Wilson County Trends 2019

Wilson County Trends A Cumberland University Publication

Spring 2019

Dean’s Foreword Welcome to the Spring 2019 issue of Wilson County Trends, a publication about business and economic activity in Wilson County, Tennessee. Cumberland University’s Labry School of Science, Technology, and Business is pleased to provide this publication and hope that readers will find it interesting and informative. Our target audience are individuals and organizations that need to have a more in depth understanding of the Wilson County economy and its local business community. This

includes those who are involved in such things as business planning, business expansion, business location or relocation, as well as county residents or visitors who simply have a general interest in things going on in Wilson County. Each issue will provide updated economic data and focus on a specific industry prevalent in the county. I hope you will enjoy perusing the pages which follow.

Thank you for your interest in Wilson County Trends.

Chris Fuller, PhD, Dean, Cumberland University’s Labry School

In This Issue Wilson County Trends contains statistical economic data on the county and also provides news articles on local industry, businesses, and special topics. This spring issue presents a series of graphs1 on Wilson County showing 10+ year “historic trends” as well as “recent trends” that

have occurred within the last one to two business cycles. Also included in this issue are two articles, one on Wilson County’s growing supply chain industry and one on changes and impacts of the new federal tax laws.

Contents Dean’s Foreword

1

Recent Trends

Who’s Who

20

In This Issue

1

Tax Reform: Changes & Impacts 10

The Last Word

31

Historic Trends

2

WC’s Supply Chain Industry

List of Graphs, etc.

32

1

5

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All spring issue data extracted from federal, state and local public databases occurred during July-September 2018.

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Historic Trends The historic trends section of this newsletter presents a series of time series graphs that show changes that have occurred in Wilson County in the last ten years or more. In interpreting the historic trends graphs (H series), as well as the “recent trends” graphs (R series) that follow, one should keep in mind the obvious connections that exist between Wilson County’s economy and the U.S. economy in general. As some of our historic business data on WC goes back almost half a century (to 1970), conclusions about local business trends must take into account, for example, the various economic upturns or downturns that have occurred nationally. In particular, we should not forget the many national economic recessions that have taken place. Major U.S. recessionary periods include 1970, 1973-75, 1980-1982, 1990-1991, 2001, and 2008-2009.

Over past decades, Wilson County has shifted from a primarily agricultural community to a suburban region of Nashville, as well as a metropolitan zone in its own right. Population growth in Wilson County has been fairly constant. In 1970, a time when Richard Nixon occupied the White House and the Kansas City Chiefs were beating the heavily favored Minnesota Vikings in Super Bowl IV, about 37,000 people lived in Wilson County. Since then,

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Cumberland University Founded in 1842, Cumberland University offers a variety of educational, athletic and social experiences to enhance the learning opportunities of the current student body. The university has an exceptional academic program steeped in the liberal arts, business, technology, nursing and many other fields. The University’s athletic teams regularly compete for conference and national championships.

Cumberland University is located in Lebanon, Tennessee, 30 miles east of Nashville.

President ……………….…….………..... Dr. Paul Stumb Provost ………………..……..…. Dr. C. William McKee Dean, Labry School ……..……………. Dr. Chris Fuller Wilson County Trends Editor ….… Dr. Steve Shao Cover photo: Amazon trailer yard, Gladeville, TN a steady average yearly influx of 2,083 individuals have moved into the county. In the past half century or so, Wilson County’s recent (2016) population of 132,781 persons is more than triple the number of residents in 1970. See Fig. H1.

Figure H1 – Population Growth in Wilson County, 19702016* Source: Federal Reserve Economic Database (FRED), US Federal Reserve System of St. Louis (*) not seasonally adjusted, data plots based on January 1st value for each year.

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Figure H2 – Civilian Labor Force in Wilson County by Month, 1990-2017* Source: Federal Reserve Economic Database (FRED) (*) not seasonally adjusted

Regarding employment, the size of the civilian labor force residing in Wilson County has almost doubled from 35,729 employees at the beginning of 1990 to 69,820 persons at the end of 2017.

During this 38 year span, the size of WC’s workforce has increased steadily, adding about 1,200 employees annually. See Fig. H2.

Except for a drop in 2013-2014, wage earnings in Wilson County have grown steadily in the past decade.

Average weekly wages in Wilson County’s business sector have increased about

$7.40 annually, from $740 over a decade ago (2007) to $814 in 2017. See Fig. H3.

Since the early 1990s, WC’s unemployment rate has compared favorably with the rest of Tennessee and the nation at large. Major upwards spikes in the county’s unemployment rate (1991 and 2009 in particular) are mostly due to trickle down economic impacts during periods of national recession.

We note that the annual unemployment rate percentages (seasonally unadjusted2) for Wilson Figure H3 – Average Weekly Wage (Private Industries) in Wilson County, 2007-2017* Source: Federal Reserve Economic Database (FRED) (*) 2017 data is based on preliminary estimates

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For certain inquiries at the county level, the US Department of Labor’s Bureau of Labor Statistics (BLS) provides only seasonally unadjusted data.

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County, the state of Tennessee, and the USA overall all steadily dropped during the past decade - from 8.4, 9.7 and 9.6 in 2010, respectively; to 4.6, 5.6 and 5.3 (2015), and to 2.9, 3.7 and 4.4 (2017).

WC’s highest unadjusted unemployment rate, a jump from 5.1% in January 2008 to 9.6% in January 2010, was undoubtedly due at least in part to the nation’s subprime mortgage crisis that occurred at this time. See Fig. H4.

Growth in the total number of business establishments residing in Wilson County has occurred at a fairly constant rate over the past three decades or so. The net addition to WC’s

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economy is about 59 new businesses per year. A slight decrease in the number of establishments occurred in the 3rd to 4th quarters of 2004 but rebounded quickly in 2005. Three years later, coinciding with the 2008 U.S. recession, a somewhat flat period began in 1Q2008 and lasted until 2Q2015 before returning to its pre-recession growth rate.

Overall, we note that from January 1st 1990 to January 1st 2017, the business population in Wilson County more than doubled, increasing from 1,091 to 2,684 business establishments. See Fig. H5

Figure H4 – Unemployment Rate in Wilson County, 19902016* Source: Federal Reserve Economic Database (FRED) (*) not seasonally adjusted.

Figure H5 – Number of Business Establishments in Wilson County by Quarter, 19902017* Source: Federal Reserve Economic Database (FRED) (*) not seasonally adjusted

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Recent Trends

2018 Wilson County Fair, Lebanon, TN The recent trends section of this economic report includes time series and cross section graphs for economic activity occurring in Wilson County in the last two business cycles.

Wilson County’s economy today is primarily a service economy, albeit with growing construction and manufacturing sectors.

In June 2017 (2Q2017), Wilson County was home to 2,734 businesses, 85% of which were classified in aggregate as Service-providing3 (2,310 firms) and 15% as Goods-producing4 (424 firms).

WC’s top industry supersectors were Trade, transportation & utilities5 (732 firms, or 27% of the industry total), Professional & business services6 (479 firms, or 18%), and a near tie in the third spot between Construction (284 firms, or 11%) and Leisure & hospitality7 (283 firms, or 11%). See Fig. R1.

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Data for 2Q2017 shows that the overall average weekly wage for Wilson County’s Service-providing firms was about $718. Pay was generally higher in the Goods-producing category, which averaged $1008 per week.

In reviewing the average weekly wage across all industry groups, the highest wages in Wilson County were paid in Supersectors 55-Financial activities ($1,172 per week), 20-Construction ($1,055/wk), and 30-Manufacturing ($984/wk). A near fourth place tie occurred between Supersectors 10-Natural resources & mining ($932/wk), and 60-Professional & business services ($930/wk). Lowest average weekly wages were paid in Supersector 70-Leisure and Hospitality ($332/wk). See Fig. R2.

How does Wilson County’s industrial portfolio currently compare to the nation at large? To answer this question, we review recent county

North American Industry Classification System (NAICS) industry aggregate 07 (Service-providing) consists of Supersectors 40 (Trade, transportation, & utilities), 50 (Information), 55 (Financial Activities), 60 (Professional & business services), 65 (Education and Health Services), 70 (Leisure and Hospitality), 80 (Other Services), and 90 (Government).

