Chattanooga's Volkswagen plant could gain by trade pact, Lamar Alexander says

Chattanooga's Volkswagen plant could gain by trade pact, Lamar Alexander says

February 21st, 2013 by Mike Pare in Business Around the Region

U.S. Sen. Lamar Alexander discusses ways to improve the local business environment with the Chattanooga Regional Manufacturers Association on Wednesday.

Photo by Jay Bailey /Times Free Press.

The Chattanooga Volkswagen plant is seen in this aerial photograph taken in March 2012.

The Chattanooga Volkswagen plant is seen in this...

Photo by Dan Henry /Times Free Press.

U.S. Sen. Lamar Alexander said Wednesday he's hopeful new U.S. trade talks with Europe over cutting tariffs will help Chattanooga's Volkswagen plant and other Tennessee exporters.

"One good way to create new jobs is to have more free trade agreements," the Tennessee Republican said after meeting with Chattanooga area manufacturers.

VW officials say that such trade pacts make the Chattanooga plant more competitive within the automaker's group. The city plant is vying for production of a potential new sport utility vehicle with VW facilities in Mexico.

Alexander noted that last year, VW announced the company's first North American Audi plant would be built in Mexico.

"A lot of people hoped it would have come to Chattanooga," he said.

But the Chattanooga effort was hindered by a lack of a free trade agreement between the U.S. and Brazil. Mexico has such an agreement, Alexander said.

In fact, Mexico has such accords with 44 countries while the U.S. only has pacts with 14, according to experts.

Last week, it was announced that the U.S. would start trade talks with the 27-member European Union in June.

The U.S. and EU estimate that by 2027 a comprehensive pact could add 0.5 percent a year to the Union's gross domestic product and 0.4 percent to U.S. output, according to The New York Times.

Tim Spires, who heads the Chattanooga Regional Manufacturers Association, said that Frank Fischer, a CRMA board member and VW's top official locally, has expressed a desire for such a trade agreement.

"That is very critical," Spires said. "Bringing in raw materials is part of the expense of making the car."

Alexander said that one of every five manufacturing jobs in Tennessee is related to exports. He said a trade pact with Europe "could mean thousands of new jobs for Tennesseans."

Alexander said the auto and transportation sectors are the largest part of Tennessee's exports, about $6 billion annually.

"The prospect of opening up the European market to more manufactured goods from Tennessee is good for working families in the Chattanooga area."

Manufacturers meeting with Alexander expressed concerns about a range of issues.

Bill Minehan, president of AdTech Ceramics, which makes custom electronic components for the military, medical and other business sectors, said that one of the barriers to smaller firms is setting up sales infrastructure internationally.

Alexander noted that the state has opened new export offices in the United Kingdom, Germany, Mexico and China.

Ron Speicher, president of Davron Technologies, said his company that supplies industrial ovens has had some international opportunities. But, he said, making the more simplistic components have gone to companies in China and Mexico.

Henry Lodge, chief operating officer of South Pittsburg, Tenn., skillet maker Lodge Manufacturing, said educating people for jobs is something the state needs to do better.

Paul Loftin, president of Siskin Steel, said he has concerns about Chinese currency manipulation.