan counties in Tennessee and Scott and Washington counties in Virginia, as well as Bristol, Va.)—accounted for 19 percent of all employment, compared with 11 percent nationally. But in 1990, manufacturing jobs made up 30 percent of the region’s employment, according to the BLS.
Employment on the rise
Health care is another growth industry, not surprising for a region whose residents are aging. (The 2000 Census put the regional median age at 39.2 years, higher than the national median age of 35.3 years.) Wellmont Health System and Mountain States Health Alliance are both significant regional employers.
As with most shifts from manufacturing jobs to a service base, the result is often lower-paying jobs. “Manufacturing jobs tend to pay higher wages and salaries than those in service-related industries,” Hipple said. “As a result, the region’s overall payroll may be declining despite a net gain of jobs.”
Telling the Tri-Cities’ story
Raff said the region’s recently improved transportation infrastructure—especially the newly completed expansion of Interstate 26 between Tennessee and North Carolina—will make it easier to attract business to the Tri-Cities. Interstate 81, which connects Tennessee with Virginia, crosses I-26 in the Tri-Cities. “These highways have created a flow of commerce between Tennessee and North Carolina that wasn’t really practical before because you had two-lane roads,” he said. Nearby Tri-Cities Regional Airport is crucial, Raff said, to the Alliance’s goal of selling the region globally.
Another boost to the region could come in the form of a regional office of the World Trade Center Association (which has more than 300 offices worldwide). This initiative got under way separately from the business alliance’s efforts, but the region’s business leaders quickly embraced it, according to Raff.
Such developments have convinced Raff that the Tri-Cities can reverse the recent economic trends that have eroded its manufacturing base and slowed wage growth. “The quality of life here is fantastic, and we’ve got a great story to tell,” he said. “We see the growth in cities all around us, like Greeneville [Tenn.] and Nashville, and I know we can achieve that same growth.”
This article was written by Tom Heintjes, a managing editor of EconSouth.