REGIONAL FOCUS TENNESSEE: Resilience key in Tennessee

Recent PR agency growth in the heart of the Bible Belt looks like

divine intervention. But Sara Calabro finds that Tennessee's PR strength

lies in the uniqueness of the marketplace, which scares away big

firms.



Tennessee is somewhat of an enigma to many out-of-staters.



The popular assumption that middle Tennessee's economy is based on the

country music business is a misconception, and particularly misleading

when it comes to PR. Music remains a large part of Nashville's culture,

but a relatively small part of the PR business and the overall

economy.



So, while country music sales have actually taken a dip, Tennessee's

economy as a whole has more than endured. Thanks to its surprisingly

diverse economy, the state has suffered little loss in a year that

proved to be devastating to many more concentrated states and

cities.



Fred Harris, VP at the Nashville Area Chamber of Commerce, says

Nashville is "not recession-proof, but recession-resistant." Naturally,

the city has felt some effects of the recession, with unemployment

rising from 2.8% in 2000 to approximately 3.5% in 2001, and anticipated

to hit 4% in 2002. But relatively speaking, those are low percentages,

and Nashville is confident that when one industry suffers, there are

many others waiting in the wings to pick up the slack. In recent years,

Nashville has averaged a 2% annual growth rate, and Harris reports with

conviction that 2002 will be no exception.



The business of Tennessee



The birthplace of for-profit healthcare, Nashville is home to 220 HMOs,

including the Hospital Corporation of America (HCA). Lucky for

Tennessee, healthcare is an industry that typically manages to defy the

laws of what it means to be in a recession. As one PR expert puts it,

"People are always going to get sick, regardless of how well the economy

is doing."



Publishing of all sorts is thriving as well. Fittingly, known as part of

the Bible Belt, Tennessee is one of the largest producers of Bibles and

other religious literature in the country. People are prone to seeking

comfort in religion, particularly in times of distress, and several

book, magazine, sports, entertainment, and healthcare publishing houses

have also found a home in Tennessee.



With Nissan, Saturn, and Bridgestone/Firestone located here, Tennessee's

automotive and transportation equipment industries show little sign of

slowing down. Nissan is planning on hiring 1,000 new employees in 2002,

while Saturn plans to bring 2,000 new workers on board.



FedEx really put Tennessee on the map when it set up in Memphis, and

more buzz was created by the arrival of Dell. Banking, insurance, higher

education, and a strong entrepreneurial community contribute to the

state's diversity.



Obviously, that's good news for PR firms here. Long-term clients are

always important in times of recession, but Tennessee agencies have also

been welcoming several new clients with open arms during this supposed

economic downturn.



PR firms in the area have been reluctant to allow one suffering industry

to greatly impact overall revenue. When one sector is down, another is

up, and the area is mainly dominated by firms that can wear many

different hats. Privy to several options, agencies are able to either

focus their attention toward industries that are doing well at the time,

or adjust their approaches.



Prior to September 11, Dye Van Mol & Lawrence, a 60-person PR firm in

Nashville, pitched for the nearby international airport's PR

business.



The firm was forced to drastically alter its plans for handling the

account when it was hired in October. "They (Nashville International

Airport) are certainly going to have different needs now - more specific

and urgent.



But we are glad to be of help," says agency partner Hank Dye.



Homegrown PR talent



Despite Tennessee's wide-ranging market, few of the big-name PR agencies

have offices here. And the state's PR community seems to be downright

proud of that fact.



"We have excellent practitioners here who have been doing it for a long

time," says Mark McNeely of McNeely Pigott & Fox, an agency with offices

in Nashville and Memphis. "If the larger agencies thought there was a

void in Tennessee, they would jump on it." McNeely and many of his

Tennessee colleagues feel that the homegrown in-state firms are

perfectly capable of working for local, national, and international

clients with the high caliber of services they are looking for.



Many national companies have hired firms like McNeely because they want

to add local flavor, as it is the savviest of companies that recognize

the need to adjust products and ideas to different cultures.

