Chattanooga is starting the new decade as a much different place than it was at the start of the 21st century.
Two economic downturns in the past 10 years, including the "Great Recession" of the past two years, stalled any local employment gains over the past decade. While jobs grew in health care, education and tourism, employment fell even more in the manufacturing, construction and utilities industries in the six-county metropolitan Chattanooga area, according to the U.S. Bureau of Labor Statistics.
"It's been a brutal decade for much of the economy," University of Tennessee economist Bill Fox said.
But as a new decade begins, Chattanooga is emerging from the worst recession in modern times with a new type of future being shaped by a cleaner, more attractive city with multibillion-dollar investments in automobile and energy plants. Although the economic recovery still is sputtering in many communities, Chattanooga appears poised to do better than most others.
After cleaning up what was once the smoggiest city in America and pumping more than $1 billion of public and private investments into downtown and riverfront attractions, Chattanooga is proving attractive for both young entrepreneurs and baby boomer retirees.
"There is no city in the country that has done a better job in reinventing itself than Chattanooga," said Lamar Alexander, who has watched Chattanooga's transformation as governor, University of Tennessee president and now Tennessee's senior U.S. senator. "The newcomers to Chattanooga like Volkswagen and others are bringing with them an environmental ethic that fits in the way Chattanooga has been thinking about itself for the last 25 years. I think the future is very bright."
Chattanooga is capitalizing on the growth in new types of automobile and energy manufacturing to replace the most labor-intensive manufacturing jobs in local foundries and textile mills shed over the past generation.
Southeast Tennessee is home to two of America's top 10 business investments announced in the past two years -- the $1 billion Volkswagen assembly plant in Chattanooga and the $1.2 billion Wacker Chemical solar equipment plant planned near Charleston, Tenn.
Renewed interest in nuclear power and the growth of solar and wind power are generating another half billion dollars of investments in the region at new plants from Alstom Power, Westinghouse Electric, Chicago Bridge & Iron and Aerisyn Inc. The Tennessee Valley Authority also is studying or already building more than $5 billion of new nuclear power plants.
Robots and laborers
But experts caution that the new jobs in those plants will require higher skills and may be slower in coming than in previous economic recoveries.
At the new Volkswagen plant, for instance, an army of 398 robots will do much of the work in the body shop where cars will be assembled starting in early 2011. The new jobs involve more brains than brawn to operate the high-tech machines capable of ever-more-precise assembly.
"The business world is much different than in the past and workers will need to be more skilled and educated," said Tom Edd Wilson, president of the Chattanooga Area Chamber of Commerce, which helped recruit VW to town two years ago. "Businesses today must compete in a global market and be as efficient as possible."
Among nearly 200 readers of the Chattanooga Times Free Press responding to a survey about Chattanooga's future challenges, the biggest community concerns focused upon education, crime and jobs.
With the local unemployment rate hovering around 10 percent -- a 27-year high --many workers have been without jobs for more than a year. Others are experiencing unemployment for the first time.
Looking for work
Mike Littrell, formerly general manager for the Ready Mix USA cement plant, is one of nearly 25,000 unemployed workers in metropolitan Chattanooga. When the cement maker consolidated operations last November to cut costs, the 55-year-old manager found himself out of work for the first time in his career.
"It's really tough because there just aren't many jobs opening up anywhere," Mr. Littrell said while looking for work last week at the state employment office in Chattanooga. "I've probably applied to nearly 150 companies, but a lot of them you just don't get any response."
David McArthur, a 49-year-old former construction worker, took up long-haul truck driving in 2007 to try to gain extra job security. But he lost his job last year and has had to move his family in with his mother and rent out his former home to make the mortgage payments.
"Hopefully, I can get a job soon because I just found out my unemployment benefits have run out," he said. "I've never seen the market this bad."
Signs of recovery
The economy is showing some early signs of recovery, including a report Friday that the U.S. economy added 162,000 jobs last month. The recession appears to have ended last year, but the economic growth since then hasn't been enough to push most employers into hiring more workers.
Mark Vitner, senior economist for WellsFargo Wachovia Bank in Charlotte, N.C., calls the recovery so far "one that only a statistician would like" because it has yet to translate into lower unemployment.
"The damage that was done by this recession is really mind-boggling, so even though things are improving, it will be a couple of years to get back to where we were on the jobs front," he said.
In metropolitan Chattanooga, employment has dropped by 23,500 jobs from the peak reached in July 2007, according to the Bureau of Labor Statistics. In the past decade, the number of manufacturing jobs has dropped by more than a third.
In metropolitan Cleveland, Tenn., employment fell by 2,600 jobs from 1999 to 2009, including 5,200 jobs lost in manufacturing during the decade, government figures show.
Despite the decline in factory jobs, however, manufacturing output in the region still is nearly as great as it was a decade ago because of steady productivity gains.
"All businesses have learned to do more with less," Dr. Fox said.
The turnaround city
Chattanooga learned many of those lessons in the early 1980s when its manufacturing base was shaken and the city lost more than 10 percent of its population. But the Scenic City is unique among declining cities with more than 100,000 people to have recovered those losses since the 1990s.
By reclaiming its riverfront and natural attractions, Chattanooga is luring more residents, according to David Eichenthal, president of the Ochs Center for Urban Studies.
"People are now coming to Chattanooga, whereas 25 years ago everyone was leaving," he said.
The turnaround, and the prospect of new growth and sprawl spurred by Volkswagen and other new investments, is creating new challenges for getting workers ready for the 21st century ahead, Mr. Eichenthal said.
"We have a serious problem related to human capital and it's always harder to solve human capital problems than it is to solve physical capital problems," he said.
"It's much easier to build infrastructure than it is to build people and a community," he added. "But because of what we as a community have accomplished in the last 25 years to rebuild our city and its appeal, we now are positioned to tackle this next great challenge."
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