Cathy Ackerman: Welcome to Sweet Tea and Strategy, a podcast featuring business and community leaders throughout Tennessee talking about issues and trends of importance to our state and beyond, and sharing some of their very best sweet tea recipes and maybe some tea-sipping stories. I'm Cathy Ackerman and I'm very pleased to welcome Bob Rolfe, Commissioner of the Tennessee Department of Community and Economic Development to our podcast today. So before we dive into our actual interview, Bob, we'd love to hear any stories that you might have to tell about sweet tea, that most Southern of Tennessee drinks. First of all, do you even like sweet tea? And if so, what's your favorite that you've ever had?
Bob Rolfe: Well Cathy, you’re nice to ask and yes, Nashville has been home and the South has been home my entire life and I am a, I love sweet tea and my favorite of all sweet teas is an Arnold Palmer, which is obviously sweet tea with a touch of lemonade. And so I drink that in the summertime and I am, when I’m out of the Southeast, which is often, it is very interesting when I do order tea, certainly overseas when we order tea and we travel and we recruit overseas, about a third of the jobs that we bring to Tennessee are foreign direct investment partners and in those cases, they don’t offer traditional sweet tea, so there are periods where I go without.
Cathy Ackerman: You know it’s also interesting from the other standpoint when we have business visitors and guests from out of state and they go to restaurants in Tennessee. Yeah, it’s a very Southern experience in that. So now we’re going to dive into the very large job you have of being primarily responsible for bringing business, industry and new economic growth to the state of Tennessee. I want to start by talking about maybe some of Tennessee’s strategic platforms, if you will, from which you launch your primary outreach efforts. In other words, what are we really packaging and selling here in Tennessee? And how do we package our strengths accordingly in order to be successful, which we really have been quite successful? Talk about that a little bit, just in an overview way.
Bob Rolfe: Absolutely. So Cathy, it starts with having a great product. And we’re very proud of the product that we sell every day, called our state, the state of Tennessee. And people always wonder, well what makes Tennessee so special? And I think the short answer is that our state really has and offers a great quality of life. And that’s important because these companies that are investing tens and hundreds of millions of dollars are very intentional and thoughtful about where they choose to invest their capital. And then when you talk about the state of Tennessee, the education system, the workforce development, the low taxes, and I think probably what resonates most with companies and CEOs is that we are a very, very business-friendly state.
Cathy Ackerman: Right. So what does business-friendly mean?
Bob Rolfe: Business-friendly means, for example, when a company is interested in looking at Tennessee and we can invite them to come to our offices, they’re interested to see, we have 95 counties and ECD, we do not traffic in where to land those companies. So our job and responsibility is to show them all of the inventory across the state. And not only do we show them the inventory, we try to match what they’re looking for with the assets we have to offer. And then our second initiative is to make sure that we bring, if a particular site has some workforce challenges, if a site needs additional road work or infrastructure or permitting, our job is to bring all of those other departments so that we present ourselves as a one-stop shop, as opposed to saying okay when you get through with our meeting, get in the car and drive three blocks and go see TDOT, our transportation team, and then when you’re through there, go over to Metro Center and visit with the workforce, Labor and Workforce Development. So we again try to service that single point of contact that hopefully makes that visiting C-suite experience top drawer.
Cathy Ackerman: Yes, and easy, easy to navigate. That’s right. You have had some great success stories in terms of job creation in our state. Can you talk a little bit about how we landed a thousand new Amazon jobs in Mount Juliet? I think that our whole state is very proud of that and would love to know sort of the backstory there, to the extent that you can.
Bob Rolfe: Well I can, to the extent. That story actually goes back a couple of years. They had known Tennessee, they knew exactly what our brand was about, what the quality of the workforce, they knew our tax structure and the low taxes. And then at the end of the day, I think part of those conversations really resonate around the big win about two years ago, two and a half years ago, when Amazon was looking to build a second headquarters, to move away from Seattle. And while Tennessee did not win the big fish, the big prize, as you know, Amazon announced that they were going to bring 5,000 jobs to Tennessee to operate their center of operations for excellence. And what that means basically is they are bringing 5,000 jobs, in this case to Nashville. It’s going to be white-collar technology jobs. And so that was probably our big, big signature win. And then since then, Amazon made the decision to spend $200 million in Memphis to build an e-fulfillment center and hire another thousand people, and those jobs were announced back in January. And then you’re right, just a week and a half ago, Amazon made the announcement that they’re going to add another $250 million e-fulfillment center in Mount Juliet and again hire another thousand Tennesseans. So we cannot say enough about our partnership with Amazon, and they continue to invest. I think today there are about 12,000 Tennesseans that work across our state for Amazon and that hopefully will double in the next two to three years.
