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THE TENNESSEE

AUTOMOTIVE INDUSTRY

Published May 2016

Prepared by:

THE TENNESSEE AUTOMOTIVE INDUSTRY

1

The Southeast has emerged as the driving force in automotive manufacturing in the United States, and Tennessee is its engine.

The Volunteer State's automotive manufacturing cluster includes three major assembly operations – General Motors in Spring Hill, Nissan in Smyrna and Volkswagen in Chattanooga – as well as a growing roster of Tier 1 and Tier 2 suppliers. In addition, Nissan maintains its North American headquarters in Franklin.

Business Facilities magazine named Tennessee the top state in its Automotive Manufacturing Strength ranking for five of the past six years. The automotive industry employs 117,900 workers at approximately 930 establishments and accounts for one in three manufacturing jobs in Tennesseee.

The state offers a number of advantages that favor automotive manufacturing investment:

◆ Tennessee is home to 6.5 million people, and 30.9 percent of the state’s population 25 years and older has an associate degree or higher.

◆ The Tennessee Board of Regents (TBR) system consists of six state universities, 13 community colleges and 27 colleges of applied technology (TCATs) with a combined annual enrollment of over 240,000 students, making it among the nation’s largest systems of public higher education. The TBR system is a $2.2 billion per year enterprise. Tennessee’s 35 independent colleges and universities brought 2014 statewide enrollment to over 380,000 students.

◆ The state’s 27 TCATs provide certificate and diploma programs in over 50 distinct occupational fields, as well as customized training for business and industry. Many of the

TCATs offer automotive-related programs, including machine tool technology, welding technology and mechatronics.

◆ Tennessee offers labor skilled in automotive processes. The Nissan plant in Smyrna, for example, is the most productive plant in North America, producing 633,347 automobiles in 2015, according to Automotive News research.

◆ The state offers access to a growing roster of engineering talent. Engineering completions in Tennessee have increased by 35.7% from 2009 to 2014.

◆ Multiple interstate systems and railways allow close access for proximate supplier-to-supplier and supplier-to-OEM relationships.

A 2013 Brookings Institution study showed the Tennessee automotive sector touched virtually every corner of the state, with 80 of the state’s 95 counties having automotive operations. The study also indicated Tennessee has the largest concentration of automotive industry employment in the South. The automotive cluster in Tennessee is the

dominant force in the state’s advanced manufacturing sector, accounting for one in three manufacturing jobs. Employment in the state’s auto sector is projected to grow 22.4% from 2016 to 2025; higher than the sector’s projected growth of 6.2% nationally.

The presence of major assembly operations has been a catalyst for attracting foreign direct investment. Major Tier 1 suppliers from Japan, Germany, South Korea, Canada, Spain and other countries have invested over $21.9 billion in Tennessee operations.

Since 2011, OEMs and suppliers in Tennessee have committed to over 38,000 new jobs. Among the latest successes is South Korean tire manufacturer Hankook, which is building its first $800 million U.S. production facility in Clarksville, and locating its North American headquarters in Nashville. Additionally, General Motors announced in April 2016 that it will expand production operations in Spring Hill – investing $788.7 million and creating 781 new jobs. The announcement brings GM’s total Tennessee investment to over $2 billion since 2010.

THE TENNESSEE AUTOMOTIVE MANUFACTURING SECTOR

THE TENNESSEE AUTOMOTIVE INDUSTRY

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RANKINGS PRODUCTION LEADER

TENNESSEE WAGES BY INDUSTRY, 2016

Industry NAICS Average Hourly Wage Average Annual Wage

Motor Vehicle Manufacturing 3361 $45.05 $93,707

Motor Vehicle Body and Trailer Manufacturing 3362 $18.85 $39,212

Motor Vehicle Parts Manufacturing 3363 $23.70 $49,297

Tire Manufacturing 32621 $30.61 $63,671

#1For automotive manufacturing

strength by Business Facilities

magazine in 2015. Tennessee has

been ranked No. 1 five times in the

last six years.

