Memphis is better prepared to handle an economic recession than you might think.
Although the fragile airline and shipping industries may spur concern about the future prosperity of Memphis International Airport and Federal Express, two of Memphis’ largest employers, in a recession, economists and industry representatives said Memphis has nothing to fear.
“We’re going to come out just fine,” said Jeff Wallace, senior research associate at the Bureau of Business and Economic Research at The University of Memphis.
Memphis may weather a recession well because the area economy is not based on manufacturing, the employment sector hit hardest by economic lull because consumers postpone buying high-dollar, large items like cars and boats. The manufacturing sector employs less than 10 percent of the population, Wallace said.
Rather, the Memphis economy is largely based on services, which are some of the last things to suffer during recession.
“Are you going to postpone getting your hair cut?” Wallace said.
‘Services’ include things like passenger flights, distribution and shipping.
“Think of FedEx as a giant service,” Wallace said.
Federal Express recently signed a $7 billion agreement with the struggling U.S. Postal Service to provide air capacity for 3.5 million pounds of U.S. Postal Service Express and Priority Mail shipments. Those new 3.5 million pounds translate into 1,500 new Federal Express jobs and 40 more flights per day shuffling through the Memphis International Airport.
The events of Sept. 11 and the anthrax scare have not affected the jobs, flights or the details of the agreement, said Pam Roberson, senior communication specialist for Federal Express.
The new flights have also meant an increase in cargo traffic for the Memphis International Airport, even in times when airports nationwide report losses in cargo traffic, according to Larry Cox, president and chief executive officer of Memphis-Shelby County Airport Authority.
“Strong cargo presence underwrites and guarantees that the Memphis airport will always be financially stable,” Cox said. “It’s our ace in the hole.”
Cox said 45 percent of the flights that channel through the Memphis International Airport are cargo flights.
The guarantee of a large number of cargo flights cushions the Memphis International Airport from the loss of passenger flights due to cancellations after Sept. 11.
Employment levels have remained “steady” since Sept. 11.
“Our growth is guaranteed for the future,” Cox said. “The airport’s always going to be here.”
