3rd Quarter 2009


(Click on graph for larger view.)

 

patitions as percent of manufacturing establishments 2006 - 2009

 

petitions per 100,000 manufacturing workers 2006 - 2009

 

tennessee petitions by industry

 

(Trade Adjustment Assistance)

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The Tennessee petition percentage is substantially higher than that for the United States as a whole.  The state generated nearly twice the petitions that one would expect based simply on the number of businesses in the state. A look at the disbursement of TAA monies is also cause for disquiet. In 2009, about $3.1 million of the $165 million appropriated for the program went to Tennessee. This has increased by 27% in the past four years, as the state takes an ever larger portion of total TAA distributions. In other words, Tennessee needs more and more support relative to other states.

We can investigate this further in the regional context. As the accompanying chart shows, Tennessee is the source of more petitions per manufacturing establishment than any of its neighbors, save North Carolina. Its ratio of petitions to establishments is almost twice the nation's over the past three years. If we use instead the number of manufacturing workers, the story is essentially the same, although the gap between the state and the nation closes a bit.

There are several possibilities for why the state generates relatively more petitions than most of its neighbors and more than America overall. One relates to industry structure. Perhaps Tennessee industries are disproportionately located in the sectors most exposed to international trade or other economic difficulties? In fact, there's not a lot of evidence to support this. TAA petitions, as one would expect, come mostly from troubled industries. Textiles, furniture, rubber, and the automotive industry stand out. (The pie chart understates the automotive sector's impact in Tennessee because a good portion of fabricated metal and rubber petitions are auto-related.) However, it does not appear that Tennessee has a greater percentage of its establishments in these more exposed areas.  The state is modestly "heavy" in automotive-related establishments but not so in these other sectors. The bigger piece of evidence against this argument is that Tennessee establishments are more likely to generate TAA petitions across almost all industrial sectors, whether the state is relatively concentrated in the sector or not. It doesn't look like we can blame Tennessee's greater than average resort to the TAA on its industry structure alone.

Another possibility relates to ownership. Tennessee establishments are more likely to be branch plants, or at least owned out of state, than is generally the case across the United States. A company may be more likely to close or reduce operations at a distant facility than in the state or locale where it is headquartered. If so, it would be these outlying establishments that would be more likely to have need of the TAA program. This could explain a pattern of higher TAA petitions across a number of industries. Over the past three years, the number of branch plants has indeed been reduced across the nation, even while locally owned operations have increased.  All of the southeastern states saw reductions in their number of plants that were owned out of state. These closures were most severe in plants that employ more than 100 workers — the classic assembly plant, for example, that is often thought to be particularly at peril from international trade.

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