#1In the Southeast for automotive

industry employment

3Original equipment

manufacturers in Tennessee

6.3%Of cars produced in the U.S. in

2015 were made in Tennessee

#7Tennessee’s rank among states

for car and light truck

manufacturing (2015)

10Number of models produced at

Tennessee automotive plants

#1Rank of Nissan’s Smyrna plant

among the most productive

automotive operations in North

America (633,347 cars, light

trucks and SUVs in 2015)

Source: Automotive News,

Data Center

CARS AND LIGHT TRUCKS MANUFACTURED AT TENNESSEE PLANTS

735,511

Source: Automotive News. Data Center

2015

= 100,000

Source: EMSI

THE TENNESSEE AUTOMOTIVE INDUSTRY

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2013 $6.7B

TENNESSEE TRANSPORTATION EQUIPMENT EXPORTS

AUTOMOTIVE EXPORTS (2015)South Carolina: $11.4B

Alabama: $8.4B

Tennessee: $6.0B Kentucky: $5.3B

Georgia: $2.7B

Florida: $2.4B

North Carolina: $1.8B

Virginia: $1.2B

Mississippi: $924M

Arkansas: $164M

West Virginia: $54M

Louisiana: $48M

$6.0B

TENNESSEE EXPORTS

23.3%Transportation equipment exports

as a percentage of total exports

(2015)

#1Tennessee’s rank in the Southeast

(sixth in nation) for exports of

Motor Vehicle Parts, with a total of

$2.9B in 2015

52.6% Five-year growth rate of

transportation equipment exports

(2010-2015) $2.7BMotor Vehicle Exports

$310MMotor Vehicle Bodies

and Trailers Exports

$2.9BMotor Vehicle

Parts Exports

KEY COMPONENTS (2015)

Tra

nsp

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ati

on

Eq

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nt

$7.

5B

Co

mp

ute

rs &

Ele

ctr

on

ic

Pro

du

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$5

.4B

Ch

em

icals

$4

.7B

Mis

c. M

an

ufa

ctu

red

C

om

mo

dit

ies

$3

.8B

TENNESSEE’S MAJOR EXPORTS (2015)

LOCATION QUOTIENT FOR SELECTED INDUSTRIES IN TENNESSEE

Industry 2016 Employment 2016 National Location Quotient*

Motor Vehicle Manufacturing (NAICS Code 3361) 12,492 2.99

Motor Vehicle Body and Trailer Manufacturing (NAICS Code 3362) 7,573 2.53

Motor Vehicle Parts Manufacturing (NAICS Code 3363) 42,891 3.88

Tire Manufacturing (NAICS Code 32621) 2,771 2.60

Source: EMSI

* A location quotient of 1 indicates the industry’s employment share matches the national average; a location quotient greater than 1 indicates the industry makes up a larger share of the area’s total employment than the national average.

Source: U.S. International Trade Administration

2014 $7.4B

2015 $7.5B

2012 $6.0B

2011 $5.5B

2010 $4.9B

2009 $3.6B

2008 $4.1B

2007 $4.1B

2006 $4.5B

2005 $4.4B

THE TENNESSEE AUTOMOTIVE INDUSTRY

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AUTOMOTIVE CONCENTRATION IN TENNESSEE

ENGINEERING ACHIEVEMENT: INCREASED PROGRAM COMPLETIONS FROM 2009 TO 2014

Electrical and Electronics Engineering

Machine Tool Technology/

Machinist

Mechanical Engineering

Industrial Engineering

Mechanical Drafting and Mechanical

Drafting CAD/CADD

69.6% 75% 167%

Engineering and Engineering Technologies program completions in Tennessee have increased by 35.7 percent over the last five years (2009-2014).

Sour

ce: E

MSI

, IPE

DS

There are approximately 930 automotive-related establishments spread throughout Tennessee.

<10

10-20

21-30

31-40

>40

MAJOR AUTOMOTIVE EMPLOYERS

CompanyStatewide

EmploymentLocations

Nissan North America, Inc. 10,828 Smyrna, Decherd, Franklin

Denso Manufacturing Tennessee, Inc. 4,487 Maryville, Athens

Bridgestone 3,819Nashville, LaVergne, Dickson, Morrison, Clarksville, Lebanon

CalsonicKansei North America, Inc. 2,672 Lewisburg, Shelbyville, Smyrna

Volkswagen of America, Chattanooga Operations, LLC

2,417 Chattanooga, Lenoir City

Hankook Tire Co., Ltd. 2,000* Clarksville, Nashville

Yorozu Automotive Tennessee, Inc. 1,976 Morrison

GM Spring Hill Manufacturing 1,921 Spring Hill

E I DuPont De Nemours & Company 1,100 New Johnsonville

M-Tek, Inc. 1,050 Manchester, Chattanooga

*Announced employment, Source: TNECD

30.1% 22.5%

THE TENNESSEE AUTOMOTIVE INDUSTRY

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FDI IN TENNESSEE’S AUTOMOTIVE INDUSTRY

