Loudon County Tennessee: Correcting Past Mistakes and Moving

Loudon County Tennessee: Correcting Past Mistakes and Moving Forward
Executive Summary
Cheap land and low labor costs have been a formula for success in Loudon County
Tennessee for nearly half a century. Cheap land has spurred development and construction of
retirement communities and waterfront housing development in Loudon County. Low labor
costs have attracted low technology manufacturing and shipping and distribution to Loudon
County.
In 2014 Loudon County stands on the rocky edge between success and failure.
Available land for development along the waterfront has all been utilized and because of
globalization Loudon County workers must compete against unskilled workers throughout the
world. Commercial sprawl of retail big-box stores litters US Route 321 between exit 81 off US
Route 75 to the Fort Loudon Dam while downtown Lenoir City is mostly vacant and in some
cases rotting. And while tile manufacturer Del Conco has brought 250 new jobs to Loudon
County there has still been a net loss in manufacturing jobs with the closing of the Yale Lock
plant in Lenoir City.
The County needs to invest in people, infrastructure and education in order to succeed
in the 21st century. Cultural and religious customs hold this County back from attempting
simple methods of economic development. Without a change in attitudes and customs Loudon
County will remain just another poor rural County in East Tennessee.
Introduction
Loudon County Tennessee lies to the southwest of Knox County and Knoxville.
Transportation resources include two exits off of US Interstate 75 and US Route 321 which
1
crosses the Fort Loudon Dam and connects Loudon to Blount County and the City of Maryville.
US 321 is also the secondary route to the Smokey Mountains National Park. The County has a
population just under 50,000. According to U.S. Census statistics one in three people employed
are employed in either low-wage manufacturing or retail sectors. The poverty rate is higher
than state average; the educational attainment is lower than the state average, including only
11% of county residents possessing a Bachelors degree. The unmarried birth rate in Lenoir City
is 80% which is twice the state average. Over the last 20 years large influxes of retirees from
Midwestern states have come to live in newly developed waterfront areas such as Tellico
Village.
Lenoir City for the largest city in Loudon County was originally formed as a company
town along the railroad. It was a planned community divided into four quadrants of light
manufacturing, heavy manufacturing, wage earner properties and professional residences.
These quadrants are still visible today. The wage earner quadrant is shown on local maps as
Bucktown revealing Lenoir City's segregationist past. The TVA's (the Tennessee Valley
Authority) construction of the Fort Loudon Dam forever changed the geography of the County.
This creation of navigable waterways and to waterfront properties created a large construction
boom in the County from the 1980s which continued all the way to the crash of 2008.
The Loudon County economy is stalled. Political leaders and the local economic
development agency have publicly said they are looking for answers they have turned to the
University of Tennessee's Urban Planning Department for help. While getting academic
consultation will be useful the actual answers to Loudon County's economic development stall
are quite obvious to anyone with knowledge of economic development living in this County.
2
Literature Review
Globalization can be measured as a sum of exports, imports, and investment, which are
themselves indicators of network flows of goods and capital. In the article published in the
Annual Review of Sociology (2007) the Consequences of Economic Globalization for Affluent
Democracies the authors Brady, Beckfield, and Zhao explode many of the myths surrounding
globalization and job loss in industrialized Western nations. This review of other academic
papers describing the effects of globalization shows that most loss job losses in the United
States are not the effect of globalization. The deindustrialization of American industry is not an
effect of globalization. The article leads us to the conclusion that the level of globalization in the
United States is considered too low to be the main cause of deindustrialization. And that the
economic impact from developing countries such as Mexico or China is actually very limited
instead technology, rising worker productivity, and economic development were found to be
more influential than globalization and driving deindustrialization. Though there is little
question that globalization has contributed to increased income inequality that near we all
affluent democracies have experienced since 1970s.
