Jobs at stake as Volkswagen fills supply chain

photo The Chattanooga Volkswagen plant.

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Volkswagen is ramping up efforts to find parts suppliers for its new sport utility vehicle, and the automaker said it's talking to companies about locating closer to the Chattanooga assembly plant.

"We're pushing more to come locally," said Gary Heywood, the factory's purchasing director.

Heywood said VW is trying to find the links to the supply chain for the new midsize SUV that the plant is to start producing in late 2016. The $900 million investment is expected to create 2,000 more jobs at the plant that already employs 2,400 workers.

Prospective suppliers already have started visiting the Scenic City.

And on Thursday, the automaker launched a training program in Chattanooga to make sure purchasing department employees have skills for the challenge of sourcing parts for both the SUV and the Passat midsize sedan, which the plant already produces.

VW's Chattanooga initiative will join what the company calls "purchasing academies" that began with plants in Germany in 2009 and expanded to China in 2011, Mexico in 2012, and Russia in 2013.

The academy will develop competency profiles for each position, and employees can identify areas of expertise they want to develop. According to VW, this permits a tailor-made training plan for employees in partnership with their managers.

"The purchasing academy aims to provide the skills and expertise needed for our team members to be successful and embrace their careers," said Sebastian Patta, the Chattanooga plant's executive vice president of human resources.

The Chattanooga academy is especially working with one at the VW factory in Puebla, Mexico, as the two plants build cars for the same region and share many parts suppliers.

Heywood said that having suppliers locate closer to Chattanooga drives down logistics costs and boosts flexibility.

He cited the startup of construction of Plastic Omnium's plant at Enterprise South industrial park, less than a mile from the VW factory. The French company is building an $80 million facility that will produce bumpers for the SUV, helping to employ upwards of 300 people within three years.

Ron Harr, the Chattanooga Area Chamber of Commerce's outgoing chief executive, said VW notes that close proximity of the Plastic Omnium plant is important.

"Being in the shadow of the [VW] plant has advantages," he said.

Harr said VW has given the Chamber a list of suppliers it can pursue with hopes they'll build a factory in the area.

"Two prospects were in town the same day recently," he said.

City and Hamilton County officials are hopeful of landing more suppliers. In 2008, after VW announced it was building a plant in Chattanooga, the Great Recession that hit the auto industry over the next few years is believed to have hindered many suppliers from opening factories in the area. While some companies landed in the Chattanooga area, a number found it more cost effective to service VW from existing factories.

Charles Wood, the Chamber's vice president for economic development, cited a 300-acre site in Enterprise South that Chattanooga and Hamilton County soon will have access to and pitch to suppliers. VW agreed to walk away from its option to buy the tract as part of incentives negotiations with the city and county.

Wood said plans are to soon look at where utilities to the site will need to go and that site clearing will start next year.

The city and county also need to pay the federal government for the parcel by next April, Wood said. The tract is a portion of 1,024 acres that was purchased from the federal government by the city and county in 2005, and the $5.5 million payment was deferred until next spring, according to county officials. That cost will be split between the city and county.

Officials have said the 300 acres ultimately could add another 20 companies and 2,000 jobs.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

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