Tupelo Money

Tupelo, Miss., is five hours by road from the closest seaport. It's two hours from an international airport. And it's nearly an hour's drive from an interstate highway. If you were trying to get to any of those places, you wouldn't start here. Tupelo is isolated in the hilly, northeastern corner of the poorest and least educated state in the union. If you've ever heard of Tupelo, it's probably as the birthplace of Elvis Presley. It seems an unlikely magnet for foreign investment and export employment. But that's exactly what it has become.

The city's nighttime population of 36,817 more than doubles on workdays as manufacturing jobs draw employees from six counties. The Tupelo area has attracted 44 new factories, and 150 existing plants have expanded in the past two years, creating 10,000 new jobs. Companies from 16 countries now manufacture in the region. Exports range from precision valves to computer chips to 75% of the world's steel golf-club shafts. Tupelo has even attracted one U.S. factory back from Mexico. And other Tupelo companies compete successfully against imports, making everything from crepe paper to couches. (The Hometown of the King of Rock 'n' Roll is also the Upholstered Furniture Capital of the World.)

Why Tupelo? The city has only one significant geographic advantage: proximity to the Tennessee Valley Authority's system of hydroelectric dams, which offers electric rates 20% cheaper than the national average. But other towns in several states can offer the same deal. Public officials in the Tupelo area lure industry with low taxes, free road and rail connections--even subsidized rent and low-interest loans. But much of America engages in that kind of smokestack chasing. Tupelo has a low cost of living and cheap, nonunion labor. So does South Carolina. So does South America.

What Tupelo offers that's special is cheap labor that is also skilled, trainable and loyal. The city has invested in its schools, which not only produced an eye-popping 11 National Merit Scholars in the most recent graduating class but also provide top-notch vocational training to those not bound for college. Rather than throw money at the biggest factories that are shopping themselves to the highest bidder, Tupelo's industrial-development effort seeks smaller employers across a diverse range of industries. And most new residents find Tupelo a pleasant place to live--one reason that turnover, a major expense for any business, runs only about 3% a year in the manufacturing sector, compared with double digits experienced by fast-food restaurants in the area.

Tupelo was started on the road to success by George McLean, an eccentric teacher turned millionaire who bought the town's newspaper in the early 1930s, then used it to push what he called social interaction. Only by investing in schools and in infrastructure like roads, he believed, could the town evolve into a community and attract prosperous industries. He and other Tupelo leaders were recruiting foreign companies as far back as the 1970s. Upon his death in 1983, McLean donated most of his wealth, including his profitable newspaper, to create an economic-development foundation that remains the driving force in the town's growth.