The Growth and Geography of Tennessee’s Chemical Exports 2nd Quarter 2015

Tables and Graphs

In 2014, chemical exports valued at $4.4 billion were shipped out of Tennessee.

The chemical industry has long been one of Tennessee’s major export industries. Back in the 1980s and ’90s, in fact, it was the state’s largest. Eastman Chemical was easily Tennessee’s biggest single exporter. The industry has since been overtaken by the automotive sector, and depending upon how you wish to count things, the state’s medical industry. Pharmaceuticals, one of the state’s most rapidly growing export goods, are counted in government industry statistics as “chemicals.” However, many people would prefer to include them with medical-related exports.

Tennessee pharmaceutical exports have risen dramatically in recent years. Over the past decade they have jumped from under $100 million a year to nearly $600 million a year. We share the view that these exports are not usually what people associate with “chemicals,” and so we will leave them for a later overview of the state’s medical-related exports. But even excluding these exports, the chemical industry remains a very large and dynamic exporter, even if it no longer dominates the state’s export scene as it did a generation ago.

In 2014, chemical exports valued at $4.4 billion were shipped out of Tennessee.* That is essentially double the amount the industry exported a decade earlier. This amounts to about 13.4 percent of total state exports. About half that amount is in “basic chemicals.” These are things like industrial gases, petrochemicals, and the classic inorganic and organic chemicals. The largest single exports in this area are cellulose acetates ($650 million a year) and titanium dioxide preparations ($460 million a year). The other sizable exported “basic chemical” is sodium cyanide compounds, where foreign shipments are valued at around $200 million a year.

*These are the industries with NAICS codes beginning with 325, excepting 3524, pharmaceutical and medicine manufacturing.

The chemical industry remains a large and dynamic exporter, even if it no longer dominates the state’s export scene as it did a generation ago.

The other half of the state’s chemical exports involve resins and artificial fibers. In this half, the leading products include artificial filament tow (about $675 million, much of this from cellulose acetates), polyesters ($460 million), polyamides (that’s nylon to us laypersons, at $186 million), and polypropylenes ($115 million). The resin and fiber exports are growing a bit more rapidly than basic chemicals and are slowly becoming the larger segment of overall chemical exports.

The percentage of all state exports that come from the chemical sector has remained fairly steady over recent years and is virtually the same today as it was at the start of the century. Tennessee remains unusually reliant on chemical exports. As noted, chemicals constitute 13.4 percent of the value of all state exports compared to just 9 percent nationally. The competitiveness of the state industry can be seen by the fact that it is slowly but steadily accounting for a larger share of total American chemical exports. Today a bit more than 3 percent of all U.S. chemical exports come from Tennessee. That is a quarter higher (.5 percent) than it was 10 years ago.

So where in Tennessee do we find this industry? We have constructed a map of Tennessee chemical exporters by zip code. It reveals some clear patterns. The industry is more geographically concentrated than the automotive industry, which we examined last issue. A handful of counties account for a very significant portion of the export activity. Contrary to those who believe the industry to be mostly located in more rural areas, in fact most state chemical exporters are just outside the state’s major cities. (The small size of the zip codes in these areas means you may have to hover over those regions to see the extent of the activity.) The two exceptions to this pattern are the large number of chemical exporters in the Oak Ridge area and the significant number of exporters in the belt that stretches from Manchester to Lewisburg (roughly). Elsewhere in the state, the number of chemical exporters is much smaller.

The Tennessee chemical industry has long been a backbone of the state’s export performance. As we see, it remains very competitive in global markets, even if its numbers recently have been a bit overshadowed by several other “star” export industries. The slow rise in the percentage of American chemical exports coming out of Tennessee suggests the industry is also very competitive compared to other regions of the U.S. For these reasons, we should expect the chemical sector to remain a significant part of Tennessee’s export economy.