4 NAICS industry aggregate 06 (Goods-producing) consists of Supersectors 10 (Natural resources & mining), 20 (Construction), and 30 (Manufacturing).

5 NAICS Supersector 40 (Trade, transportation, and utilities) consists of Sectors 42 (Wholesale Trade), 44-45 (Retail Trade), 48-49 (Transportation and Warehousing) and 22 (Utilities).

6 NAICS Supersector 60 (Professional and business services) consists of Sectors 54 (Professional, Scientific, and Technical Services), 55 (Management of Companies and Enterprises), and 56 (Administrative and Support and Waste Management and Remediation Services).

7 NAICS Supersector 70 (Leisure & hospitality) consists of Sectors 71 (Arts, entertainment, & recreation), and 72 (Accommodation & food services).

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Figure R1 Unclassified

2

Other services

Number of Business Establishments by Industry in Wilson County, 2Q2017

215

Leisure and hospitality

283

Education and health services

269

Professional and business services

479

Financial activities

Source: US Department of Labor

281

Information

49

Trade, transportation, and utilities

732

Manufacturing

133

Construction

284

Natural resources and mining

7 0

100

200

300

400

500

Location Quotients8 (LQs) which provide a comparative measure of a region’s industrial specialization relative to the USA overall.

In Wilson County’s case, using US Department of Labor data for 2017, WC’s overall employment and wage LQs are both computed at 1.04, indicating that the county’s overall industrial demographics closely resemble that of the nation in general.

600

700

800

In looking at select individual industry supersectors, however, Wilson County’s economy includes comparatively higher representation in Trade, transportation & utilities (employment LQ=1.71, wage LQ=1.94), as well as in Construction (employment LQ=1.16, wage LQ=1.45), evidence of a diversified economy that includes significant portions of both consumer and industrial activity.

Figure R2 –

Unclassified

$457

Other services

Average Weekly Wage

by Industry in Wilson County, 2Q2017

$635

Leisure and hospitality

$332

Education and health services

$806

Professional and business services Financial activities

$1,172

Information

$792

Trade, transportation, and utilities

$729

Manufacturing

$984

Construction

$1,055

Natural resources and mining

$932 0

8

Source: US Department of Labor

$930

200

400

600

800

1,000 1,200 1,400

Location quotients (LQs) are computed as an industry’s share of a regional economy (for some economic statistic, such as employment or wage) divided by the industry’s share of the USA total for the same statistic. For example, a regional LQ=1.0 in the Service-providing industry would mean that the local region and the nation are equally specialized in the Service-providing industry; on the other hand, an LQ=2.1 in Leisure & Hospitality would mean that the local region has a comparatively higher concentration of businesses in the Leisure & Hospitality category than the nation overall.

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Figure R3 – 43,000 42,000 41,000 40,000 39,000

Total Persons Employed in Wilson County, 2016-2017 Source: US Department of Labor

38,000 37,000

The number of persons who work in Wilson County (both public and private sectors) has grown steadily in recent years, going from 38,793 in January 2016 to 42,297 in June 2017, representing recent monthly additions to the county labor force of about 195 workers. See Fig. R3.

Wilson County is an important shopping locality.

Several brick-and-mortar retail clusters operate in both east and west ends of the county, for example, the Lebanon Shopping Outlet in Lebanon and Providence Mall in Mt. Juliet. Tennessee

Department of Revenue data for 2017 reports an annual retail sales total in Wilson County of $2,740,635,003.

By far, WC’s largest retail category is in big ticket sales of Automobiles, boats & aircraft which in 2017 accounted for almost a billion dollars in sales at $986,522,613, representing 36% of the county’s retail sales total. Besides the presence of many retail auto dealers in WC are several wholesale/retail vehicle fleet resellers9, as well as at least six boat and watercraft dealerships.

Figure R4 – Total Retail Sales

by Category in Wilson County, 2017 Source: Tennessee Department of Revenue

Canadian truck auctioneer Richie Brothers is located near Lebanon, TN on an 81 acre tract next to I-40W. Nearby, off I-40E on a large 200 acre paved lot, is auto fleet reseller Manheim Nashville, a Cox Enterprises subsidiary.

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Figure R5 – Monthly Retail Sales in Wilson County, Jan. 2017 – Mar. 2018 Source: Tennessee Department of Revenue

Annual sales percentages for other key retail categories include Food stores ($384 million, or 14% of the total), General merchandise ($290 million, or 10.6%), Other retail ($284 million, or 10.4%), Building materials ($241 million, or 8.8%), and Eating & Drinking ($228 million, or 8.3%). See Fig. R4.

In looking over WC monthly retail sales figures for the 15 month period from January 2017 to March 2018, the peak winter seasonality of most of the county’s retail businesses is apparent. As in other

parts of the country, the Christmas holiday shopping season is king in Wilson County as evidenced by the upward spikes for most of the retail categories during November and December.

Service station sales, however, are relatively stable over all periods, including the winter months. Not surprisingly, Building material sales steadily decreased at the end of the calendar year due to a construction slow down during the winter holiday season, before picking back up in mid-January.

See Figs. R5, R6 and R7.

Figure R6 – Monthly Autos, Boats & Aircraft Sales in Wilson County, Jan. 2017 – Mar. 2018 Source: Tennessee Department of Revenue

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Figure R7 – Monthly Retail Sales10 by Category in Wilson County, Jan. 2017 – Mar. 2018 Source: Tennessee Department of Revenue

2018 Music and Arts Festival, Watertown, TN

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2018 Wilson County Fair, Lebanon TN

Figure R7 excludes the Auto, boats & aircraft retail category which is depicted separately in Figure R6.

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Guest Article Tax Reform: Changes & Impacts

by Evan Watson, CPA, Gammon & Drueck

Evan Watson is a Tax and Business Advisor with Gammon & Drueck CPAs and a graduate of Tennessee Tech University. He is a member of the Mt. Juliet Noon Rotary Club, Mt. Juliet Young Professionals, and Chamber of Commerce Ambassador, and is currently pursuing his MBA. Comments or questions can be shared at ewatson@gdcpaspllc.com .

This time last year, the tax world was abuzz with the possibility of a system overhaul and the implications to business and individuals’ bottom line. After a reconciliation of House and Senate bills, the Tax Cuts and Jobs Act (TCJA) of 2017 was signed into law, ushering in the largest tax reform since 1986. Nearly a year later, taxpayers are still scratching their heads trying to maneuver the changes and understand the impacts. The TCJA took aim at tax rates at nearly all levels, from taxable corporate structures to individual and pass-through entities. The details of the law can be overwhelming to say the least, so the overview below should help bridge the gap between what you’ve heard, and what the law says.

Individual Tax Filings An apparent theme of the reform was simplification in the filing of individual tax returns.

Many changes were made on the individual side

including a widening of tax brackets with a lowering of overall rates. The most generous of these cuts came through the middle brackets at 22%, 24%, and 32% ranging from $77,400 to $315,000 for married filing joint taxpayers and $38,700 to $157,500 for single individuals.

The standard deduction changes have also been a hot topic since the bill was signed. Previously, single and married filing jointly taxpayers received a standard deduction of $6,350 and $12,700 respectively. New provisions nearly double these amounts bringing them to $13,000 for single filers and $24,000 for joint filers. Naturally, this should lower the number of taxpayers who need to file itemized deductions in 2018, giving them a more advantageous position by using the standard amount.

Further changes to certain itemized deductions can encourage filers to shift to the standard

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deduction. Deductions for state and local taxes (SALT) have been limited to a total of $10,000 each year. This would include sales tax, property tax, and income tax. While this is of little concern to Tennesseans who enjoy a low-tax state, it could impact those who own multiple personal properties or pay tax in other states.

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refundable to $1,400. More taxpayers will also be eligible to claim the Child Tax Credit as the income threshold was drastically widened as well.

Taxpayers filing jointly don’t experience the phase out until $400,000 in taxable income; the same limit was previously $110,000.

Business Tax Filings

A change that could prove costly for taxpayers this year is the elimination of most miscellaneous itemized deductions.

