published Friday, April 20th, 2012

Manufacturing comeback brings hope for Chattanooga region

Daniel Hudson, an employee at Kalenborn Technologies, smoothes the edges of a piece of metal at the Soddy-Daisy facility.  Kalenborn Technologies fabricates steel for stairs, handrails, and other items and is planning to bring in new manufacturing business from Illinois.
Daniel Hudson, an employee at Kalenborn Technologies, smoothes the edges of a piece of metal at the Soddy-Daisy facility. Kalenborn Technologies fabricates steel for stairs, handrails, and other items and is planning to bring in new manufacturing business from Illinois.
Photo by Ashlee Culverhouse.

PLANNED JOB ADDITIONS

• Volkswagen, 800 more jobs in Chattanooga

• Wacker Chemical, 450 more jobs in Bradley County

• Mann+Hammel USA, 150 jobs in Dunlap

• Whirlpool, 130 more jobs in Cleveland

• Alstom Power, 120 more jobs in Chattanooga

• GE Roper, 100 more jobs in LaFayette, Ga.

• Duracell, 60 more jobs in Cleveland


RECENT ADDITIONS

• Volkswagen, 2,700 jobs since 2008

• Alstom Power, 230 jobs since 2009

• Wacker Chemical, 200 jobs since 2010

• Wrigley, 120 jobs since 2010

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Kalenborn Technologies in Soddy-Daisy is aiming for a big year as it swings into full production.

"We'll be employing more," company President Phil Mitchell said about the modest-sized steel fabrication venture that's investing about $1.6 million in its factory.

When it expands, it'll join a manufacturing base that, in the past two years, has been the fastest component of job growth in metro Chattanooga, reversing a decline in such jobs since the 1980s.

From February 2010 to February 2012, the number of factory jobs in Chattanooga rose by 3,500 -- or nearly 13 percent -- the fastest two-year growth in the quarter-century that the U.S. Bureau of Labor Statistics has kept such records.

Manufacturers in the Chattanooga area are planning to add at least another 1,500 jobs in new and expanding plants, a dramatic turnaround in a metropolitan area that shed nearly half of its manufacturing jobs since the 1980s, including 7,700 during the recession from 2008 to 2010.

Tim Spires, the Chattanooga Regional Manufacturers Association's chief executive, said the brutal downturn took its toll and the companies that survived are healthier.

"The stronger companies are seeing growth," he said.

Ashley Hancock, executive director of the Southeastern Medical Devices Association, said that while the economy is slowly improving, the recession created a kind of pent-up demand.

"For so long, companies hadn't done much. We've got to move forward," he said Thursday at the Chattanooga Enterprise Center's technology conference.

HOME AGAIN

While some manufacturers continue to move offshore in search of cheaper workers, others are investing again at home.

Whirlpool and General Electric both decided in recent years to maintain and upgrade their oven and cooking appliance plants in Cleveland, Tenn., and LaFayette, Ga., respectively.

Whirlpool, which operates 31 of its 39 factories outside the United States, decided after years of study to spend $200 million on a new Bradley County plant a few miles from its century-old factory near downtown Cleveland.

Jeff Fettig, chairman and chief executive of Whirlpool, said that, after the new factory announcement, the question he was asked most was: Why invest in America?

"We believe in the country," he said, citing the work ethic of the Cleveland work force and support from local officials.

Whirlpool's Bradley plant is its first new U.S. factory since the mid-1990s and the company projects that its work force in Cleveland will grow from about 1,500 now to 1,630 within about two years.

Labor rates are lower in Mexico, where many U.S. appliance makers have moved, but Whirlpool gained more than $30 million in state and local incentives and avoided costly severance costs by staying in Cleveland. Freight costs to serve the American market are also lower than they would be from Mexico.

Fettig said that, when housing demand begins to come back, so will appliances.

"We want to be positioned to grow very fast," he said.

Mike Montgomery, fabrication and finishing operations manager for GE Roper's plant in LaFayette, said America is "a great place to make stuff again."

"We just seem to be getting more and more competitive," he said.

Montgomery mentioned transportation costs and the ability to quickly change orders in the U.S. is an advantage compared to manufacturing overseas.

"That leads to insourcing parts of the production previously done overseas," he added.

CITY TURNAROUND

The Wall Street Journal this week heralded Chattanooga's turnaround, noting that new and expanding factories "have helped give the former manufacturing city a second act."

At one time, more than 40 percent of Chattanooga's workers were employed in textile mills, foundries and other factories and the city probably will never regain all the manufacturing jobs it lost to automation and foreign competition.

But Volkswagen of America picked Chattanooga for its return to U.S. production in 2008, helped by more than $577 million worth of incentives. VW expects to have 3,500 employees and contractors at its $1 billion plant by the end of the year.

"The manufacturing sector is getting healthier," said Tom Edd Wilson, the Chattanooga Area Chamber of Commerce's chief executive. "People are more optimistic. There's more bounce in their walk."

Last year, Tennessee had a net gain in manufacturing jobs for the first time since the 1990s "primarily because of the strong rebound from the trough of the recession when companies had to make dramatic cutbacks in staff and production," University of Tennessee Economist Matt Murray said.

Murray, who helps prepare the state's economic forecast for Gov. Bill Haslam, predicts manufacturing employment will grow through 2014 before resuming its long-term slide.

"We'll recover some of the jobs we lost during the recession, but the technologies being put into today's factories simply allow businesses to produce far more with fewer workers," Murray said.

The Chattanooga area also is benefiting from the region's success in luring new industry by promoting its central location and offering manufacturers land and tax incentives.

The largest capital investment ever in Southeast Tennessee is reshaping 550 acres near Charleston, Tenn., where Wacker Chemical is building a $1.8 billion polysilicon plant.

In 2010, Alstom opened a $280 million plant along Chattanooga's riverfront to service the power production sector.

Still, there are hopes that the U.S. economy will continue its recovery and further bolster the manufacturing sector.

Tommy Shaw of Ringgold, Ga., electric bus company EVAmerica, said business was steady during the last few years, but if the economy is healthier, cities will have more money to buy its buses.

Joe Accetta is president of Abresist Kalenborn, an Indiana-based company whose Soddy-Daisy facility produces wear-resistant metal plates for industrial use. He said business fell 30 percent after 2008, but now "we've made a substantial recovery."

He added that he's hopeful revenues will jump 10 percent this year over 2011.

Staff writer Carey O'Neil contributed to this story. Follow the latest Chattanooga news on Facebook.

about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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