Memphis is facing the greatest challenge to its growth and prosperity since the 1968 assassination of Dr. Martin Luther King Jr. and the subsequent description of it by Time magazine as “a Southern backwater” and “decaying river town.”
Memphis rose to the challenge and can do it again. This time, though, there are big changes in five of the key drivers of our growth in the last 40 years. We’ll know better where we stand by the end of this year, and we’ll know some key things by the end of this month and even this week.
FedEx: On Tuesday and Wednesday, FedEx CEO and founder Fred Smith and other top executives will give a detailed description, via webcast, of their plans for reshaping the company. This is unprecedented. Buyouts and possibly layoffs in Memphis are expected. FedEx, which began operations in 1973 and became a public company in 1978, employs some 30,000 people in the Memphis area. Its FedEx Express World Headquarters on Hacks Cross and the FedEx World Tech Center in Collierville were huge construction jobs, employment magnets, and growth engines from 1998 to 2005, especially for the suburbs.
Whatever FedEx does will have a big ripple effect on Memphis as a distribution center and on Memphis International Airport, one of the busiest cargo airports in the world.
The airport: It’s so uncrowded that, strange as it sounds, it’s scary. There’s been an exterior building boom, with a new tower and parking garage, that masks the often empty concourses and shops, the short lines, and the dwindling list of daily arrivals and departures in the terminal, due mainly to cutbacks since 2010 by Delta Air Lines. Airport expansion in the 1980s and 1990s by Northwest Airlines, including international service to Amsterdam, gave the Memphis economy a boost and big-city pride. But the Northwest hub doesn’t figure much in Delta’s plans, and flights have been cut nearly in half.
The disappearing banks: Less than 15 years ago, Memphis was home to three regional banks — Union Planters, First Tennessee, and National Bank of Commerce — as well as homegrown Morgan Keegan. Not even Nashville could say that. Now Morgan Keegan is a piece of Raymond James, and the Union Planters and National Bank of Commerce brands are gone. There is, literally, no sign of them on the downtown skyline. Only First Tennessee, now First Horizon, still calls Memphis its headquarters, and its stock price and employee count took a big hit in the recession.
The housing bust: Home builder Jerry Gillis of Faxon-Gillis said there were more than 9,000 starts in the five-county Greater Memphis area in 2005, way over the 40-year average of 4,000-5,000 starts a year. Easy mortgage money to overextended buyers fueled the boom and ripple effect to appliances, furnishings, road building, and expanded public services. Some of it was growth, but some of it was flight. Memphis annexations of Cordova and Hickory Hill disguised what would otherwise have been a significant loss of population in the 2000 and 2010 Census. The completion of the Southwind annexation in 2013 could be the end of an era.
“The number of starts fell off 80 percent in 2008,” Gillis said. “It happened all over the country, not just in Memphis. Because of low interest rates, the number of permits is going to grow, but I don’t know if we will get back to 4,000-5,000 units in five years.”
The changing school system: Within a week or two, U.S. district judge Samuel H. Mays will rule on the legality of the proposed municipal suburban school systems. Face it, if municipal school systems aren’t coming next year, they’re coming soon enough. Meanwhile, charter schools will chip away at enrollment in the Unified School System. Will “multiple paths to achievement” be more than gobbledygook or will the muni systems spiral toward taking care of their own while the Unified School System becomes the former Memphis City Schools, with a final and fatal round of flight?
Cause for hope: Nobody is cooler under fire or more visionary than Fred Smith, who has said he won’t retire for a few more years. Memphis has a stellar group of innovative and generous philanthropists. Electrolux and Mitsubishi will bring new jobs that should eventually drive the housing market. Southwest Airlines and Bass Pro are (probably) coming to Memphis. So are hundreds more new teachers with Teach For America. Downtown developer Henry Turley says apartment rents are rising.
We’re buying growth. There will be bills to pay. But that’s better than being a Southern backwater and decaying river town.