Cathy Ackerman: That’s great. And I’m sure that that also is something that you can sort of package and repackage as you’re speaking with other prospects in terms of Amazon’s great experience with us that has led one thing after another after another. So it’s a great sales tool for you in addition to being an economic boom for the state.
Bob Rolfe: Well and I tell our team every day that it’s important that we recruit global brands, because global brands attract other global brands. And what I mean by that is when you look at Tennessee and you look at the technology sector, you’ve got Amazon, which really is a technology company. You know last week we announced Facebook is going to invest $800 million in a data center in Sumner County in Gallatin. And then Amazon, and then Google about a year and a half, two years ago announced that they were going to invest about $650 million over in Clarksville. So when you look at those kinds of global brands, that is important and that does resonate with other CEOs that are considering Tennessee.
Cathy Ackerman: Absolutely. So the only missing link there would be the company that I think declared recently that they are now a $2 trillion market value company and that’s Apple. Maybe we can recruit that Apple.
Bob Rolfe: Well we haven’t run the table, that is correct. We have not cornered that market, but I can promise you we continue to do everything we can to sell Tennessee. Not only across from the West Coast to the East Coast, but as I mentioned earlier, about a third of the jobs that we recruit and land in Tennessee are foreign direct investments. And so we have been very successful. Now more recently Cathy, with the borders closed it’s very difficult. We are unable to leave the U.S. and the CEOs of these international companies are unable to enter the U.S. right now due to the COVID pandemic. So that’s really slowed us down from that perspective. But back to how we go about recruiting those multinational companies, believe it or not, ECD, we have offices and a presence, a recruiting presence in 11 different countries. So ECD has a footprint in Asia and where we have three offices and then we have the balance of our footprint in Europe. And so that’s really how we expand our global reach and those people are responsible in-country for promoting Tennessee and have done a fantastic job of certainly making sure that Tennessee is in the conversation when companies are considering relocating or expanding.
Cathy Ackerman: Wonderful. Are there any other significant pivots that you’ve had to do as a result of COVID? I mean so much of your job is reaching out and bringing people in. Are there other strategies that you’re having to turn to these days?
Bob Rolfe: Well this has been this disruption. As I talked to our team yesterday, this is five months and two weeks in. And I think early on, Governor Lee and I were having a conversation and I think two weeks in he said Bobby, the only real solution is going to be a vaccine, that this is going to drag on. And boy were those very true words. So what we’ve done in the interim, we’re able to travel across the U.S. and actively recruit inside the U.S. where we’ve again had the challenge is how do we continue to tell the story for our international clients? What we’ve been able to do, believe it or not, is use the technology tools to host virtual tours to showcase the Tennessee assets. But at the end of the day, I can promise you this, when it comes to recruiting, at least in Tennessee, we believe in a very personal relationship. So I can promise you in the last three and a half years, we’ve not landed one job over the internet, by fax, by phone or by text. And it’s about building that personal relationship. And so we are most anxious to have these borders open up again because before COVID there were four or five major projects that were international where we had ended up as a finalist and of course if you’re a CEO of an international company, Kathy, and you’re going to invest $100 to $500 million, you’re going to want to go see that community, you’re going to want to meet the local community and make sure that you’re as in love with that community as that community is in love with that company because once you invest those capital asset dollars, you just can’t pick up and move because you fell out of love with that community and/or the resources that that community provides.
Cathy Ackerman: Absolutely. So pandemic aside, what if any are the things that we could do here in Tennessee to be even more attractive to relocating business and business startups? Are there things that you sort of have on the drawing board, if you will?