Harvard's Michael E Porter in his article Location Competition and Economic
Development; Local Clusters in a Global Economy defines clustering as "Clusters are geographic
concentrations of interconnected companies, specialized suppliers, service providers, firms in
related industries, and associated institutions in a particular field that compete but also
cooperate." These local clusters can include a city, state or region and in some cases even
extends across national borders. The Windsor, Ontario and Detroit, Michigan automotive
manufacturing cluster is an example of clustering crosses international borders." These
3
companies are not exclusive to one industry instead of cluster is a number of linked industries
including suppliers of specialized inputs such as components and machinery services (Porter
2010)." Porter explicitly states within his article that clusters are defined too broadly if they
are aggregates such as manufacturing, services, consumer goods or high tech. In this case Mr.
Porter shows that standard census data and NAICS categories are often too broad as to be
useful in detecting clusters." Cluster participants are not always competitors and often serve
different segments of industries (Porter 2010)." Clustering is often made up of complementary
firms rather than competitive firms for example Kia and Volkswagen themselves may be
competitors but the surrounding parts manufacturers may serve both of these companies. This
is also seen in the transportation industry where many transportation firms would serve all of
these varied automotive manufactures.
Source: American International Automobile Dealers via Christian Science Monitor
.
Clustering adds to the sophistication of processes but this is strongly influence by the
quality of microeconomic and business environment of the location. Through inter industry
cooperation clustering encourages the use of sophisticated methods, new and advanced
technology and offer can unique products. Competition must shift from imitation to innovation
and from low investment to high investment in not only physical assets but intangibles such as
4
skills and technology. Clustering amplifies pressures to innovate by companies within the
cluster in order to do business with new companies coming into the cluster. An existing cluster
of manufacturers may need to upgrade internal training and technologies in order to do
business with these new large high-tech manufacturing companies. These economies of
amalgamation need access to specialized input and employees and access to information.
These companies are not competitive but complementary to one another. One company may
make the plastic pellets used for injection molders. That injection molders may be making a
plastic housing for an automotive part. That part is then sent to a smaller manufacturing plant
for subsystem assembly. Later that subsystem is transported to the main manufacturer to be
installed in their final finished product. This example illustrates how complementary
manufacturing works. Most new businesses are formed in existing clusters rather than in new
unused and isolated locations. Clusters have lesser barriers to entry then other areas as they
already possess the infrastructure as well as employee asset skills and inputs needed by
employers. Clustering is not an advantage in all manufacturing or fields. Clustering is a
combination of competition and cooperation.
. These clusters will often form around superior transportation systems or educational
institutions. Government's role is the facilitation of cluster development. Government should
reinforce and build on established and emerging clusters by recognition that clusters are
present and then removing obstacles, relaxing constraints and eliminating efficiencies to that
cluster.
A government that focuses on an individual company or industry through the use of
subsidies and technology grants will distort markets and use government resources
5
inefficiently. Governments are often drawn into developing policies that attempt to enhance
the competitiveness of individual firms. Neither of these methods will help clusters.
The Economist's magazines' article: America's Cleantech Clusters Venture Capitals
illustrates effective government policies in creating or growing clean technology clusters.
Several localities are working hard to develop these clusters such as Austin Texas, Boston
Massachusetts and Toledo Ohio.
Government's role in these clusters is to provide education and infrastructure. Other
institutions such as universities, think tanks, vocational training providers, industrial and
engineering standards agencies (ISO for example) and trade associations can provide the
specialized labor component needed by the employers within the cluster.
Local Economic Analysis
Comparing national figures against those of Loudon County verifies what local residents
might suspect. Over 30 percent of all employment in Loudon County is in two sectors; retail and
manufacturing. The manufacturing is of a lower skill and lower wage level than what might be
expected. Three of the five largest manufacturers are in the food processing business. While
the number of manufacturing jobs in Loudon County decreased between 2000 and 2010 it was
a significantly smaller decrease found in the national figures.
