Dean Barber

Where the Four R’s Meet

In Places on June 9, 2013 at 6:51 am

When I first heard the words “location, location, location,” coming from a real estate broker, it was maybe 30 years ago and I thought, “Now how clever is that? He about sums it up.”

But that catchy phrase doesn’t sum it. The truth is that you may have the best strategic location for a given project, but if the pieces of the puzzle don’t come together, then you are not the right choice after all.

If a manufacturing client for example wants an existing 100,000-square-foot building with 32-footing ceilings and you don’t have anything close to it, then you are not in the running. Or let’s say we are looking for a 50-acre certified site where all the proper due diligence has been performed so that we can hit the ground running on a fast-track basis. If you don’t have it, we’re looking elsewhere.

Then again, you may have a great building or a site that fits the bill completely, but there is that one factor which you have no control over, which invariably gets you scratched. It’s a cruel world.

As a location investigator, which is what I ultimately am, I can tell you that the site selection process transcends location alone. So many factors are at work, which is why companies should not try this on their own. A mistake can be costly, even put a company in peril.

Last week, I wrote about how infrastructure was a basic building to commerce and an essential ingredient to site selection. I lamented how infrastructure in this country is getting old and rickety and how we need to invest in ourselves if we are to remain a competitive force.

A Place of the Four “R’s”

I just came from Memphis this past week. Here I found a lot of the basic building blocks in place – an air cargo hub ranked second in the world, five Class I railroads and three intermodal hubs, a convergence of highways, and a major port along the Mississippi River.

This is a place of four “r’s” —  runway, river, rail, and road.  Some professor somewhere, probably a fellow with a lot of time on his hands, called Memphis “America’s Aerotropolis.”

I do like the sound of that. I think I need to make me up some nifty words.

While I was in Memphis as the guest of the Greater Memphis Chamber this past week, I also found Graceland, the National Civil Rights Museum, and the Stax Records museum.

Yes, Memphis was fun and educational. I got my fill on blues, barbecue, baseball, Beale Street, Ghost River beer and was even regaled with tales of a bizarre barefooted provocateur by the name of Prince Mongo from the Planet Zambodia.

It seems he was a perennial mayoral candidate with his real estate parcels around town decorated with coffins, toilet bowls, mannequins, and beach umbrellas. He is now in Florida, causing a quite a ruckus down there from what I understand.

Move the Pipe

But I was more impressed with the real mayor, actually I should say mayors. AC Wharton is the mayor of Memphis, whereas Mark Luttrell is the mayor of Shelby County. I got to hear both of them speak, and they did a fine job. But I was taken more by Mayor Wharton’s deeds than his words. Here is the gist of the story as I remember it.

Mitsubishi Electric Power products will begin production next month in its newly constructed $200 million plant in Rivergate Industrial Park in Southwest Memphis.

The plant, which I had the opportunity to tour, will employ 300 people and it will be Mitsubishi’s first North American facility to manufacture the large power transformers that are sold to utility companies. Mitsubishi liked the site but there was a problem. A sewage pipe eight feet in diameter was buried 40 feet deep through the middle of the 100 acres.

If Memphis was to win the project, the city would have to spend $9 million to relocate the pipe. The decision rested with Mayor Wharton. His verdict: “Move the pipe.”

And the rest as they say is history. But the truth is that in many places in our great country, that pipe would not have been moved and those 300 jobs would have gone elsewhere, proving it’s not just location but sweat equity, too.

Controlled Chaos

They call it the Matrix and I think it rivals the movie in terms of confusion to the untrained eye. This is a place of controlled chaos. This is FedEx Corp.’s Memphis hub at midnight and for the next few hours, the Memphis International Airport is the busiest airport in the world. I was there. I saw it, and I was amazed.

The Hub covers 862.8 acres, contains 42 miles of conveyor belts and on an average night, the facility handles 150 airplanes and 1.5 million shipments. About 7,000 Memphians descend upon the Hub every night. Watching packages flow over a myriad of connecting conveyers is a jaw dropping experience.

I got back to the Peabody Hotel at 2:30 a.m. after my FedEx tour. I wondered if I might dream of being smothered in an avalanche of boxes and envelopes. Thankfully no such nightmare.

FedEx is Memphis’ largest private employer with 30,000 workers. The Hub pumps more than $27 billion a year into the area economy, helping support more than 200,000 jobs.

Medical Device Mecca

Medical device and other life science companies in particular have found that just a few hours advantage over the competition with deliveries can make a huge difference. With an extended business day via later pick-up times because of the FedEx Hub, Memphis, now the country’s second largest orthopedic device center, is home to major operations for Medtronic, Smith & Nephew, Wright Medical, Symmetry Medical, and NuVasive.

