Three storylines to watch for in 2017

1/4/2017

Time to produce

 

Some previously announced manufacturing projects will start to become a physical reality.

Doug Lawyer, vice president of economic development with the Knoxville Chamber, said there are several to keep an eye on.

“Lifetime Products announced about a year ago that 2017 is the year they will really be up and running and in production,” he said. “They are going to hire up to 500 people, so that will be a big thing to watch for.”

In May, Lifetime broke ground on a $115.6 million manufacturing and distribution facility in Eastbridge Business Park in northeast Knox County, with the goal of opening the plant in April 2017. The operation will produce water sports products, including kayaks and paddleboards, plus a line of outdoor play equipment. Lifetime plans to have 125 workers when it opens and the other 375 over the course of five years.

Then, there is Fresenius Medical Care North America, which announced in 2014 that it would build a $140 million manufacturing plant in the former Panasonic facility at Forks of the River Industrial Park in East Knox County. The project is expected to create 665 jobs within five years. Lawyer said the plant is getting close to being operational.

“They have been doing testing and getting their certifications with the Food and Drug Administration, but they too should be starting large scale production this year,” he said.

The company plans to spend $35 million preparing the 28-acre site, and invest $100 million in equipment. Over five years, it intends to create 557 production jobs with a starting pay of $16.85 per hour and 48 maintenance jobs paying $22.95 an hour.

Based in Germany, most of Fresenius’ U.S. clinics are on the East Coast, but the company did not have a manufacturing facility in the region.

“I think you should also keep an eye on Local Motors in 2017, as they move into full-scale production,” Lawyer said.

Phoenix, Ariz.-based Local Motors, which develops 3-D-printed vehicles, is establishing its first direct digital manufacturing enabled production microfactory in West Knoxville. The facility can print finished pieces directly from digital designs.

The plant developed the Strati, the world’s first 3-D printed car, and will produce the Olli public transportation vehicle and LM3D Swim, which is the world’s first road-ready 3-D printed car.

The company’s goal is to have the Swim ready for delivery in 2017, and Local Motors CEO Jay Rogers wrote in a blog post that the Knoxville operation will play an important role in the company’s future.

“Our microfactory in Knoxville is the template for more Local Motors microfactories to come, and it wows everyone who enters it,” he wrote. “While we expect a public grand opening of the microfactory in spring of 2017, I’ll never forget the first few times I was able to show it off to partners, and even our own employees. We will produce amazing vehicles there for years to come.”

So, we meet again

 

Some companies that faced challenging circumstances in 2016 may be back in the news.

While a number of companies announced expansions and new projects in 2016, the year was not kind to everyone. The Maryville-based Ruby Tuesday restaurant company faced a number of upheavals during the year and could make news in 2017 as it tries to recover and regain traction.

In August, Ruby Tuesday announced it was closing 95 underperforming restaurants, including locations in Fountain City and West Knoxville. In September, the company released disappointing financial results, with same-restaurant sales down 2.7 percent for the first fiscal quarter of 2016 and a net loss per diluted share ranging from $0.67 to $0.74.

Also in September, Ruby Tuesday announced the sale of its Maryville headquarters and the layoff of 19 workers at its support center. That same month, James J. Buettgen announced his resignation as Ruby Tuesday CEO, to be replaced by interim president and CEO F. Lane Cardwell Jr.

In its 2016 annual report, the company noted the steps it is taking to improve its situation. Termed a Fresh Start Initiative, the company is doing a reassessment of its corporate-owned restaurant portfolio, development of a new menu and garden bar, steps to improve customer service, and other actions.

Franklin-based Community Health Systems, the parent company of Knoxville’s Tennova Healthcare, had a tough year financially, raising questions about what impact this might have on Tennova’s plans to build a hospital at Middlebrook Pike and Old Weisgarber Road. CHS was beset by falling stock prices, a 9.6-percent drop in earnings for third quarter 2016 compared to the previous year, a 12.5-percent drop in total admissions, and other financial woes.

However, Tennova officials maintain that the parent company’s difficulties will not stop plans for the five-story, 556,083-square-foot hospital on Middlebrook Pike. Leslie Paul Luke, Tennova interim CEO, said in November that approvals have been secured for the facility, initial designs completed and arrangements made with the Knoxville Utilities Board to relocate gas and wastewater lines for the project.