6
Employment Trends 2000 and 2010
Nation
Industry
Total employment
NAICS 31 Manufacturing
NAICS 44 Retail Trade
NAICS 51 Information
NAICS 52 Finance and Insurance
NAICS 53 Real Estate Rentals and Leasing
NAICS 54 Science and Technical Services
NAICS 61 Education Services
NAICS 62 Health Care and Social Work
NAICS 71 Arts, Entertainment and Recreation
2000
114,064,976
16,473,994
14,840,775
3,545,731
5,963,426
1,942,046
6,816,216
2,532,324
14,108,655
1,741,497
2010
% Change
111,970,095
-1.84
10,862,838
-34.06
14,496,625
-2.32
3,124,036
-11.89
5,928,696
-0.58
1,946,424
0.23
7,822,417
14.76
3,273,527
29.27
17,787,859
26.08
2,003,595
15.05
Loudon County TN
Total employment
NAICS 31 Manufacturing
NAICS 44 Retail Trade
NAICS 51 Information
NAICS 52 Finance and Insurance
NAICS 53 Real Estate Rentals and Leasing
NAICS 54 Science and Technical Services
NAICS 61 Education Services
NAICS 62 Health Care and Social Work
NAICS 71 Arts, Entertainment and Recreation
10,362
3,273
1,678
67
264
53
187
3
967
39
11,782
3,081
1,764
40
365
129
307
60
1,397
81
Category
2000 Total Employment
Total Number of Establishments
Total Number of Small Establishments (<500)
Total Number of Large Establishments (>500)
Nation
16,473,994
354,498
349,842
4,656
Loudon
County TN
3,273
49
48
1
2010 Total Employment
Total Number of Establishments
Total Number of Small Establishments (<500)
Total Number of Large Establishments (>500)
10,862,838
299,982
297,340
2,642
3,081
47
47
0
-34.06
-15.38
-15.01
-43.26
-5.87
-4.08
-2.08
-100.00
Focus Industry (NAICS 31)
Time
% Change (20002010)
Total Employment
Total Number of Establishments
Total Number of Small Establishments (<500)
Total Number of Large Establishments (>500)
7
13.70
-5.87
5.13
-40.30
38.26
143.40
64.17
1900.00
44.47
107.69
Location Quotient for Selected Employment
Sectors in Loudon County Tennessee
NAICS Industry
31
42
44
48
51
52
53
54
55
56
61
62
71
72
Total employment
Manufacturing
Wholesale trade
Retail trade
Transportation and
warehousing
Information
Finance and insurance
Real estate and rental and
leasing
Scientific, and technical
services
Management of companies
and enterprises
Administrative and support
and waste management and
remediation services
Educational services
Health care and social
assistance
Arts, entertainment, and
recreation
Accommodation and food
services
111,970,095
10,862,838
5,598,507
14,496,625
Loudon
County
2000
10,362
3,273
608
1,678
Loudon
County
2010
11,782
3,081
585
1,764
3,790,002
3,545,731
5,963,426
4,011,989
3,124,036
5,928,696
940
67
264
848
40
365
1,942,046
1,946,424
53
129
6,816,216
7,822,417
187
307
2,873,521
2,832,953
60
60
9,138,100
2,532,324
8,977,265
3,273,527
275
3
413
60
14,108,655
17,787,859
967
1,397
1,741,497
2,003,595
39
81
9,880,923
11,312,122
808
1,373
National
2000
National
2010
114,064,976
16,473,994
6,112,029
14,840,775
LQ 2000
LQ
2010
2.1870
1.0950
1.2446
2.6955
0.9930
1.1564
2.7302
2.0087
0.2080
0.4873
0.1217
0.5851
0.3004
0.6298
0.3020
0.3730
0.2299
0.2013
0.3313
0.4372
0.0130
0.1742
0.7545
0.7464
0.2465
0.3842
0.9002
1.1535
The location quotient in manufacturing is 2.5 times greater than the national figures in
Loudon County. Retail trade shows a slightly higher location quotient, while transportation and
distributing shows a location quotient of 2.7 in 2000 shrinking to 2.0 in 2010. Accommodation
and food services had had a location quotient below 1.0 in 2000 but has increased to 1.15 in
2010, showing real growth in the travel and tourism sectors. Arts and entertainment location
quotient had increased by .14 location quotient between 2000 and 2010.