More than 70,000 Memphians are employed in the city’s broad-based collection of bioscience industries. Memphis biomedical device industry employment has grown 50 percent since 1999 – more than four times the national rate of growth. St. Jude Children’s Research Hospital, the University of Tennessee Health Science Center (UTHSC) and medical school, InMotion Musculoskeletal Institute, the Medical Education & Research Institute are among the major employers in the life sciences.

Tennessee’s Department of Economic and Community Development has identified medical device manufacturers as among the state’s most important exports, with U.S. Census data showing its $2.1 billion in 2012 ranks at the top of all state exports by dollar value.

Made in Memphis

During a luncheon, I listened to John Moore, president of the Greater Memphis Chamber,  tout a “Made in Memphis” report on the manufacturing sector showing that “miscellaneous” industries were the top category with 6,170 jobs, according to U.S. Bureau of Labor statistics.

“It means we are diversified,” he said.

U.S. Bureau of Labor Statistics figures show that there are 34,272 manufacturing jobs in the Memphis economy, led by paper manufacturing with 4,870 jobs followed by machinery, chemical, fabricated metal and food. Each of those four categories shows 3,412 to 3,843 jobs each.

The 2012 Made in Memphis report indicates that Memphis manufacturers will hire more than 4,000 employees through 2016 at an average annual pay of $32,180 with a direct wage impact of $128.7 million on the local economy.

“This trend diversifies the Memphis economy that has historically been dominated by logistics and distribution, healthcare and tourism,” according to the executive summary of the report. “The rapid growth presents an opportunity and a challenge to provide a skilled manufacturing workforce.”

Providing a skilled manufacturing workforce is an old tune now heard throughout much of this country. The report was quite pointed in its finding that, “Few employers reported working with educational institutions to recruit employees.”

While that is not good, it is sadly the norm in probably most places. Educators and manufacturers are two different tribes that often will not speak the same language.

Big Tracts in the Offing

But that doesn’t stop the economic developers from wanting to expand the real estate product that could be available to manufacturers. The Memphis-Shelby County Economic Development Growth Engine and the International Port of Memphis have plans to expand Presidents Island by 1,000 acres.

The city would look to leverage private investment at the 960-acre industrial park into what could be a $60 million project which would involve backfilling dirt into floodplain land and could be bordered by a planned Canadian National Railway rail line. At least that is the plan. Its fate now rest with the approval of a key federal grant.

Much farther along in reality is the 3,840 acre Memphis Regional Megasite, a property suitable for a major automotive manufacturing facility. The site, which is owned by state, is just north of Interstate 40 and 20 minutes east of the Memphis suburbs. It is adjacent to U.S. Highway 70/79 and the CSX Railroad on the north.

The Jackson Regional Partnership, an extension of the Jackson Chamber, is working with the Greater Memphis Chamber, Tennessee Department of Economic and Community Development, HTL Advantage, and Tennessee Valley Authority to market the site. The JRP is led by Kyle Spurgeon and a member advisory council from nine counties of Carroll, Chester, Crockett, Gibson, Hardeman, Haywood, Henderson, Madison and McNairy. 

Folks, this is how regionalism is supposed to work. It’s only a matter of time when something big happens here. Stay tuned.

I was one of a group of site selectors invited to Memphis this past week. We all learned so much, much more than from a website and had some fun to boot. A foundation for growth exists here, albeit Memphis has certain big city problems that most big cities will have. But the fundamentals are too strong for things not to happen here. You can’t ignore those four “r’s.”

I only wish I could name everyone who assisted me in gaining a better understanding of the Bluff City. If I started, I would certainly fail by leaving someone out.

But I do want to publicly thank “The Godfather.” Clifford Stockton, 80, was the first African-American managerial employee at the Memphis Chamber, hired on Jan. 20, 1969 in response to Dr. King’s assassination. He is a most modest man, but I sense that he was and continues to be a great healing agent for the city that he loves. 

Mr. Stockton, more than anyone else, has the institutional knowledge about Memphis and how it works. If I had a project where Memphis could be a possible fit, he would be the first man that I would want to talk to.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Plano, Texas —http://www.barberadvisors.com He can be reached at 972-767-9518 or atdbarber@barberadvisors.com

If you work for a company seeking site selection consulting or an economic development organization in need of counsel, ask for our separate brochures (pdfs) outlining how we can help. All requests for information will be considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Dean Barber and Barberbiz with specific direction to the original content.

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  1. It was fun to read this weeks blog as I came to Texas from Tennessee and worked in West Tennessee. Kyle Spurgeon is a friend of mine from those days. We were 32 miles south of Jackson in McNairy County and Kyle had just started working for the State in economic development. He is a good guy. I knew several from the Memphis Chamber at the time but did not recognize any of these names.

    I hope all is well with you. If you are headed this way, give me a shout and let me buy you a lunch or a beer.

    Charles L. Smith, CEcD Mount Pleasant Industrial Foundation Office 903-572-6602 Cell 903-563-0568 http://www.mpedc.org ________________________________

  2. […] Don’t miss the rest of this interesting story; read it here. […]

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