A change that could prove costly for taxpayers this year is the elimination of most miscellaneous itemized deductions. Housed in this provision previously was the deduction for unreimbursed employee expenses that often totaled thousands for those who travel and drive personal vehicles for work. Under prior law, these taxpayers would be able to add expenses that rose above 2% of their adjusted gross income to their itemized deductions. That deduction has been removed under the TCJA. While the increased standard deduction should help lessen the blow, it may be a time for employees to approach their employers about developing a reimbursement program to avoid out-of-pocket expenses.

Personal exemptions were another provision chopped by the TCJA. Personal exemptions were previously an amount deducted from adjusted gross income to arrive at taxable income.

Taxpayers were entitled to one for themselves, spouse, and dependents in the amount of $4,050 each (this would have been $4,100 for the 2018 tax year). For a family of four, this totaled a valuable exemption of $16,200. For a family in the 28% tax bracket, this meant a savings in tax of more than $4,500. The new tax law does away with these exemptions completely.

In order to soften the blow from the loss of personal exemptions, the Child Tax Credit also underwent some changes. The Child Tax Credit doubled to $2,000 per qualifying child under 17 accompanied by an increase in the amount

The business world saw major changes as well. The corporate tax rate was slashed to a new top rate of 21%, down from a previous high of 35%.

Corporations are usually taxed twice- once at the entity level (corporate) and again at the individual level (shareholder).

A large change in the new tax code that was glossed over by many relates to how certain business expenses are deducted. The ever popular ‘meals and entertainment’ expenses utilized by so many has undergone a complete renovation.

Under previous law, you could snag tickets to the ballgame, grab a client, eat some hotdogs, keep the receipts, and write them off at a 50% rate come tax time. Not so fast. Under new laws, the entertainment part of the outing is no longer deductible as a business expense, even to the extent of 50% of the cost.

Business meals are still deductible at 50% given they are not lavish or extraordinary and serve a business purpose - so you are still in the clear on buying lunch before the round of golf. Not being aware of this important new change could prove costly to many when their expenses are turned away during filing season.

Perhaps the most important feature of the TCJA is the shiny new Section 199A Business Income Deduction.

Perhaps the most important feature of the TCJA is the shiny new Section 199A Business Income Deduction.This deduction will allow taxpayers and “flow-through” entities to deduct up to 20% of qualified business income (QBI) from a trade or

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business. Sole proprietors, partnerships, and SCorps will all qualify for the deduction. The deduction is calculated on net income determined at the partner or shareholder level if applicable and would result in a direct lowering of taxable income for federal income tax purposes. Seems straight forward, right? The code section is riddled with its fair share of complications as the calculation has detailed limitations.

For starters, the income is capped by the greater of two scenarios: 1) 50% of the W-2 wages from the qualified trade or business and 2) the sum of 25% of the W-2 wages in addition to 2.5% of the unadjusted basis of all qualified property.

Furthermore, the deduction may also not be more than 20% of taxable income. Although there are other particular limitations, this is enough to give us an overview.

The second limitation applies to the nature of the trade or business. An important distinction must be made to determine whether the trade or business is “qualified” for the purposes of the code section. This would include all forms of a trade or business except those deemed to be “specified service” trades or businesses which include those rendering services in the fields of law, accounting, financial services, and any field where the principal asset can be determined as the reputation or skill of one or more owners and employees.

Businesses which fall into the category of “specified service trade or business” can still qualify for the deduction given their taxable income stays below that of $157,500 for single filers and $315,000 for taxpayers filing jointly (phaseout range is $207,500 for single filers and $415,000 for married-filing-joint). Along the same vein, qualified trade or businesses whose income falls under the same threshold are exempt from the W-2 limitations.

The examples below can further clarify: Example 1 An individual is a single filer and has $100,000 of qualified business income from his single-member

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LLC. His income is under the limitation of $157,500 so his Section 199A deduction would be the full 20% or $20,000 ($100,000 x 20%).

Example 2 An individual is a single filer and has $125,000 of business income from a specified service trade or business. Although the income is derived from a specified service trade or business, it is under the threshold and therefore eligible for the full 20% deduction of $25,000 ($125,000 x 20%).

Now let’s take a look again considering some of the limitations: Example 3 An individual is a single filer and has $200,000 of qualified business income from his single-member LLC. During the year, he paid out $60,000 in W-2 wages to employees. 20% of the qualified business income would mean the deduction would be $40,000 ($200,000 x 20%). However, the taxpayer has exceeded the phaseout limitation and his deduction is now limited to 50% of W-2 wages, resulting in a deduction of $30,000 ($60,000 in W2 wages x 50%).

Example 4 An individual is a single filer and has $200,000 of business income from a specified service trade or business. During the year, he paid out $60,000 in W-2 wages to employees. This taxpayer is not eligible for the 20% deduction because it is from a specified service and over the phase out threshold.

The W-2 wage limitation is also disregarded because of the service trade. The deduction would be reduced based by the percentage the taxpayer is over the phase out threshold.

It’s important to remember that the deduction is calculated from net income and only applies to federal income tax – not self-employment tax.

There are many considerations when determining the amount of the Section 199A deduction and its application to a tax return. A tax return is the result of specific planning and strategy and the

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addition of Section 199A makes it even more so.

From income strategy to wage planning, each amount could contribute to a maximum deduction allowed or cause a taxpayer to miss out on the new opportunities offered by the tax reform.

Conclusion If simplification was the goal, they missed it by a mile in my humble opinion. For those tax payers who previously itemized, it may indeed take out the hassle of tracking certain deductions. Sole proprietors and participants of pass-through

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entities have a whole new list of items to consider now revolving around the aforementioned code section. It is important to remember that many of these provisions are set to expire in 2025 without further Congressional action. The impact of the law as a whole has been interpreted differently by experts in the industry and will undoubtedly continue to be debated. The U.S. Treasury has reported an estimated $1.8 trillion in additional revenue due to the changes. Only time will tell if this bill will be shouldered by individuals or corporations. ######

Gammon & Drueck CPAs - Located in Mt. Juliet, Tennessee, Gammon & Drueck CPAs specializes in Tax and Business Advisory Services, Tax Compliance, Accounting, and Third- Party Administration of Retirement Plans.

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Editor’s Note – For additional information on recent changes to the federal tax code, please consult the following links: Tax Reform, What’s New for Your Business, IRS Publication 5318, available at https://www.irs.gov/pub/irs-pdf/p5318.pdf IRS Tax Reform News, available at https://www.irs.gov/newsroom/tax-reform-news

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Feature Article: Wilson County’s Supply Chain Industry Central Freight Lines - Wilson Trucking Company drop yard, viewed from I-40 West

Driving westward along the Interstate 40 highway corridor between Lebanon and Mt. Juliet in Wilson County, Tennessee, an observant eye sees much more than trees and gentle rolling pastures. In addition to the scenic venues, there are frequent passing images of robust business activity in the county.

Besides the usual clusters of gas stations, hotels and eateries stationed along this busy interstate highway, one also observes large paved plats of tractor trailer rigs, parked neatly in front of rows of warehouse shipping and receiving docks.

Looking up at the signage on the nearby buildings, one sees a variety of familiar, and less familiar, corporate logos. FedEx. Under Armour. XPO. CEVA. Richie Brothers. The list goes on. Taking an I-40 off ramp and continuing the drive along other county roadways, in many places the experience repeats itself.

Besides hosting a bevy of modern trendy retailing establishments and malls, Wilson County’s (WC) commercial residents also includes providers of those “behind the curtain” business processes and resources that help to make consumer shopping experiences a reality, both locally and elsewhere.

These processes and resources, often unnoticed by shoppers, consist of a variety of daily logistical operations, facilities and delivery equipments essential for moving materials, parts and products along the nation’s “supply chain” to end markets.

Supply Chain Defined What is a supply chain? The Council of Supply Chain Management Professionals (CSCBMP) defines the supply chain (SC) as being the “material and informational interchanges in the logistical process, stretching from acquisition of raw materials to delivery of finished products to the end user”11.

Richie Brothers truck auction yard viewed from I-40 East

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CSCMP Supply Chain Management Terms and Glossary, August 2013, retrieved from https://cscmp.org/CSCMP/Educate/SCM_Definitions_and_Glossary_of_Terms/CSCMP/Educate/SCM_Definitions_ and_Glossary_of_Terms.aspx?hkey=60879588-f65f-4ab5-8c4b-6878815ef921

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A corporate supply chain is a challenging complex operation involving several critical middleman, or intermediary, functions - material sourcing, transport, storage, production, distribution, etc.