“We plan to open the new medical center by early 2019,” Luke said.

 

Rebuilding in Sevier County

Although tourism numbers may lag in Sevier County following late November’s devastating wildfire, look for a construction-job boom as Gatlinburg rebuilds.

The forest fire burned more than 17,000 acres, killed 14 people and damaged or destroyed more than 2,000 structures. Damage estimates sit around $500 million.

Gatlinburg, Pigeon Forge, Sevierville and all of Sevier County live on tourism, so reviving that trade is the top priority for government and business leaders.

Even as the damage was being tallied, several reconstruction and expansion efforts were announced.

Something the area’s boosters emphasize is that most damage was on the outskirts of town or in the hills. Though flames came perilously close, Gatlinburg’s central business district emerged with only a coating of soot that took several days to scrub off. Alamo Steakhouse was one of the few high-profile Gatlinburg businesses actually destroyed, and now the restaurant’s sign promises a return to operation in fall 2017.

Many of the county’s several thousand rental cabins were destroyed, but rental companies said their owners generally plan to rebuild.

The Westgate Smoky Mountain Resort & Spa, which lost about 70 of its 90 buildings, reopened only 10 days after the fire. It will be rebuilt and enlarged within 18 months, Westgate Resorts founder and president David Siegel said.

Most of the buildings lost were cabins, and most of the main buildings survived. The resort still had 356 dwelling units, capable of holding about 1,000 guests; but about 100 of those units remained closed as of mid-December, according to Westgate chief operating officer Mark Waltrip.

The remaining rooms were booked for Christmas, Siegel said.

The resort company plans to rebuild all the lost units, and add 100 more, plus a 50,000-square-foot indoor activity center.

The total rebuilding cost is expected to be more than $150 million, according to Siegel; some of the resort staff are expected to be hired as cleanup and construction workers. Anakeesta, a 72-acre outdoor adventure project, will see its completion pushed from spring until June due to the fire’s effects, owners said. The $47 million attraction is on a mountainside overlooking Gatlinburg, from which visitors will be expected to take an aerial tramway.

As the rest of Gatlinburg cleaned up from the fire, demolition started on the former Best Western Twin Islands. But the hotel’s removal is unrelated to the fire; it is to be replaced by the seven-story Margaritaville Resort in the Smokies, developer Bob McManus and partners announced Dec. 23.

McManus and partners, as Margaritaburg LLC, already own The Island in Pigeon Forge. Both attractions will be Jimmy Buffett themed.

Though it won’t completely open for 18 months, the Margaritaville Resort and associated restaurants should provide 150 new jobs, McManus said.

Fronting on the Parkway will be a LandShark Grill restaurant, which is expected to open this spring, on the former Hard Rock Café site, and the resort should open in July 2018.

The $35 million Margaritaville project is expected to have 174 rooms.

Expanding the lodging base is seen as vital to reviving Sevier County tourism. While several hotels and cabin rentals in the area reported being full or nearly so, that wasn’t because of conventional tourists. Many were reservations transferred from other properties that had been damaged or destroyed. Some guests were emergency and cleanup workers, and others were local residents displaced from their homes by fire.

Attractions, restaurants and shops generally reported that business was down nearly a month after the fire. That matches the results of recent surveys by Justin Jones, head of tourism research and marketing firm IMEG.

“The media’s image, and what was being spread to the masses, was that Gatlinburg was gone and Dollywood, Ripley’s and other core attractions to our area and economy were lost in the fire,” Jones wrote Dec. 22.

Lodging establishments got “thousands of calls” canceling reservations even in untouched areas, he said. While most people said they felt positively about vacationing in Gatlinburg, research found people’s actions didn’t match what they said.

Research from mid-November to mid-December found the number of people looking for Gatlinburg hotels went down by 75 percent from 2015, though those seeking Pigeon Forge hotels was up 25 percent. People looking for Pigeon Forge cabins were down 41 percent from the year before, while people seeking Gatlinburg cabins declined 66 percent.

It’s possible that a major reason for the discrepancy is that people feel guilty for vacationing in what’s perceived as a disaster area, according to Jones. Sevier County leaders and business operators, however, have repeatedly said that tourists’ return is the best way to help fire victims, as local residents need the jobs that tourism provides.

Source: Knoxville News Sentinel, by Ed Marcum

The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org

Back to News Listing