Bob Rolfe: Well let me give you an example. When I joined the Department of Economic and Community Development, it used to be the conversation was all about incentives and these companies were most interested in, well how many incentive dollars can you provide us? Now let me say this, these are taxpayer dollars so I’m very mindful and we’re only able to provide these cash incentives because of a great partnership we have with our General Assembly. They approve our budget every year, obviously, it requires the Governor’s participation as well. But at the end of the day, what the conversation has moved from just about incentives to now workforce development. And these companies want to know can you in Tennessee, can we in Tennessee in a certain location provide the workforce? And what they’re looking for is a trained workforce, they’re looking for the quantity, the quality and at a price that matches their pro-forma. So we spend a lot of energy now convincing companies that Tennessee does have a ready workforce in the right size and numbers. Now how do we prepare our workforce? So thanks to Governor Haslam, actually going back three or four years ago in the General Assembly, we have this Tennessee Connect and the Tennessee Reconnect. So every high school graduating senior can now go back or go to college, it’s either a two-year Associate degree or a one-year T-CAT certification which is a welding certificate, mechatronics etc. and that is all tuition-free for our citizens. It was so successful, Cathy, that the Governor and the General Assembly came back and expanded it now, any Tennessean now has the ability to go back and further their education. And the great news is it is a benefit that’s paid for by our state.
Cathy Ackerman: Yes, wonderful. Are any other states starting to copy that model?
Bob Rolfe: Yes ma’am. So the great news is Tennessee truly was first and we’re very proud of that. And again I take no credit nor does our team, but I can promise you that was the great vision of Governor Haslam and the General Assembly at the time. And since that time, I can think of eight or nine states that either have since then provided that benefit to their citizens and/or are considering that benefit. But what’s important is the state needs to have a very attractive and healthy balance sheet because it’s not inexpensive and once you offer that you better make sure you’ve got a sustainable program to fund that initiative.
Cathy Ackerman: Absolutely. So in addition to sort of landing the big fish, what resources are allocated toward growing our own, helping existing businesses grow and helping startups become larger?
Bob Rolfe: All right so Cathy, we do that really through a couple of avenues. Across our state, we have ECD professionals across the nine regions and so each region is responsible for making sure that the companies that already call Tennessee home are happy. And what I mean by that is are they happy, are they thriving and what additional resources can we bring to help those companies if they’re not thriving. The reason that’s important is when these companies consider an expansion, most of these larger companies have enormous options not only across the U.S. but across North America and the globe. And so our job is to make sure that when a company is considering an expansion that we’re there with the same kinds of resources and incentives as we provided when that company first came to Tennessee. That’s the group that is responsible for making sure our companies are happy, satisfied and thriving. And then separate and apart, we have a partnership with Launch Tennessee and the CEO of that organization is Van Tucker. And Van is responsible with her team to make sure that we are the most startup-friendly state in the U.S. And I can just tell you from my 30 years in business that this is the toughest mile, the last mile, and that is startup capital for small companies because statistically speaking, startups just don’t have a great track record of surviving because it’s so difficult to start up. And a company of course the greatest startup story as I love to say is probably our greatest global brand and it’s a company called FedEx. Now but that’s one out of many, many, those odds don’t always stack up that way, but nonetheless that’s what Launch Tennessee, that’s their responsibility to create this statewide nurturing system for these startups and early-stage companies.
Cathy Ackerman: Right. And to become known as a startup-friendly state. You know I think that people tend to think of technology startups all being in Silicon Valley or Austin, Texas or Research Triangle area in North Carolina, but Tennessee really is becoming more of a success story in terms of startup nurturing.
Bob Rolfe: Very true. When I look at our healthcare ecosystem I think that we’ve been focusing more recently on life sciences, obviously third-party logistics etc. So very, very true.
Cathy Ackerman: Absolutely. So talk a little bit if you would about what our state is doing to help expand economic opportunities in the many rural counties that comprise the state of Tennessee. I was happy to see the statistic that I think in 2013, if I'm not mistaken, 26 Tennessee counties were classified as distressed and that now that has reduced to 11 counties in that bottom category. So what did we do to make that happen and how are we building on it to keep making it happen?