Like musical instruments in an orchestra, to be wholly effective, these essential chain components must operate in synchronized unison with one other, often involving the specialized and managerial expertise of many different SC organizations.

High Growth Service Industry As the nation’s economy grows, nonmanufacturing “service” supply chain providers are an increasingly prominent part of the economic equation. Supply chain businesses today are not only enablers of key corporate operations, they are increasingly a major financial component of the nation’s economy.

A recent article published in the Harvard Business Review notes, for example, that “the U.S. supply chain contains 37% of all jobs, employing 44 million people. These jobs have significantly higher than average wages, and account for much of the innovative activity in the economy … Supply chain service jobs include many different labor occupations, from operation managers, to computer programmers, to truck drivers. They comprise about 80% of supply chain employment, with an average annual wage of $63,000, and are growing rapidly.”12 As evidence of the HBR article’s conclusion concerning the growing importance and prominence of supply chain industries, we note, for example, a recent U.S. Department of Labor employment report for October 2018. In its opening paragraph, the report highlighted that nonfarm job gains for October occurred primarily in healthcare, manufacturing, construction, transportation and warehousing. The report stated that in the first 10 months of 2018, an

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impressive 184,000 new jobs were added in the latter two supply chain categories. It went on to report that one third of the job gains in manufacturing were in the manufacture of transportation equipment, suggesting new capital investment and interest in supply chain rolling stock13.

Challenges exist, however, as the supply chain requirements of individual businesses tend to differ – by industry type, by corporate strategy and, perhaps most importantly, by available financing.

Given the relatively high capital requirements, most corporations do not want to own or manage their entire supply chains. They may choose, however, to selectively own and manage parts of the chain where it makes economic and strategic sense to do so. A company may decide, for example, to build its own private distribution warehouse or maybe buy its own fleet of delivery trucks.

Typically, the greater the distance between the terminal ends of the supply chain (suppliers and markets), the more critical the intermediary functions. Significant cost efficiencies, even competitive advantage, can result from well managed mid-chain functions, including scheduling, long distance transport (long haul), freight storage and handling, shipment consolidation or disaggregation, etc.

The business risks involved in the design and management of a supply chain today are high but so are the potential benefits and returns. A variety of key decision areas must be addressed by corporate enterprises, from in-source vs outsource decisions, selecting physical distribution routes, choosing and contracting with transport mode providers, incorporating new information technology, etc.

The Supply Chain Economy and the Future of Good Jobs in America by Mercedes Delgado and Karen Mills, Harvard Business Review, September/October, 2018 12

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The Employment Situation – October 2018, US Dept of Labor News Release, USDL-18-1739, November 2, 2018

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Public vs Private Supply Chains For individual corporations, no tactical or strategic logistical decision looms larger than deciding whether to implement a key supply chain component in-house (aka in-source) or contract it out to a public third party logistics provider (i.e., outsource the component to a “3PL” in industry jargon).

Large corporations may decide to “vertically integrate” or take ownership of key portions of their supply chain. Some will privatize chain components for cost economies of scale while others will do it for reasons of tighter managerial control or security.

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especially for medium size firms who serve large regional or national markets. Well known 3PLs with a significant presence in Wilson County include, for example, CEVA Logistics, DSC Logistics, FedEx Supply Chain, GEODIS, Knight Transportation, Schneider National, XPO Logistics, as well as others.

In-source versus outsource decisions may ultimately come down to who is willing to bear the capital investment cost of the infrastructure (e.g., vehicles, land development, buildings, etc.). Wellheeled large corporations with reliable suppliers and stable markets may prefer to in-source much of their supply chain infrastructure.

A review of Wilson County’s business community shows that its resident corporations are engaged heavily in both public and private supply chain activities. Activity of private supply chains is found in many places in Wilson County. Corporate logos of such well known national brands as Bridgestone, Kroger, Starbucks, Walmart and others, adorn the trailers of many privately owned or leased trucking fleets that travel along the nation’s interstate highways, passing or stopping in WC. The same logos, or perhaps different ones, may be seen in Wilson County on the exteriors of large private warehouses owned by corporations who have decided that it is also important to own or lease their own dedicated storage facilities.

Amazon, Bridgestone, Genesco, Hollister, Lifeway, FedEx, Starbucks, for example. WC is host to many corporations who have their own managed warehouse facilities – some with storage space exceeding a million square feet.

What about companies who don’t have the resources, or the inclination, to operate and maintain their own transport or storage facilities?

For these firms, outsourcing is the preferred SC alternative, by creating contractual partnerships with for-hire transportation firms and/or leased warehouse facilitators.

Use of 3PLs is a common business practice for many physical goods producers or distributors,

FedEx Supply Chain, Eastgate Blvd, Lebanon, TN

On the other hand, mid-size corporations, even some large corporations, especially those in highly competitive industries replete with changing suppliers or customers, may decide that capital cost savings and flexibility are more important than tight management control and lower operating expense, hence the decision to outsource. Of course, corporations may also seek a more practical compromise by entering into long term leasing contracts with 3PLs that preserve managerial control while avoiding expensive capital cost outlays.

WC’s Locational Advantage Given the high level of recent economic growth in Tennessee and the nation, the shipment volume

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and corporate need for fast and efficient supply chains is increasing sharply. The need to strategically move materials, parts, and finished goods from manufacturers, through distributors, to other businesses, and to the end markets, has never been greater.

Economic development agencies understand that corporations today seek out advantageous middle ground locations and partners through which to support their production, storage and distribution activities, effectively tying together the supplier and market ends of the chain. As the old adage goes, a chain is only as strong as its weakest link.

Hence, the importance to corporations of finding strategic locations and partners to support the allimportant chain middle.

“Location, location, location” is the sacred mantra of the real estate industry. Location is also a major factor in WC’s success in becoming an important partner for many physical goods producers and distributors. Much of this success is owed to the county’s inherent strategic central location within the main urban and industrial regions of the nation. It is said that about two-thirds of all US markets are less than a day’s drive from Wilson County and Tennessee.

This affords Wilson County the unique economic opportunity to act as a convenient go-between and facilitator (i.e., intermediary) for a significant percentage of the nation’s surface freight movements, whether the points of origin and destination are interstate, intercoastal, or cross border continental.

Another locational economic benefit is the county’s close proximity to urban Nashville, whose own economic growth rate is one of the nation’s highest. It is said that proximity only counts in horseshoes and hand grenades, but the mutual benefits of neighboring Nashville and Wilson County are real enough. Nashville workers, for example, are given additional living options in surrounding contiguous counties such as Wilson, while WC’s transport and warehouse companies have access to additional business resources in nearby Nashville/ Davidson County.

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For corporations with national or global distribution agendas, Wilson County is a perfect strategic location from which to carry out such activities. The availability of affordable land in 583 square mile Wilson County, along with a skilled work force, business resources and services, and a supportive local government, all combine to make Wilson County a nationally attractive supply chain partner for business enterprises operating across the U.S. and abroad.

Wilson County continues to be a good current and future locale and base of operations for various intermediary corporate, or for-hire, logistical functions, especially in support of the following key supply chain activities: 

fast, high capacity, highway transport for east vs. west freight movement,



provision of east/west route connectors for north and south freight movement,



truck maintenance and procurement,



freight consolidation/rebundling, and,



warehousing and freight storage.

Warehousing Overcoming distance barriers to commerce is just part of the supply chain challenge. Overcoming time barriers (e.g., delays) to commerce is important too. Moving materials, parts or goods to the factory, distributor, or end market, is part of the delicate balance which effective supply chains strive to attain; hence, the important role which warehouses and other types of storage facilities play in construction of supply chains.

Of the various organizations that collaborate in supply chain partnerships, perhaps it is the warehousing and storage facilitators who are currently experiencing the most significant industry transitions and transformations, especially against a backdrop of emerging digital technologies and a growing need for improved handling of larger volumes of freight in shorter

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South Shore Furniture regional distribution center, Mt Juliet, TN

time periods. In Wilson County, for example, one notes the presence of cross-dock facilities and drop yards14 in close proximity to I-40 and other major thoroughfares.

A variety of public and private warehouse operations are based in Wilson County, including state of the art automated facilities (e.g., Amazon) and general regional or national distribution centers.

