Chattanooga: Chattem plans to grow $7 million expansion may spearhead others

While many companies are downsizing or hunkering down until the current economic situation improves, a Chattanooga manufacturing company is planning a multimillion-dollar expansion.

Chattem Inc., which markets and manufactures health care products, toiletries and dietary supplements, has committed to a $7 million expansion and is considering more projects that could mean total investments of $31 million over several years, officials said Thursday.

Zan Guerry, chairman and chief executive, said the expansion became necessary as the company continued to grow.

“The growth of our business has continued with the acquisition of five brands from Johnson & Johnson in January 2007 and the strong performance of our other business lines, which enables us to continue to expand our presence in Chattanooga,” he said.

Robert Long, Chattem’s vice president and chief financial officer, said the expansion is needed despite the current economic climate.

“The business is doing very well, and we are growing,” he said. “This is to meet demands. It is an expansion out of necessity.”

He said Chattem’s plan will add 33 full-time positions and outlays of $7 million over the next three years. The company will purchase equipment to enhance productivity and efficiency, Mr. Long said.

In addition to the initial expansion, Chattem is considering building a 250,000-square-foot warehouse to consolidate storage operations, which officials said would improve efficiency of its distribution operations and increase manufacturing capacity.

Yet another expansion project being considered includes the construction of a $24 million distribution facility and manufacturing location that would create an additional 50 full-time manufacturing positions, officials said.

Chattem has about 400 employees in Chattanooga.

Mr. Long said a decision about the projects will be made by the end of 2009.

Hamilton County Mayor Claude Ramsey said the expansions will create opportunities for the area.

“I am always happy when a manufacturer of long standing and distinction such as Chattem announces that it will contribute even more to the local economy by creating new jobs and retaining existing jobs,” he said. “The projects Chattem envisions will offer enormous opportunities for the local construction industry.”

Chattem officials are expected to meet with city and county officials next week to discuss what Mr. Long called “typical tax abatement” issues.

“We don’t have a final calculation (for the tax credits),” he said.