8
Proportional Shift of Selected Industries: The Nation as Compared to Loudon County
-0.3406
-0.0840
-0.0232
-0.3222
-0.0657
-0.0048
Regional shift
(differential
shift)
0.2819
0.0462
0.0744
0.0586
-0.1189
-0.0058
0.0769
-0.1006
0.0125
-0.1564
-0.2841
0.3884
0.0023
0.0206
1.4317
0.1476
0.1660
0.4941
-0.0141
0.0042
0.0141
-0.0176
0.2927
0.0008
0.3111
0.5194
18.7073
0.2608
0.2791
0.1839
0.1505
0.1689
0.9264
0.1448
0.1632
0.5544
National
share
NAICS Industry
31 Manufacturing
42 Wholesale trade
44 Retail trade
Transportation and
48
warehousing
51 Information
52 Finance and insurance
Real estate and rental and
53
leasing
Professional, scientific, and
54
technical services
Management of companies
55
and enterprises
Administrative and support
56 and waste management
and remediation services
61 Educational services
Health care and social
62
assistance
Arts, entertainment, and
71
recreation
Accommodation and food
72
services
Proportional
shift
Proportional shift analysis is a more difficult proposition. Outliers create the impression
of enormous growth in the educational services area. This is due to the opening of the Roane
County Community College in Lenoir City. The growth in real-estate rental and leasing are hold
overs from the County’s continuing efforts to promote cheap land. More pertinent to this
analysis is the increased shift in arts and entertainment as well as accommodations and food
services. This shows an overall growth in travel and tourism in Eastern Tennessee that is
currently not being exploited by the County.
9
Loudon County's Largest Manufacturers 2010
Strategic Plan
Current Conditions
You could not do more wrong in the areas of urban planning and economic
development than Loudon County and Lenoir City Tennessee officials have done. Said again
economic development has been based on cheap land and low labor costs. While urban
planning has been either completely ignored or misapplied. In the area of business and
industrial development the County continues to highlight its low costs. This has brought lowwage, low technology manufacturing and distribution to the County. While these jobs are
valuable they cannot remain to be the main component of employment in the County.
Loudon County lies squarely within the Southeastern United States regional automotive
industrial cluster. However there is only one manufacturer of automotive accessories in the
County and one large parts distribution center. Jobs in the automotive production industry
require highly skilled workers that cannot be found in Loudon County's labor force.
10
Employers seeking skilled and educated employees in manufacturing would not consider
locating in Loudon County Tennessee after reviewing US Census statistics on educational
attainment. Other industries requiring a creative, innovative, or educated workforce would not
consider locating in Loudon County Tennessee.
The public education infrastructure in Loudon County is average for the State of
Tennessee at best. High school graduation rates were near the state average but still lower than
national graduation rates. We cannot get into the performance of the Loudon County and
Lenoir City public schools in this paper. Anecdotal evidence of bias by administrators and
teachers towards those of foreign birth or lower socio economic class serves to damaged
student's self-esteem and destroy motivation to seek greater education level opportunities.
While there is a branch of Roane State Community College in downtown Lenoir City it is just
eight classrooms and one building. Students wishing to complete a degree have to attend
classes at the main campus in Harriman, Tennessee.
Exasperating the lack of higher educational opportunities within the County is the lack
of any public transportation in the County. A large population base (the most densely
populated area of the County) in downtown Lenoir City could easily serve the retail and food
service trade on Route 321 if public transportation was available. Beyond that there are a few
sidewalks within the County. The best sidewalk system is in the City of Loudon which has a nice
historic downtown with good commercial occupancy rates. The big-box retail area on Route
321 has no sidewalks.
Officials in Lenoir City and Loudon County have made the classic mistake many other
municipalities have in allowing the strip centers to decimate a downtown area. However in
11
Loudon County it was done 20 years later than anywhere else in the country, long after this
type of development was shown to be harmful to community development. Lenoir City and
Loudon County are still pursuing big-box development along connector highways. As such the
typical situation has occurred. Downtown Lenoir City is beautiful, historic and crumbling.
Occupancy rates are low however rents remain high, due to the proximity to the more
expensive big-box retailers on Route 321. Route 321 intersects with Route 70 which connects
downtown Lenoir City to downtown Loudon. This area of downtown Lenoir City once in the
1950s and 1960s was a bustling retail area with drug stores, hotels and supermarkets. As
development of suburban areas in the County such as Tellico Village came in the 1970s and
1980s the three-mile strip between Route 75 and the Fort Loudon Dam became highly
Route 321 in Lenoir City shows unplanned commercial sprawl. Roane County Community College in Lenoir City.
developed with multiple supermarkets, a Wal-Mart and literally dozens of fast food
restaurants. This influx of competition decimated locally owned, privately owned downtown
businesses. As time has gone on downtown buildings have gone into disrepair and in some
cases are structurally unsafe. Rather than city government than focusing on bringing
12
development to downtown is itself abandoning downtown City Hall for a bigger location
accessible only by road along Route 321.