Many warehouses in Wilson County are large. The storage facilities used by Bridgestone, Opus Nissan, and Wilson Sporting Goods, for example, are all in excess of a half million square feet. The storage spaces of Amazon and Under Armour are each over a million square feet.

In 2017, there were about 16 private warehousing & storage firms located in Wilson County, employing some 2,870 workers earning an average weekly wage of $804, slightly less than the average general industry wage for the county15.

14

Transport Alternatives Various transportation modes are available today to move materials and finished goods along individual supply chain routes. Transport mode alternatives include truck, rail, air, water, pipeline, and intermodal (combined transport using two or more different transport modes). Since President Eisenhower signed into law the Federal Aid Highway Act of 1956 to provide early funding for construction of a cross-country Interstate Highway System, the primary national transport mode has been the use of trucks to haul freight stored in trailers or containers. The dominance of truck transport in today’s supply chains is obvious. In 2015, for example, of the total 15.9 million tons of freight moved domestically within the U.S., 67% was by truck.

While various transport modes exist in Wilson County (e.g., highway, rail, air), the county’s unique proximity to several major interstate highway systems makes truck transport the most attractive mode of choice for moving freight.

Cross docks are combination shipping/receiving docks in which materials are unloaded from an incoming semi-trailer truck and then loaded directly into outbound trucks or trailers, with little or no storage in between. Drop yards are used for various purposes by trucking companies, including, for example, short term parking of empty trailers.

15 Source: U.S. Bureau of Labor Statistics; data for subsector NAICS 493 - warehousing & storage.

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Using the latest available data (2017), we note 60 private trucking companies reside in Wilson County, employing a total of slightly more than 800 workers, earning an individual average weekly wage of $122616.

Being locally employed in the trucking industry is a fairly lucrative occupation. On average, a Wilson County trucking firm employee’s weekly wage is about 50% higher than the $814 average weekly wage brought home by all workers employed by private industry in the county.

Freight transportation, a primary supply chain component, is a key part of Tennessee’s economy.

The state’s gross domestic product (GDP) for freight industry sectors accounts for nearly 40% of Tennessee’s total GDP, higher than the nation’s percent of total GDP in the U.S. for similar industry sectors17.

WC’s Regional Highway Systems Since about two thirds of all freight tonnage in Tennessee moves by truck, one cannot overstate the importance of the national interstate highway system as a key contributing factor of the

19

economic success enjoyed by Wilson County and the state.

Key segments of the U.S. east-west corridor’s Interstate 40 (I-40), as well as State Route 109, and middle Tennessee’s bypass Interstate 840 (I-840), are all located in part within Wilson County. Traffic volume, most notably freight trucks, has increased steadily over past decades along all three thoroughfares as they pass through Wilson County, providing evidence of WC’s increasing importance as a key supply chain locality. See Figures H6, H7, H8 and Map 1.

Construction and development of Wilson County’s transportation infrastructure are important to the county’s current and future economy, particularly WC’s segment of Interstate 40. It is important to note that I-40 carries much of the nation’s long haul east/west truck traffic. WC’s I-840 and State Route 109 segments are expected to evolve as important connectors between east/west I-40, northwest/southeast Interstate 24 (I-24) and north/south Interstate 65 (I-65), creating a powerful all-directional national freight transportation hub. (See Chain, page 22)

Master of Business Administration (MBA) Degree In keeping with its mission to provide opportunities for advanced study in fields appropriate to the needs of the community, Cumberland University offers a Master of Business Administration (MBA) degree. The program primarily seeks to provide individuals who have earned an accredited baccalaureate degree in any field with an opportunity to acquire advanced business expertise while continuing to work full-time during the period of enrollment. The MBA curriculum is designed to afford students the opportunity to develop both analytical and communication skills, and deepen their understanding of basic and advanced business processes and related areas. The MBA degree can be earned in as little as one year entirely online, entirely on campus, or any combination. Tuition cost is very competitive, and students can begin the program at any of six eight-week terms during the year. The MBA program is accredited by the Accreditation Council for Business Schools and Programs (ACBSP). For more information, please contact the Labry School at (615) 547-1210.

16

Source: U.S. Bureau of Labor Statistics; data for subsector NAICS 484 - truck transportation which includes both general and specialized freight trucking.

17 Tennessee Statewide Multimodal Freight Plan, Tennessee Department of Transportation, 2014

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Who’s Who: Wilson County’s Supply Chain Industry Amazon Fulfillment Center, Gladeville, TN

Table 1 provides a partial listing of various corporations (25+ employees) residing in Wilson County18 that are engaged in various kinds of interstate supply chain operations. The list contains both private and public SC operators.

Private operations refer to corporations who manage their own corporate supply chains. Public operations refer to corporations who act as a third party provider for companies who have outsourced all or part of their supply chain activities or infrastructure.

A testimonial to Wilson County’s strategic value as an attractive logistics partner is the presence of many well known national corporations who have added Wilson County to their corporate supply chain infrastructures. FedEx, Lifeway, Nissan, Starbucks, Under Armour, Wilson Sporting Goods, to name but a few.

The county’s role as an important supply chain locale is further strengthened by the large number of top ranked third party transportation and warehouse providers who have also chosen to locate some of their key SC facilities within the

18

county. Wilson County’s 3PL (third party logistics) business community include, for example, CEVA Logistics, DSC Logistics, FedEx Supply Chain, Geodis, XPO Logistics, Schneider National, among others.

It is interesting to observe that a large percentage of the 3PLs operating in Wilson County are owned, either directly or indirectly, by Canadian or European corporations, a business demographic that is consistent with the state’s foreign investment strategy19.

Supply Chain Staffing We should also mention the various 3rd party logistics staffing agencies in Wilson County which augment direct company hiring of supply chain personnel. In Wilson County, this includes Abacus, Adecco, Randstad and Woods Personnel Services.

At any given point in time, these local public staffing agencies collectively seek qualified applicants to fill several hundred to a few thousand open positions in WC warehousing, freight handling, and truck operations

In Table 1, proximate locations outside formal city limits are considered part of Mt. Juliet if to the west of Route 109, and part of Lebanon if to the east of Route 109.

19 See, for example, “Tennessee: a Hot Bed for FDI”, Business Facilities, July 17th, 2017 retrieved from https://businessfacilities.com/2017/07/tennessee-a-hotbed-for-foreign-direct-investment/

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Table 1 – Who’s Who in Wilson County’s Supply Chain Industry Company [1]

Primary SC Function[2] regional distribution regional distribution regional distribution regional distribution 3PL, SC systems design heavy cargo hauling regional distribution 3PL regional distribution

Location[3] MJ Leb Leb Leb MJ Leb MJ Leb Leb

FedEx Supply Chain[5] Genesco (footwear)

3PL

Leb

regional distribution

MJ, Leb

GEODIS[6] Hollister Inc. (medical equipment)

3PL national distribution storage 3PL

MJ, Leb MJ Leb

3PL, truck & intermodal transport logistics 3PL warehousing, regional distribution truck transport services TL & specialized freight transport cold storage 3PL parts distribution warehousing, regional distribution parts distribution TL truck transport regional distribution truck tractor auctions long haul/mid haul trucking, 3PL

Leb MJ Leb Leb Leb Leb Leb Leb MJ Leb Leb Leb Leb

South Shore Furniture [10]

regional distribution

MJ

Starbucks[11]

store supply regional distribution

Leb

Under Armour[12] Vijon Inc. (personal care products) Wilson Sporting Goods[13]

global distribution manufacturing, regional distribution national distribution

MJ MJ MJ

Wilson Trucking Corp.[14] XPO Logistics

LTL services 3PL, LTL services

Leb MJ

[4]

ADLI (grocery) Amazon (online retailer) Bridgestone (tires) Caleres (footwear) CEVA Logistics Denney Trucking Inc. Denso (auto parts supplier) DSC Logistics Famous Footwear

[7]

Jacobson Warehouse Co. Knight Transportation Inc. Legacy Supply Chain Services Lifeway Christian Resources May Trucking Co. Music City Logistics Express Nashville Refrigerated Services[8] Omniparts Automotive Optoro (reseller) Opus/ Nissan Ozark Motor Lines Inc. Performance Food Group (food services) Richie Brothers (heavy equip reseller) Schneider National[9]

_____ [1]

Please email any table additions or corrections to wilsoncountytrends@cumberland.edu .

