Enterprise South could see 2,000 more supplier jobs, officials say

Enterprise South could see 2,000 more supplier jobs, officials say

20 more suppliers could build inside Chattanooga's industrial park

July 27th, 2014 by Mike Pare in Business Around the Region
Illustration by Laura McNutt /Times Free Press.

Enterprise South Industrial Park

Major tenants: Volkswagen, Amazon, Gestamp, ADM, Plastic Omnium

Total employment: With VW's planned expansion, Enterprise South businesses will collectively employ more than 7,500 workers.

History: Developed as the Volunteer Army Ammunition Plant in World War II, the military facility was once the largest TNT production plant in the country and supplied munitions through the Korean and Vietnam wars.

* 7,353 acres - Size of former Volunteer Army Ammunition Plant and buffer zone established in 1941

*1,200 acres - Property for which VW had an option to purchase for future expansion

* 300 acres - Size of tract VW is releasing to city and county from its 1,200-acre property option

* 250 acres - Maximum number of the 300 that are developable

* $5.5 million - Amount the city and county still owe the federal government for Enterprise South

* 2005 - Year when Enterprise South industrial park was certified as megasite

* 2,800 acres - Size of Enterprise South Nature Park

Some 300 acres that Volkswagen is freeing up at Enterprise South industrial park in Chattanooga for potential suppliers ultimately could add another 20 companies and 2,000 jobs, economic developers say.

"We're seeing a lot of interest from auto suppliers," said Nick Wilkinson, the city's deputy administrator for economic development, in the wake of VW's planned $600 million investment to make a new vehicle and hire 2,000 more workers at its Chattanooga plant.

Enterprise South emerged from the former Volunteer Army Ammunition Plant, which provided the U.S. Army with ammo going back to World War II. Nearly two decades ago, city and Hamilton County leaders crafted plans to acquire most of the remaining VAAP site with the intent of landing a major manufacturer such as VW to the property.

The 300 acres were part of the VW incentive deal unveiled nearly two weeks ago to put assembly of the German automaker's new sport utility vehicle in Chattanooga. The city, county, state and utilities provided about $274.3 million in incentives to VW for the project.

VW had the 300 acres under an option to purchase along with about 900 more acres in connection with future expansions, should it decide to make the investment. The company agreed to release its option on the 300 acres to the city and the county so more suppliers could be pursued. That would help VW cut its logistics costs if the companies locate nearby, officials said.

Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, said there's a wetlands on the 300-acre parcel, and VW wants a road from the plant to the site, so he's hopeful that 200 to 250 acres can be used for suppliers.

"It all won't be developable," he said. "We've seen 10 jobs per acre. If we get that, that's 2,000 additional jobs that can fit on that site."

City Council Chairman Chip Henderson said he knows that substantial incentive money is going to VW, but the carmaker giving up the option on the 300 acres is key.

He said that a lot of auto suppliers are waiting on the second production line, which VW will add alongside assembly of its existing Chattanooga-made Passat sedan. A second vehicle produced at the plant, which now employs about 2,400 people, makes it more cost effective for supplier companies to build a new facility of their own in the area.

"We'll entice auto manufacturers to come and settle next to VW," Henderson said.

Wilkinson said the city has seen supplier company interest.

"Our intention is to have as many auto suppliers as possible" on the parcel, which is located near Highway 58 and a new road the state is now building from that artery to the back of the VW plant and its existing supplier park.

Wood said that while the 2,000-job forecast is a long-term one, the land is vital because of the shortage of industrial space in Hamilton County.

Over the past decade, nearly all the land at Enterprise South has been spoken for. VW took up a big chunk, some 1,340 acres, in connection with its current plant that opened in 2011. In addition, it has the option property, for which the time frame was extended to 2026 by the new agreement with city and county.

Also, Amazon was wooed to the industrial park in 2011, and the nation's No. 1 Internet retailer now has hired more than 2,000 full-time workers at its Chattanooga facility.

In addition, a handful of other companies have much smaller operations at the industrial park, including some VW suppliers.

Only three sites remain at Enterprise South, Wood said, and each is less than 20 acres in size.

Countywide, there's a shortage of industrial park space, officials have said, and they've been actively looking for suitable space.

"We're pretty challenged," Wood said.

VW swapped some of its property about four years ago to accommodate Amazon and "we haven't found any more land," Wood said.

Henderson said that's what makes reuse of the former 36-acre Harriet Tubman housing site in East Chattanooga so critical. That site could give the city another fairly sizable parcel for economic development purposes, he said.

While the 300 acres at Enterprise South are seen as important to economic development efforts, there's still a big payment coming due for the city and county from the deals which helped create the industrial park.

The parcel 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 for the land was deferred until April 2015, according to county officials. That cost will be split between the city and county.

Local governments have paid for all the land at Enterprise South with the exception of the 1,024 acres, officials said. About 2,800 acres at the former VAAP site became Enterprise South Nature Park. That property was donated to the city and county by the National Park Service for park and recreation purposes.

Wood said that in addition to the undeveloped industrial land at Enterprise South, there's two vacant building pads at the existing VW supplier park adjacent to the plant. Currently, there are two structures holding suppliers at that site.

Wood said he doesn't know what VW's plans are for the empty building pads. But, he said, companies with large supplier operations are unlikely to go into the currently supplier park because they're sharing space with other businesses.

Also, Wood said, the Chamber would like for suppliers to serve other automakers than just VW.

"That's problematic with the buildings owned by VW," he said.

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