Loudon Tennessee is the county seat of Loudon County Tennessee Loudon has a lovely
old Courthouse and many public buildings surrounding the central square. The occupancy rates
are estimated to be around 80% in the area and also include a high end waterfront restaurant.
However on the banks of the Tennessee River within sight and smell of the city square lies the
Viskase meat casings plant. This large industrial facility distracts from the attractiveness of the
downtown area and its ability to expand commercially.
The Viskase meat casings plants lies just across the Tennessee River form the City of Loudon.
County office buildings are not in the downtown area but are instead off on the road in
a field in a freestanding building. It is always better to locate government offices in your city
center to help with economic development, retail development and build density in the city
centers.
The Fort Loudon Dam, a large city park and Marina are just across the Fort Loudon
Bridge from Lenoir City. This recreational area attracts fishermen and boaters, holds nationally
known fishing tournaments and is home to a high-end Marina restaurant.
Rural towns such as Greenback and Philadelphia are also part of the County but have
13
very small downtowns usually consisting of a post office and a gas station. These areas are
more agriculturally dependent or serve as hobby farms for those working in Knoxville.
Off US Route 75 the Sugarlimb area has become a corridor of manufacturing and
distribution. Kimberly-Clark is manufacturing paper products and a large CVS distribution
center are two of the largest employers in Loudon County.
Moving Forward
The local economy is in a stall. All inexpensive waterfront lands have been utilized
although more growth is always expected. Local county and city governments seem not to have
a true master plan for either urban planning or economic development for either the City or the
County
There are positive signs such as the Adesa Car Auction house and Adesa Road which is
an example of a well-planned well executed commercial area. This far sighted planning close to
the interstate also features multiple roads to nowhere. These roads are for future commercial
and high density residential development. While this far sightedness is to be applauded the
negligence to current pressing development matters such as downtown and the Lenoir City
neighborhood needs to be questioned.
Adesa Road is a well laid out modern commercial area 500 yards from I-75.
14
The Roane County Community College branch which also houses the Loudon County
Public Library and Employment Center was an excellent anchor to downtown Lenoir City. Lenoir
City Hall abandoning downtown shows the government does not understand simple urban
planning principles. Political leaders are currently evicting the Board of Education from the
Loudon County Building in Loudon and attempting to relocate them to a Technology Center in
the industrial Park in Lenoir City. It is against the state charter to have your Board of Education
outside of the county seat. While from an economic planning /economic development
perspective it should be an opportunity to fill/rehabilitate/create commercial space in
downtown Loudon.
Tourists come through Lenoir City and Loudon County on their way to the Smoky
Mountains National Park. GPS navigation sends you through the County on the way to the Park
coming from the west or the south. When they get off the exit they find the typical suburban
sprawl of a Wal-Mart and fast food restaurants but no actual attractions. Lenoir City has a
geographic advantage of being on a major tourism route but has not exploited it this is because
of the cultural custom of being a dry City. One of the local commercial trends in East Tennessee
to improve tourism is the construction of moonshine distilleries. Such a small scale distillery is a
historical tourist attraction. Currently the County is bereft of movie theaters, bowling alleys,
nightclubs and what available liquor is by the glass at national chains Ruby Tuesdays and Chili's.
The County’s cultural customs are holding back hotel and tourism development that could
change Route 321 from your typical strip center to a tourist destination.
15
Downtown Lenoir City is in need of restoration and economic revitalization.
Downtown Lenoir City should be revitalized and a freeze or moratorium on retail
development along Route 321 should be instituted except for entertainment, attractions and
accommodations. New commercial development in Lenoir City and Loudon should be diverted
to downtown areas and tax breaks, property refurbishing assistance available through available
state development funding or the use of federal block grants.