Abbrev: SC=supply chain, 3PL=third party logistics, LTL=less than truckload, TL=truckload [3] Abbrev: MJ=Mt Juliet, TN, Leb=Lebanon, TN. [4] North Carolina-based Sharp Transit, LLC is the main private carrier for Aldi Foods in eastern USA. [5] FedEx 3PL subsidiary Genco was rebranded as FedEx Supply Chain in 2017.

[6] French co. Geodis acquired TN-based 3PL Ozburn-Hessey Logistics (OHL) in 2015.

[7] XPO acquired Jacobson Warehouse’s french parent company in 2015.

[8] Nashville Refrigerated is owned by Dutch multinational Agro Merchants Group.

[9] Schneider National maintains a tractor-trailer drop yard in Lebanon, TN. [10] Quebec-based South Shore Furniture is a key supplier to Walmart and other major US retailers.

[11] Starbuck’s Lebanon, TN location is a store supplies regional distribution center.

[12] Mt Juliet's UA facility is expected to expand to 1500 workers & double sqft by 2020.

[13] Wilson Sporting Goods Co. is owned by Amer Sports, a Finnish company.

[14] Texas-based Central Freight Lines acquired Wilson Trucking Corp. in 2017.

[2]

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(Chain, continued from page 19)

Map 1 – Wilson County Regional Highway Systems Source: Google Maps

Interstate 40

whose PHFS percentage exceeds 2% of the nation’s total PHFS mileage21

Interstate 40 passes through Wilson County’s urban centers of Lebanon and Mount Juliet, all three grand divisions of Tennessee, and terminates at both U.S. coastal regions. I-40 is the third longest highway in the US interstate highway system. The segment of I-40 that passes through Tennessee and Wilson County is considered an important part of the country’s national freight transport infrastructure that supports regional, national and international commerce.

I-40 is strategically important to companies residing in Tennessee and Wilson County as a major transport, storage and processing link in corporate supply chains. Having I-40 span the entire east/west length of the county is indeed fortuitous to WC’s local economy as the segment acts as a business magnet attracting a bevy of public and private supply chain organizations alongside the corridor.

In 2015, the federal 2015 FAST Act20 created the Primary Highway Freight System (PHFS) which identified a list of highways (including I-40) deemed as the most critical highway portions of the U.S. freight transportation system. Tennessee is identified as one of 18 “high mileage” states

Since the 1980s, traffic volume along Wilson County’s I-40 segment has increased steadily. We can measure the specific vehicular increases by reviewing the Annual Average Daily Traffic22 (AADT) data compiled by the Tennessee Department of Transportation (TDOT).

20

On December 4th, 2015 President Obama signed the Fixing America’s Surface Transportation (FAS) Act into law (Pub. L. No. 114-94) which reauthorized federal surface transportation programs for five years (FY 2016-2020).

21 National Highway Freight Program (NHFP) Implementation Guidance Memorandum, US Department of Transportation, Issued February 29, 2016 22 Annual average daily traffic, abbreviated AADT, is the total annual volume of car and truck traffic on a road or highway divided by 365 days and seasonally adjusted. AADT is a commonly used measure of how “busy” a road is.

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23

Figure H6 – Annual Average Daily Traffic Volume along I40 in Wilson County, 19852016 Source: Tennessee Department of Transportation

Based on the available traffic count data23 for the period 1985 to 2016, a steep annual growth rate in travel is evident along WC I-40. Traffic volume is expected to triple from 1985, which averaged 27,100 vehicles daily, to year 2020 (already at 80,991 vehicles by 2016). We note that since 1985, an average of 1,730 vehicles has been added annually to the daily travel commute on Wilson County I-40. See Fig. H6.

But what percentage of this general traffic growth can be attributed to truck traffic? We can answer this question by reviewing the available data for USDOT designated major truck routes on the National Highway System24. Federal estimates indicate that the percentage25 of trucks traveling along I-40 (as well as I-24 and I-65N) through Tennessee exceed 25% of all vehicle traffic. Thus, at least every fourth vehicle that travels on major Tennessee highways is a truck. Of the estimated 80,991 vehicles which traveled daily along I-40 23

through Wilson County in 2016, for example, at least 20,247 were trucks. That’s a lot of freight moving through the county.

Interstate 840 Conjoined to I-40 is the completed southern portion of Interstate 840, which interconnects with the I-65 and I-24 interstate highway systems, south of Nashville. Construction of I-840’s “southern loop” was completed in 2012. I-840, also known as Tennessee National Guard Parkway, is not, as its name suggests, an interstate highway per se. It is a regional highway system. Upon completion of its “northern loop” component26, similar to highway loops in other urban areas (e.g., Atlanta’s I-285, Charlotte’s I-485, Washington DC’s I-495, Baltimore’s I-695, etc.), I-840 would serve as a full outer loop bypass around Nashville27, providing alternate route support for commuter and truck traffic in all directions.

TDOT traffic count station no. 990 located on I-40, just west of state route 109 Freight Facts and Figures, p. 3-20, 2017; this data is based on the U.S. Census Bureau’s Commodity Flow Survey (CFS) which is conducted every 5 years. The CFS was last administered in 2012. Preliminary 2017 CFS data will be released on December 6th, 2018.

25 This percentage is calculated as the ratio of AADTT/AADT, where abbreviated AADTT refers to the Annual average daily truck traffic.

26 Completion of I-840’s northern loop is unclear at the present time. Objections by local residents concerning land use and construction disruptions have prodded TDOT to put further I-840 construction on “indefinite hold”.

27 I-440 already encircles Nashville, serving as an existing inner loop highway system.

24

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Wilson County’s I-840 vehicular usage patterns are shown in Fig. H7. The higher growth rate on I-840 during the initial years 1995-1999 is probably due to buildup of general public awareness and ongoing activation of various completed segments of the southern loop.

Stewarts Ferry Road on-ramp to I-840, Wilson County

As shown in Map 1, I-840’s southern loop connects to I-40 on the western side of Lebanon, and east of Mt. Juliet. For “pass through” freight movements, I-840 provides truckers hauling loads on bidirectional routes (east/westerly to or from a north/south direction) with a convenient bypass around the Nashville/ Middle Tennessee region. I840’s seven on/off ramps in Wilson County (excluding the I-40 interchange) provide fast convenient access to the region’s various interstate highway systems for commuters residing near the ramps, as well as for trucks hauling freight to or from nearby public/private distribution warehouses.

I-840’s two notable decreases in I-840 traffic patterns correspond to years 2001 and 2007 which, not coincidentally, correspond to key recessionary periods in the U.S. economy.

Looking at Figure H7’s traffic count data28 for 19992016, we observe a steady though moderate growth of approximately 295 vehicles added to the daily traffic volume along Wilson County’s I-840 segment. In 2016, WC’s I-840 average daily traffic was 17,320 vehicles. It is unclear what percentage of this volume is attributed to truck travel.

However, daily truck usage of I-840’s southern loop can be expected to increase significantly once connectors to Tennessee’s northern segments of I65 and I-24 are complete.

Figure H7 – Annual Average Daily Traffic Volume along I840 in Wilson County, 19952016 Source: Tennessee Department of Transportation

28

TDOT traffic count station no. 170 located on I-840, between I-40 and State Route 265

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25

progress expansion projects. Based on available traffic count data29 for the thirty one year period 1985-2016, we observe a sizable steady annual addition of approximately 573 more vehicles traveling daily along the important stretch of Route 109 through Wilson County, north of I-40.

See Fig. H8.

Road construction near the I-40 and Route 109 Interchange

State Route 109 State Route 109 is an important state highway that traverses Wilson and Sumner Counties. The well traveled state road’s southern terminus begins in southern Wilson County at the intersection of state route 265 and I-840, bypasses the city of Gallatin in Sumner County, with a northern terminus at state route 31W near I-65, just south of the Kentucky state line.

Car and truck traffic on Route 109 has been steadily increasing since the mid-1980s, even before the recent group of completed and in-

Route 109 is currently undergoing a series of construction projects to widen the road to a 5 lane highway with 12 foot travel lanes making the highway a strategic connector between interstates I-40 and I-65N, as well as I-840.