$15.9B Japan

$2.85B Germany

$965M South Korea

$704M Canada

$339M Spain

$1.1B All Others

Source: TNECD

TOP AUTOMOTIVE PROJECT COMMITMENTS BY NEW JOBS (January 2011 – April 2016)

Company New Job Commitments

Capital Investment Location Date

GM Spring Hill Manufacturing 2,350 $244,000,000 Spring Hill November 2011

Volkswagen Group of the Americas 2,000 $600,000,000 Chattanooga July 2014

Hankook Tire Co., Ltd 1,800 $800,000,000 Clarksville October 2013

Nissan North America, Inc. 1,400 Smyrna October 2012

Calsonic Kansei North America, Inc. 1,200 $109,612,000

Multiple Sites (Shelbyville, Lewisburg, Smyrna)

September 2013

SL Tennessee, LLC 1,000 $80,500,000 Clinton July 2014

Volkswagen Group of the Americas 1,000 Chattanooga March 2012

Nissan North America, Inc. 1,000 $160,000,000 Smyrna March 2015

Nissan North America, Inc. 900 Smyrna June 2013

Magneti Marelli Suspension USA, LLC 800 $53,700,000 Pulaski June 2012

Nissan North America, Inc. 800 $325,000,000 Smyrna January 2012

GM Spring Hill Manufacturing 781 $788,700,000 Spring Hill April 2016

Bridgestone Americas 607 $232,600,000 Nashville November 2014

Source: TNECD

THE TENNESSEE AUTOMOTIVE INDUSTRY

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TENNESSEE COLLEGES OF APPLIED TECHNOLOGY

Tennessee has 27 colleges of applied technology that are the state’s premier providers of workforce development. The 27 TCATs provide state-of-the-art technical training for workers to obtain the technical skills and professional training necessary for advancement in today’s competitive job market. Through their workforce development mission, the TCATs help businesses and industries satisfy their need for a well-trained, skilled workforce. Under the governance of the Tennessee Board of Regents, the TCATs offer certificate and diploma programs in more than 50 distinct occupational fields as well as customized training for business and industry.

Many of the TCATs across Tennessee offer automotive and manufacturing related programs. A few of these programs include:

◆ Automotive Technology – The Automotive Technology program trains students to diagnose and repair today’s high-tech automotive systems using the latest diagnostic procedures. Students achieve a thorough understanding of all automotive systems with special emphasis being placed on the vehicles electrical and computer systems.

◆ Drafting and CAD Technology – Computer Aided Drafting is the primary focus of this program. Autodesk, Inc.’s AutoCAD is the main CADD software used for training. Other software used in the training process include Dessault Systemes, Solidworks; Autodesk, Inc. Inventor and Revit; as well as Bentley Systemes, Inc. Microstation.

◆ Industrial Maintenance – This course is designed to prepare students to enter the Industrial Maintenance field in an entry-level position and to enhance the skills of students already employed in the field. The program provides instruction to develop the skills needed to succeed in the repair and maintenance of machinery and equipment in industrial environment.

◆ Machine Tool Technology – This program prepares students to work in the industrial machine tool trade.  Students develop skills by completing hands on project using conventional machinery, such as saws, drill presses, grinders, lathes and mills, before progressing to state-of-the-art CNC machines and their associated software.

◆ Mechatronics – This program trains students extensively in manufacturing processes with emphasis on accuracy and productivity utilizing skills in pneumatics, hydraulics, robotics, computer controls, and preventive maintenance. Instructors emphasize proactive maintenance rather than reactive maintenance. Graduates are well-rounded, multi-craft technicians.

◆ Tool and Die Maintenance

Technician – This program is dedicated to meeting the needs of manufacturers in need of tool and die maintenance technicians to repair tools and dies, maintain and operate press machines, create basic die sets, and operate machines that are used in making die sets.

◆ Welding Technology – The Welding Technology program is designed to give the students the necessary classroom instruction and practical work experience needed for entry-level job performance. The major emphasis of the course is placed on electric arc, oxy-acetylene, tig and mig welding.