Because of the influx of Northerners collecting on generous pension plans and a strong
yet unattractive retail sector the County is in good financial condition. The County could use its
monies to fund downtown revitalization or create programs to bring development to Lenoir
City and Loudon downtowns. Currently the local economic development agency only offers
federal and state funding.
Entrepreneurship needs to be addressed as the visitors and residents people of East
Tennessee love to shop at flea markets and small local shops. East Tennessee is a glorious
bastion for those living in the car culture. There are hundreds of skilled mechanics in Loudon
16
County that work from their home garage or work for someone else because they themselves
don't have the initial funding for equipment. Small scale fine-grained economic development is
needed in this County to promote entrepreneurship. This could come from the creation of
micro financing by the County for small startups by County residents.
Education and educational infrastructure must be improved beyond the public schools.
More college satellites and the expansion of the Roane County Community College branch
needs to be a priority whether that be through grants of buildings and land or direct cash
contributions by the County. Loudon County needs to attract branches of the University of
Tennessee, East Tennessee State University, Pellissippi State Community College or University
of Tennessee Chattanooga to Loudon County. The opportunities for a higher education are
limited within the County.
In summary the solutions for economic development in Loudon County are simple but
very difficult to execute. Focus on rebuilding downtown Lenoir City and Loudon while limiting
and redirecting commercial development along Route 321. Any expansion of City or County
offices should take place in the County’s downtown areas. Attempt to create a financial services
cluster from along Route 321 to Lenoir's City’s downtown. Subsidize, if necessary this
movement of businesses downtown. Limit the growth on Route 321 to travel and tourism. Any
new development would have to be hotels or attractions. Attracting a new distillery for
moonshine to downtown could be an anchor for the creation of a tourism and entertainment
corridor in Lenoir City and Loudon. Do whatever necessary to bring more opportunities for
higher education to Loudon County through expansion of Roane State Community college or by
attracting another state institution to the County. Current efforts to bring manufacturing jobs
17
to Loudon County should continue but more emphasis on participating in the Southeastern US
Automotive Manufacturing cluster.
Maryville in neighboring Blount County has a bustling downtown, a lovely private
college and high-end industrial production in the automotive sectors. This neighboring County,
not without its own flaws, has shown that education, infrastructure, an attractive setting, a
viable downtown as well as entertainment venues and attractions are a matter of best practices
for rural counties in Eastern Tennessee.
18
REFERENCES
"America's Clean Tech Clusters," The Economist 24, May 2007
Brady, David, Beckfield, Jason. Zhao, Wei. (2007) “The Consequences of Globalization for
Affluent Democracies” Annual Review of Sociology Volume 33 (2007) pp. 313-334
“California City's Bankruptcy Poses Risk to Pensions “The Wall Street Journal (April 1, 2013)
"The Complications of Clustering," The Economist 31 December 1998
"Existing Industry Directory, Loudon County Economic Development Agency"
May 2010 http://www.loudoncountyeda.org/resources/labor.pdf
Revised 18
Jackson, Nancy (2012) “How Local and Regional Governments are Creating Jobs”
American
City and County (July 23, 2012)
Available: http://americancityandcounty.com/economic- development/how -localand-regional-governments-are-creating-jobs
Loudon County Tennessee Economic Development Agency (2014, Feb. 16)
Available http://www.loudoncountyeda.org/
Myers, Stephanie "City Could Get a Diet" Lenoir City News Herald
(April 30 –May 1, 2014)
Porter, Michael E., "Location Competition an Economic Development: Clusters
Economy." Economic Development Quarterly Vol. 14 (15)
in the Global
“United States Bureau of Labor Statistics Employment Projections: Fastest
Occupations.” (2014, Feb. 21).
Available: http://www.bls.gov/emp/ep_table_103.htm
growing
“United States Department of Commerce, United States Census Bureau: County Business
Patterns (2014, Feb. 20).
Available: http://www.census.gov/econ/cbp/
Willet, Hugh, "Mayor Adamant about Moving School Offices" Knoxville News
Sentinel (April 24, 2014)
“The World Economy in 2014: Why Optimism May be Bad News” The Economist
(January 4, 2014)
All Photographic images were created by the author
19