TDOT summarizes ongoing improvements to Route 109 as follows: “Completed and proposed improvements for State Route 109, from Interstate 65 in Sumner County to Interstate 40 in Wilson County, include reconstruction and widening for nearly 35 miles. These improvements are intended to address congestion, improve safety and traffic operations, and accommodate growth along this rapidly developing corridor” 30.

Most of Route 109’s lane widening, as well as construction of new interchanges, are scheduled for completion by late 2020 and will likely result in increased daily car and truck traffic volumes. The revamped Route 109 will provide a viable Figure H8 – Annual Average Daily Traffic Volume along Route 109 in Wilson County, 1985-2016 Source: Tennessee Department of Transportation

29 30

TDOT traffic count station no. 71 located on State Route 109, north of I-40 at Hickory Ridge Rd intersection.

TDOT statement, retrieved from https://www.tn.gov/tdot/projects/region-3/state-route-109-widening.html

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Number of Establishments

Supply Chain Industry Component Truck Transportation Firms (NAICS Sector 484) Warehousing & Storage Firms (NAICS Sector 493)

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Number of Employees

Average Weekly Wage

2010

2017

2010

2017

2010

2017

46

60

486

808

$823

$1,226

7

16

382

2870

$794

$804

Table 2 - Wilson County Supply Chain Industry Demographics31 transport corridor that supports I-65/I-40 and I65/I-840/I-24 bidirectional freight movements.

WC Supply Chain Demographics General supply chain industry demographics32 for Wilson County are provided in Table 2 for truck transportation firms (sector 484) and warehousing & storage firms (sector 493) for comparison years 2010 and 2017. Table 2’s employee data should be compared with Figures H9 and H10 which show WC supply chain employment trends from 2007 to 2017.

We note from the table and figures that during 2008 to 2009, employment levels in both trucking and warehousing were relatively low in Wilson

County, which we may attribute at least in part to the Great Recession of 200833 which created national and worldwide economic downtowns that lasted into 2010. After 2010, we observe that both supply chain industry groups experienced positive growth in WC over the next seven years and on up to the present time. Beginning in 2010, the number of trucking firms residing in WC increased 30%, reaching a total of 60 firms by 2017. During the same period, the number of local warehousing establishments in WC more than doubled to its present 2017 total of 16 firms.

Over the study period, Wilson County’s supply chain employment rates are very good.

The number of WC workers employed by trucking firms increased by 66%, from 486 employees in 2010 to Figure H9 – Number of Trucking Firm Employees in Wilson County, 2007-2017 Source: US Department of Labor

2017 data is based on US Dept of Labor preliminary estimates.

As our discussion interest here is mainly in interstate highway-based supply chain activity, we exclude from Table 2 those NAICS industry categories in Supersector 40 which are primarily focused on local or intrastate transport (e.g., sightseeing transport, courier services, etc.) , as well as other transportation modes (e.g., air, rail, water, etc).

33 See, for example, The Great Recession, link at https://www.investopedia.com/terms/g/great-recession.asp .

31

32

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27

Figure H10 – Number of Warehousing & Storage Employees in Wilson County, 2007-2017 Source: US Department of Labor

808 in 2017. We observe a six fold increase in the number of warehouse employees over the same time period, from 382 to 2,870 employees. In Figure H10, we note that this robust six fold increase was the result of steady annual growth, by hiring a net additional 355 employees per year.

Earnings for local supply chain industries over the seven year period is somewhat of a mixed bag.

While average weekly wage growth for trucking employees was a respectable 49% ($823 in 2010, increasing annually $403 per paycheck to $1226 by 2017), warehousing employee earnings were relatively flat over the same period, increasing by $10.

patterns, 3) U.S. global trade, and 4) incorporation of new information technologies.

Economic Expansion

Future Outlook

The whole purpose of the supply chain is to facilitate the creation of physical goods and bring them to market.

Clearly, an expanding U.S. national economy will, in turn expand the need and demand for goods and their supply chains.

According to the Congressional Budget Office, while current (2018) real GDP growth is in the 34% range, the annual growth rate in GDP projected over the next 10 years is expected to be more in the vicinity of 1.7%34.

In view of Wilson County’s advantageous geography, public highway systems, relative low business costs, high standard of living, and expanding economy, the likelihood of continued significant growth of WC’s supply chain industries is very good. How good? Looking at the “big picture”, there are four key factors that will influence the future demand for supply chain resources in Wilson County and elsewhere. These factors have to do with: 1) national economic forecast for physical goods, 2) freight shipment

Reasons for the lower rate prediction include ongoing tariff policies and expected changes in the Federal Reserve interest rate, both of which can change in the short term. Other economists predict a GDP growth rate slightly above 2% for the next few years, noting how quickly things can change (improve). The general economic consensus for the next decade or so is moderate to good increases in the nation’s Gross Domestic Product. Hence, one would expect a healthy increase in supply chain demand as well.

34

An Update to the Economic Outlook 2018-2028, Congressional Budget Office, U.S. Congress, retrieved from https://www.cbo.gov/publication/54318 .

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National Freight Movements The U.S. Department of Transportation predicts that total domestic freight movement will increase to 20.9 million tons by year 2045 with trucks continuing to be the primary transport mode with a modal share rising slightly to 68%.35 American Shipper magazine notes that total value of the nation’s freight moved by truck is projected to growth 84% by 2045.36 Consider current national freight movements by truck. Map 2 shows average daily long-haul truck traffic on the national highway system for 2015.

One notes three primary cross country (intercoastal) routes currently used to move freight long distance in an east/westerly general direction. In hierarchical order of higher to lower daily truck traffic volume, these long haul routes are: 1) a northern route through Chicago, Illinois, 2) a midUSA route through Memphis/ Nashville/ Wilson County, and 3) a southern route through Baton Rouge, Louisiana.

Now consider the freight movement patterns which US DOT expects to develop over the next 30 years. Map 3 shows the projected national daily truck traffic for year 2045.

Expanded highway systems, regional only transport, and environmental concerns aside, one can foresee increasing challenges (e.g., travel gridlock and congestion) in continuing to move long haul freight along the northern route, and to a lesser extent, along the mid-USA and southern routes.

We can see quite clearly the primary supply chain corridors that are projected to develop in the U.S. over the next 25 years or so. Heavy daily truck traffic is expected to flow in and out of Nashville and Wilson County to/from I-40 towards Memphis, I-24 towards Atlanta, GA, and I-65 towards Louisville, KY. An interesting question to ponder at this point is the degree of importance of the I-65 Nashville segment as a mid-USA connector to northern truck routes and markets located in states in the upper Midwest and Northeast sections of the country. The other national highway system truck corridor that could possibly play a similar connector role would be I-81N through Bristol, TN but which would pass through mountainous terrain.

International Freight Movements The major traffic flows shown in Maps 2 and 3 include domestic and international freight moving by truck on highway segments with more than 25 FAF trucks per day. A FAF truck classification includes all private and for-hire trucks but excludes mail trucks and trucks that are part of an intermodal transport37. A comparison of Maps 2 and 3 presents a fascinating view of expected U.S. freight movement dynamics in the years to come.

While daily truck volumes are expected to increase on all of the primary freight highway routes, certain U.S. corridors are expected to be overly gorged with freight traffic, the highly populated Great Lakes and New England regions in particular.

35

While truck transport is crucial to domestic freight movement, U.S. trucking also plays an important role in global supply chains, hence the role of WC’s I-40 segment and its highway system connectors as facilitators in global commerce.

A recent USDOT report states that “trucks are the most common mode used to move imports and exports between international gateways and inland locations. This trend is expected to continue with tonnage of international trade forecast to grow at a rate of 4.0 percent per year between 2015 and 2045.”38

Freight Facts and Figures, Table 2-1, Bureau of Transportation Statistics, U.S. Dept. of Transportation, 2017.

“US DOT Projects Freight to Grow 40% by 2045” by Eric Kulisch, American Shipper, March 4, 2016 retrieved from https://www.americanshipper.com/Main/News/US_DOT_projects_freight_to_grow_40_by_2045_63234.aspx .

