Companies are investing millions in new Memphis manufacturing and distribution facilities.
In the twenty-first century’s economy, the correlation between manufacturing and logistics has become undeniable. And it is the reason many companies stay in Memphis and why others choose to open plants in the area. Just in the past year, Mitsubishi Electric Power Products Inc. and Kruger Inc. have announced manufacturing facilities in Memphis, and Electrolux broke ground in December for its new plant.
Ted Townsend, regional director for the Tennessee Department of Economic and Community Development, says Memphis is in the top 15 metro areas nationally for interest from Euro-based expansions. And Susan Hadley Maynor, managing director of economic development for the Greater Memphis Chamber, says foreign companies are increasingly choosing Memphis to open their first U.S. facilities.
The logistics capabilities in Memphis are a huge draw for such companies. “Not many cities have the four Rs,” Hadley Mayor says, referring to rail, river, runway, and road, the combination of modes of transport Memphis has available. “It’s easy to get from here to there, wherever ‘there’ is.”
Interest in Memphis by companies seeking to manufacture and distribute products is on the rise. At any given time, the chamber is working with close to 30 companies that are exploring the possibility of moving their manufacturing businesses to Memphis, Hadley Maynor says.
With its central location and phenomenal logistics capacity from a cost standpoint, Memphis is a hands-down winner when it comes to manufacturing, says Jim Stock, a private economic development consultant. “Distribution and logistics are such important parts of any kind of manufacturing business,” he says.
Just a few years ago, Nike built a 1-million-square-foot distribution center in North Memphis. That is evidence, Stock says, of just how much companies are committed to operating in a place that offers such a great array of shipping options. “Nike is the epitome of what you can do with marketing distribution for a company that has decided that Memphis is where they are going to distribute to all of the U.S.,” Stock says. Nike leased another 400,000 square feet of distribution space in July 2011 to handle the inventory generated by its contract with the NFL.
“What we have seen a lot of in the past few years is that companies are looking to consolidate manufacturing facilities and distribution,” Hadley Maynor says. That’s exactly what Cargill, a major manufacturer of products derived from corn, did. “All of the international shipping that coordinated in Florida was moved to Memphis, because of the cost and savings we were able to get out of the Memphis area,” says Jeff Rott, Commercial Operations Manager for Cargill, which has been in Memphis since 1926.
The distribution capabilities here have helped the company’s business grow steadily, Rott says. “One of the main benefits of Memphis is that the logistics infrastructure is just ideal.” From a container standpoint, Cargill did very little shipping in 2009, but that has since changed dramatically. “We have more than quadrupled the amount of [container] shipping that we did then.”
Demand for sugar products has increased exponentially, and Rott says Memphis intermodal distribution capabilities have been able to allow Cargill to keep up with that demand. “We’ve seen a dramatic amount of growth,” he says.
John Norman, distribution center manager for the Memphis Coca-Cola Enterprises factory, said being able to quickly and efficiently ship products is extremely important. “We sell it today and deliver it tomorrow,” Norman says. Coca-Cola transports its orders via truck. “Memphis is a hub for transportation and there are a lot of trucking companies to pull from,” Norman says.
In addition to the transportation capabilities, Rott also credits the chamber for helping the company grow. “The Greater Memphis Chamber has been an excellent support, and I know they can help anybody coming into the Memphis area grow their business.”