According to national economic development publication "Business Facilities," Tennessee leads the nation in auto manufacturing strength, and industry analysts said they aren’t surprised by that ranking.
“We were impressed by it when we saw the report,” Senior Analyst for Edmunds.com Michelle Krebs said. “If you think about it, it’s not surprising. First of all you’ve got the Volkswagen plant, which is very high-profile globally. That’s a real feather in Tennessee's cap.”
Krebs also said that Tennessee is attractive because it is a right-to-work state, which makes unionization less likely.
State officials have also offered “extremely attractive financial incentives,” Krebs said.
Krebs and fellow Edmunds analyst Bill Visnic said Tennessee’s auto manufacturing strength started with Nissan, which began production in Smyrna, Tenn., in 1983, according to Nissan's website.
In 1997, Nissan started production at another Tennessee plant in Decherd, Tenn.
Having two major plants draws in more suppliers to the area and that can help attract more manufactures and suppliers.
“I think it indicates that, with such vast operation throughout the state, Tennessee is probably going to be ranking near the top on this particular study for quite a long time,” Visnic said.
Construction is also underway on Nissan’s manufacturing facility in Smyrna, Tenn., which will produce lithium-ion batteries to power the Nissan LEAF zero-emission vehicle.
The plant will be capable of producing 200,000 advanced-technology batteries annually and is located adjacent to Nissan’s vehicle assembly plant, where the all-electric Nissan LEAF will be produced beginning in late 2012.
Other recognition
Other honors Tennessee received in the 2011 Rankings Report include: fifth for Best Transportation Infrastructure, seventh for Economic Growth Potential and eighth for Best Business Climate.
Combined, Nissan LEAF and battery production will create up to 1,300 manufacturing jobs when the plants are operating at full capacity.
Jack Rogers, editor-in-chief of Business Facilities, said in a prepared statement that VW cemented the state’s position as an “automotive powerhouse.”
"The Volunteer State is well-positioned to defend its automotive crown for years to come," Rogers said. "A skilled workforce, low-cost utilities and a burgeoning supplier network have laid the foundation for exponential growth in this key manufacturing sector."
In addition to the Volkswagen and Nissan auto assembly plants, more than 860 automotive suppliers, original equipment manufacturers and ancillary manufacturers are located in Tennessee.
Local leaders respond to ranking
This is the second consecutive year that Tennessee has landed the No. 1 spot in the annual ranking.
J.Ed. Marston, vice president of marketing and communications with the Chattanooga Area Chamber of Commerce, said that Chattanooga is fortunate to have become a “real player” in the automotive industry and credited VW for its investment in the community and state.
“Both Tennessee and Chattanooga continue to be seen as prime locations for additional auto investments and we are working hard to make the most of these opportunities in order to create new jobs for area residents,” he said.
Gov. Bill Haslam said in a prepared statement that leaders have been consciously working to attract business.
“I’m pleased the editors of Business Facilities and other corporate decision-makers recognize Tennessee’s strengths in the automotive industry,” he said. “We are always working to improve our already attractive business climate and improve our workforce, and it is no accident that so many global automotive manufacturers and suppliers call Tennessee home.”
Last month Volkswagen Group of America, Chattanooga Operations announced the hiring of its 2,000th employee at the newly-opened Chattanooga plant.
Hiring is expected to continue through early fall at which time there will be about 2,300 employees at the facility.
The plant has the capacity to produce up to 150,000 vehicles a year and is currently building the all-new 2012 Passat sedan, specially designed for the North American market.
VW Chattanooga spokesman Scott Wilson said in an email that for three years his company has invested and hired in the community, keeping a promise that leaders made when they first announced the decision to come to Chattanooga.
“Volkswagen has created an on-site supplier park with eight companies and has attracted other off-site suppliers as well,” he said.
Wilson also highlighted work that Volkwagen does in the community, such as financially supporting community groups such as the Urban League, the Children’s Advocacy Center and the March of Dimes.
VW is investing more than $5 million in Partners in Education initiatives throughout the state, he also said.
“While we have recently reached our stated goal of 2,000 employees at our factory, we have high hopes that as time passes our business and economic impact will continue to grow and enrich the community,” he said.