37 Freight Analysis Framework Version 4.0, User Guide, Federal Highway Administration, U.S. Department of Transportation, October 31, 2015 38 Freight Facts and Figures, p. 2-16., 2017 36

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Map 2 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2015 Source: US Department of Transportation, Federal Highway Admin., Office of Freight Management and Operations, Freight Analysis Framework, ver. 4.3, 2017

Map 3 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2045 Source: US Department of Transportation, Federal Highway Admin., Office of Freight Management and Operations, Freight Analysis Framework, ver. 4.3, 2017

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According to U.S. Census Bureau data39, the total value of U.S. exports and imports in physical goods for 2017 was about $1.6 trillion and $2.3 trillion, respectively, representing a trade total of $3.9 trillion. Notably, 75% of all U.S. trade in that year were with 15 countries, including Canada and Mexico. With the USA in the map center, international trade totals break down directionally as follows: North (Canada at $582 billion, or 15% of total U.S. trade), South (Mexico and Brazil at $624 billion, or 16%), West (Asia-includes China, Japan, South Korea, India, and Taiwan at $1.1 trillion, or 28.5%), and East (Europe- includes Germany, United Kingdom, France, Italy, Netherlands, Ireland and Switzerland at $608.7 billion, or 15.6%).

We note that U.S. total trade value with Asia is about twice the percentage as trade with international trading partners located to the north, south or east of the U.S. If these U.S. trading partner percentages remain stable in the foreseeable future, though the nation’s freight movement infrastructure must be multidirectional and scalable, east/west could arguably be the more economically important transport direction in which to move freight in the coming years.

These global trading characteristics serve to underline the future potential and importance of Wilson County’s I-40 and its supply chain resource providers that are located along the highway segment. WC I-40 and its SC providers have two particular roles they could play in future Asian global supply chains.

For exports, a key east-to-west role could be to aggregate physical goods produced in the eastern and southern U.S. and transport the consolidated freight to west coast gateway ports.

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Route 109), distribute goods received from west coast gateway ports to eastern and southern U.S. markets.

Smart Supply Chains Since the beginning of the 21st century, powerful new emerging information technologies have been increasingly used to create and embed innovative upstream data communication capabilities in supply chains. These new technologies improve the coordination of downstream physical logistics (for example, transmitting changes in market demand back up to the factories, raw material vendors, and parts manufacturers).

There are thousands of logistics related hardware devices and software products on the market today, designed to improve some aspect of supply chain processes. Emerging “smart supply chains” differ from most current supply chains by significant improved computer automation of processes that today are either handled manually or by less efficient automated means. In more advanced cases, smart supply chains may incorporate artificial intelligence modules that automate complex SC decision making scenarios.

Emerging smart supply chains will be faster, cheaper and adapt more quickly to changing market and logistical conditions.

As rival manufacturers and distributors continue to seek cost efficiencies and competitive advantages against one another, we are witnessing a new generation of transport, warehousing and distributed manufacturing processes enabled by emerging information technologies. Three key technology categories in particular, are having, or are soon to have, a major impact on the development of smart supply chains: 

For imports, the supply chain operations would be reversed. A key west-to-east role of WC’s I-40 segment and its supply chain providers would be to act as a freight dis-aggregator and through its federal highway connectors (e.g., I-840 and/or 39

mobility technologies - such as global positioning systems (GPS), radio frequency identification (RFID), inventory drones, and cellular data,

Year to data total trade for 2017, US Census Bureau, retrieved from https://www.census.gov/foreigntrade/statistics/highlights/top/top1712yr.html .

Labry School of Science, Technology, and Business



logistical intelligence technologies, such as cloud computing, cloud databases, block chain authentication, artificial intelligence, and



transport technologies autonomous trucks40 41 highways .

- such as and smart

While the above technology examples sound expensive to acquire and implement, they need not be. The increased adoption of emerging technologies in the supply chain does not necessarily imply a significantly larger capital budget. An alternative business model being promoted by technology providers is that of cloudbased subscription services, offered by such well known IT providers as Amazon, Google, MicroSoft, AT&T, and others. Cloud based computing and data storage services offered by this new class of “technology 3PLs”, will significantly improve current SC processes and enable new ones. In many cases, the new tech 3PLs offer businesses a

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logistical solution that does not require a purchase of expensive hardware or software platforms.

Smart supply chains of the not too distant future may thus be more affordable, and may not be as far off as some may think.

Conclusion A perfect storm of positive developments is raising the business prominence and importance of Wilson County and its resident supply chain industry. An expanding national economy, recent world trade events, and accelerating commercial information technology offerings all combine to create new supply chain industry opportunities for the county. Wilson County is fortunate to have attracted many national corporations and global 3PLs to the area, likely guaranteeing many future economic benefits from one of the nation’s most important and expanding U.S. industries. ######

Reader Inquiries Wilson County Trends welcomes all reader inquiries. Questions or comments, including omissions, corrections, article submissions, etc. may be directed to Steve Shao, PhD, Wilson County Trends Editor.

Dr. Shao can be reached by phone at 615.453.6304 or by email at wilsoncountytrends@cumberland.edu

Appreciation is expressed by WCT’s editorial staff to the Tennessee Departments of Economic and Community Development, Transportation, and Revenue for their support and provision of data used in creation of this publication. We would also like to thank members of Cumberland University’s faculty and staff who provided many helpful suggestions, proof reading, and editing support.

The Last Word A man is flying in a hot-air balloon and realizes he is lost. He reduces height and spots a man below. He lowers the balloon farther and shouts, "Excuse me! Can you tell me where I am?" The man below says: "Yes, you're in a hotair balloon, hovering 30 feet above this field." "You must be an engineer," says the balloonist. I am," replies the man. "How did you know?" Well," says the balloonist, "everything you have told me is technically correct, but it's no use to anyone." The man below says, "You must be in management." "I am," replies the balloonist, "but how did you know?" "Well," says the man, "you don't know where you are or where you're going, but you expect me to be able to help. You're in the same position you were before we met, but now it's my fault."

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See, for example, Self-Driving Trucks: Timelines and Developments by Jon Walker, Tech Emergence, October 10, 2018, link at https://www.techemergence.com/self-driving-trucks-timelines/ .

41 See, for example, Which Way to the Smart Highway? by David Cullen, Trucking Info, November 16, 2017, link at https://www.truckinginfo.com/157822/which-way-to-the-smart-highway .

Wilson County Trends A Cumberland University Publication from the Labry School of Science, Technology, and Business 1 Cumberland Square Lebanon TN, 37087

List of Graphs, Maps and Tables Historic Trend Graphs Figure H1 - Population Growth in Wilson County, 1970-2016 Figure H2 - Civilian Labor Force in Wilson County by Month, 1990-2017 Figure H3 - Average Weekly Wage (Private Industries) in Wilson County, 2007-2017 Figure H4 - Unemployment Rate in Wilson County, 1990-2016 Figure H5 - Number of Business Establishments in Wilson County by Quarter, 1990-2017 Figure H6 - Annual Average Daily Traffic Volume Along I-40 through Wilson County, 1985-2016 Figure H7 - Annual Average Daily Traffic Volume Along I-840 through Wilson County, 1995-2016 Figure H8 - Annual Average Daily Traffic Volume Along Route 109 through Wilson County, 1985-2016 Figure H9 - Number of Trucking Firm Employees in Wilson County, 2007-2017 Figure H10 - Number of Warehousing & Storage Employees in Wilson County, 2007-2017 Recent Trend Graphs Figure R1 - Number of Business Establishments by Industry in Wilson County, 2Q2017 Figure R2 - Average Weekly Wage by Industry in Wilson County, 2Q2017 Figure R3 - Total Persons Employed in Wilson County, 2016-2017 Figure R4 - Total Retail Sales by Category in Wilson County, 2017 Figure R5 - Monthly Retail Sales in Wilson County, January 2017 – March 2018 Figure R6 - Monthly Auto, Boats & Aircraft Sales in Wilson County, January 2017 – March 2018 Figure R7 - Monthly Retail Sales by Category in Wilson County, January 2017 – March 2018 Maps Map 1 - Wilson County Regional Highway System Map 2 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2015 Map 3 - Average Daily Long-Haul Truck Traffic on the National Highway System: 2045 Tables Table 1 - Wilson County Supply Chain Industry Demographics Table 2 - Who’s Who in Wilson County’s Supply Chain Industry