A first-for-Tennessee research center that Volkswagen will erect in Chattanooga is expected to help the area woo more suppliers - and jobs - as companies will try to integrate their products to VW's new parts designs.
Experts said Monday that the center revealed by VW, supported by 200 engineering-type positions, represents an evolution of the auto industry in Tennessee and ultimately means more high-paying, high-tech jobs.
"Tennessee is known for manufacturing automobiles but it hasn't established the research and development process," said Tennessee Gov. Bill Haslam. "It's a new day in Tennessee in terms of innovation."
Along with its 1,800 new assembly jobs to build a sport utility vehicle at VW's Chattanooga plant, the German automaker also unveiled plans Monday for creating the National Research & Development and Planning Center in Chattanooga.
"This speaks volumes for VW being as close to the customer as it can be," Haslam said.
The Tennessee Automotive Manufacturers Association said the research center signifies a step forward in moving the state's auto industry up the value-chain as it tries to move from a world-class center for production to a hub for innovation excellence.
The center is seen as setting Tennessee apart from other auto locations such as low-wage Mexico.
The Brookings Institution last year in an assessment of the industry in Tennessee noted that a key step in propelling it to the next level is increasing local innovation. The report called for expanding collaboration between private industry and the state's research institutions.
After BMW built a manufacturing plant in South Carolina, the company and Clemson University teamed to create the International Center for Automotive Research. The research center is on 250 acres between Greenville and Spartanburg, S.C. The jobs at ICAR are seen as both high wage and high skill.
Greenville took the key step of directly linking its downtown to ICAR.
Chattanooga Mayor Andy Berke said the research center here symbolizes VW's belief that the company can "not just make great cars but design those cars of the future."
Berke said most of the 200 people VW hires for the research center will be at Enterprise South industrial park. But, he added, "we're looking at where to put those people. We're in discussions about exactly where they are to go."
The mayor said that for VW employees worldwide, only its operations in Barcelona, Spain, are more desirable than Chattanooga as a place to relocate within the company.
"That speaks well for our city," he said.
Ron Harr, the Chattanooga Area Chamber of Commerce's chief executive, said the VW R&D center will bring the kind of intellectual workers that add more value to what the company is doing in the city.
He said it's possible that the University of Tennessee at Knoxville, UTC and Oak Ridge National Laboratory may want to link up with the VW research center.
"I absolutely think that's possible," Harr said. "We'll have to see where that goes."
Charles Wood, the Chamber's vice president for economic development, said Volkswagen has a big research base.
"I'd imagine they'd draw from that" in terms of personnel, he said.
VW employs several hundred people in Detroit to support its North American operations, but Wood said the company doesn't do the kind of research there that's planned for Chattanooga.
"Most of that work happens in Germany," he said.
According to TAMA, the VW center could also benefit the state's auto accelerator in Spring Hill, Tenn. That's where innovative new automotive-related companies grow in a business incubator-type environment.
TAMA also said that many in the state's auto industry are interested in a statewide consortium where they can share in innovation.
TAMA said General Motors, which has a manufacturing plant in Spring Hill, doesn't do R&D in Tennessee. Nissan, which has its North American headquarters in Franklin, Tenn., as well a production plant in Smyrna, Tenn., does some of that activity.
Contact Mike Pare at email@example.com or 423-757-6318.