Bob Rolfe: Excellent question. Of course, as you know across our 95 counties, 80 of our counties are designated as rural. And what the statistic you just mentioned, there are federal means tests that identify the lowest 10% of all counties across the U.S. and then there is a second tranche, the lowest 25%. This is based on income, poverty, unemployment and these are all federal data points. And so actually Randy Boyd, who is my predecessor, deserves an enormous amount of credit for developing a whole host of rural initiatives. And so I can just simply say those initiatives have obviously allowed us to have more tools in the chest to not only help these rural communities but also direct help companies come to the rural communities. Now you’re going to say well why would a company want to come to a rural community versus an urban market? And when it comes to advanced manufacturing and the wages provided, these large and medium-sized companies do not want to compete with the labor-shed pricing in and around these metropolitan urban cities and communities. So what they do is they find a really attractive rural community. Now that rural community Kathy has to have access to the interstate, has to have access to a workforce and has to have access to basically their materials and their supply chain. And the reason I’m saying that to you, even the nicest, coolest city if that rural community is over an hour from the closest interstate, that community could have PhDs and have the greatest workforce, but because the transportation cost of raw material in and finished goods trucking out are so expensive, there are just some communities that have beautiful natural assets that just will not be landing those large manufacturing opportunities.
Cathy Ackerman: Right, right. Such a complicated matrix in terms of what a community has to have in place and yes, all communities don’t have everything. So you’re probably in the position of having some pretty good categories of if a company is interested in this then you guide them in one direction, if they're interested in that they would guide in another direction. But what are your goals for the department over the next couple of years?
Bob Rolfe: Very simple. We want to continue to be the number one Southeastern state in job growth. And so we talk about it every day, what can we do to make sure that Tennessee is at the top of everybody’s conversation when it comes to either a company relocating to Tennessee and/or a company that already calls Tennessee home and is considering an expansion project. And so it’s very simple, how do we continue to lead the way and of course what that means is more jobs for Tennesseans and hopefully in this new economy higher quality jobs. Governor Lee has been adamant about making sure that we at ECD when we incent these companies, when we recruit these companies, that we focus on the companies that bring jobs that are at least equal to or if not greater than the county median wage in that particular community.
Cathy Ackerman: So finally with your prior very interesting background in investment banking and private equity and as the CEO of a company in the healthcare field, how does that career background serve you well? What unique skills and sort of viewpoints are you bringing to this job?
Bob Rolfe: Well Kathy you’re nice to ask. In investment banking business, which was 18 years of my, the first 18 years of my career, it was about negotiating, structuring transactions and so that has been a skill set that I’ve been able to use and then serving in the CEO role for small companies, it’s enabled me to be able to walk the walk, talk the talk with the companies that we’re recruiting and so I think the ability to connect at the C-level has been very important to us because like I said at the outset, this is about a personal relationship and it’s what we can do to develop those personal relationships with the decision-makers that at the end of the day becomes critical to making sure that we do land those projects. Now behind what my job is are 100 great colleagues at ECD and the great news is Cathy they’ve been in their roles long before I arrived and they’ll be there long after I depart and so they deserve really about 100% of the credit for the success that we’ve had.
Cathy Ackerman: Bob, thank you so much. This has been a fascinating interview and obviously what you’re doing is so critically important to our state. Is there anything else that you’d like to add to the conversation today in terms of sort of how we can all help you create the best possible economic future for Tennessee?
Bob Rolfe: Kathy I think the one thing that we can all do is something that we’re asked to do every day and that’s what we can do to get the COVID behind us. Whether that’s all the CDC guidelines, that is so important because the sooner we can put this pandemic behind us, the quicker we can really open up our economy and I’m talking about opening it up at 100%. And Governor Lee’s been very intentional about not mandating, which we’re so appreciative of, and just providing some of the best practices for these companies and these communities. Hopefully, they’ll follow all of those because again we were, you know we were running at 100 miles an hour and then around March 13th we dropped to about 5 miles an hour. And that, and so we’re trying now we’re trying now to basically fight our way back. But you’ve been very kind to host me and so thank you very much for this time together.
Cathy Ackerman: We appreciate you sharing your thoughts with us on Sweet Tea and Strategy, we appreciate your time and we very much appreciate what you and your team are doing to promote growth and prosperity here in the state that we love. So thank you very much.
Bob Rolfe: Great, thank you so much. Have a great day.