With an eye on creating 5,000 jobs in the area by 2015, leaders of the Chattanooga Area Chamber of Commerce are focusing on business recruitment and expansion.
Capitalizing on Volkswagen’s presence and drawing in automotive suppliers is an important focus, leaders said. But they also aim to create an even more diverse employment base in Chattanooga.
"[The automotive] sector is tremendous, not just for Chattanooga, but for Tennessee,” Charles Wood, vice president of economic development with the Chattanooga Area Chamber of Commerce, said. “Automotive represents one out of three manufacturing jobs in the state.”
Through the chamber’s job creation strategy, called Chattanooga Can Do, chamber leaders want to facilitate public-private partnerships to spur economic growth.
In the automotive sector, that involves attracting suppliers to the area—ideally within a 50-mile radius.
There are already about 20 suppliers in the area market that represent about 1,500 employees combined, Wood said.
But not all those suppliers serve Volkswagen.
“For us, now, the focus has gotten pretty narrow on companies that either are currently or have significant potential to supply Volkswagen,” Wood said. “[We want] to get them in closer, and the reason for that is logistics costs.”
Since Volkswagen has secured its United States location, they need to get suppliers within the country.
Now, many of the company’s suppliers are in the North and Midwest.
Getting suppliers closer to Volkswagen would help them save money and ultimately be more profitable, Wood said.
Chamber leaders work to help potential suppliers match their needs with what Chattanooga has to offer, Wood said.
Some company leaders want to be in a more rural setting—they want to be the “big fish” in that area, perhaps.
Or leaders want to keep a distance from a company such as Volkswagen so that they don’t risk losing their employees to it, Wood said.
Others want to be in an urban location or as close to the plant they supply as possible.
“There are a myriad of things that go into the decision-making process,” Wood said.
There is also the question of space—where will the suppliers locate?
Land is limited, and leaders are looking at the possibility of creating a new industrial park, Wood said.
Hamilton County’s two existing industrial parks only have a few parcels left for development.
The largest portion left at Enterprise South—where Volkswagen is located—is 18 acres, which isn’t a lot of room, Wood said.
Another challenge in recruiting suppliers is the fact that many company leaders want to move into existing facilities because they won’t have to wait on construction or deal with the permit process, he said.
And much of the vacant facility space in Chattanooga isn’t ideal for modern manufacturing.
“That becomes challenging,” Wood said. “The idea of a new commerce park or things where we can start to convince the private sector to come in and build is very helpful.”
Currently, Volkswagen has two supplier buildings with eight companies there. There are four areas—almost 1 million square feet—almost ready for new construction, Wood said.
Keeping it diverse
Hamilton County Mayor Jim Coppinger reiterated what chamber leaders also said—the goal is to create a diverse employment base.
Local leaders have been successful in their recruitment, but they can’t take existing businesses for granted, he said. They must continue to actively engage them and help them thrive, Coppinger said.
Leaders must support businesses of all sizes, he said.
But he thinks Chattanooga is in a good position to become an auto supplier hub, not only for Volkswagen, but for other automakers.
J. Ed. Marston, vice president of marketing and communication for the Chattanooga Area Chamber of Commerce, said that in the ‘80s in Chattanooga, there was a heavy manufacturing base, but it dissolved and “it was devastating to the economy.”
So it makes sense to keep it diverse, and leaders said part of their mission is to get the message out that Chattanooga is more than auto manufacturing.
The city has a strong presence in the financial sector and a diverse manufacturing sector—from food production to cars, Marston said.
“And I don’t think there are many cities that are both manufacturing centers and tourist centers,” he said.