Seigenthaler Public Relations in Nashville handles PR for Leap Wireless,

a San Diego-based telecommunications company. "The idea is to take a

national brand and adapt it to the nuances of middle Tennessee," says

Beth Seigenthaler, president of the firm. Leap, the producer of Cricket,

a Tennessee-area phone service, came to Seigenthaler knowing that

community relations was going to require expertise in that particular

marketplace.



Aware of what they do best and taking pride in it, all while being

realistic about limitations, has prevented most Tennessee firms from

ending up with plummeted year-end revenues for 2001. Both McNeely Pigott

& Fox and Seigenthaler predict that they will come out even in 2001.

Down from the 65% growth it experienced in 2000, Katcher Vaughn & Bailey

in Nashville managed to remain on the plus side for 2001 with a 10%

increase in business. Though hoping for a 15% increase, Ackermann Public

Relations is satisfied with its 5% growth.



Cathy Ackermann, president of Ackermann Public Relations, can speak from

a comparison point of view because her firm is based in Knoxville, but

also has a Dallas branch. She makes the point that Tennessee has managed

to make it through this recession because it has not suffered the shock

effects that others have.



Specifically, Ackermann points to Texas professionals' "cowboy

mentality," which is the belief that nothing bad can happen to them.

When a lot of Dallas' major companies were forced to downsize, the city

had a hard time picking up and moving on. Tennesseeans' natural

inclination to humble themselves by going about their business, keeping

their heads high, and staying confident in what they have to work with

has kept them on top of their game.



Tennessee as others see it



Promising as Tennessee's economy may be, there are still many prejudices

that exist regarding this part of the country. Tennessee is often

thought of as backward or old-fashioned. Ackermann explains, "Although

Nashville is getting built up, there really is no major metropolitan

area in the state. And there is a still a general preconception about

the Southeast." So, despite their desire to overcome these prejudices

and succeed as a community, the people of Nashville are quite content

not being the next big thing.



Nashville residents do not take their city being referred to as "the

next Atlanta" as a compliment. Pam Lewis, president of PLA Media, says,

"We do not want to become Anywhere, USA." Lewis feels that Atlanta has

lost its historical feel as a result of its boom in recent years. "We

are hoping to learn from the mistakes of Atlanta," she adds. Lewis and

others in Tennessee pride themselves on the history that their cities

have maintained. Unblessed with loads of new contemporary buildings and

unbearable traffic, Nashville has managed to hold onto its Southern

charm.



Confident that Tennessee's diversity is a major factor in why its PR

business has remained so successful through turbulent times, it is

unlikely that the state is hoping for larger agencies to move in.

However, since September 11, many large companies outside Tennessee are

asking questions.



Companies may start to consider opening offices in states like

Tennessee, concerned about the risks of having all their financial

records and backup data in one location.



The Nashville Area Chamber of Commerce's Harris cites business advisory

firm Deloitte & Touche as a good example. In 1990, the firm decided to

cut costs by moving its financial and payroll departments to

Nashville.



Deloitte & Touche was located in the World Trade Center prior to the

move.



Harris believes that as companies look to avoid high-rent cities to

survive the current recession, Nashville will be a relocation target.

And that could spell good news for Tennessee's PR community.



Firm Name Revenue Increase Staff Location

(dollars (%)

Dye Van Mol & Lawrence 6,084,515 -2 67 Nashville

McNeely Pigott & Fox 5,108,477 27 58 Nashville/Memphis

Ackermann PR & Marketing 3,447,689 -4 35 Knoxville

Katcher Vaughn &

Bailey Comms 1,348,046 65 14 Nashville

Seigenthaler PR 1,053,428 18 12 Nashville

PLA Media 178,680 23 4 Nashville

Source: Council of PR Firms. Auditing: No audit was required for

inclusion in the rankings. The CEO/CFO/principal was required to sign a

statement verifying the accuracy of the data and agreeing to possible

participation in a random audit. Disclaimer: While every effort has been

made to ensure the accuracy of these figures, PRWeek cannot accept

liability for, nor make financial guarantees, based upon the information

in this chart.



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