Chattanooga to gain from more auto production in region, experts say

Chattanooga to gain from more auto production in region, experts say

January 14th, 2018 by Mike Pare in Local Regional News
“The Southeast recognizes this is a competition. You have to compete for jobs and for investment.”
Chattanooga chamber official Charles Wood about auto sector growth

Chattanooga failed to lure Toyota to the region nearly a dozen years ago, losing out on thousands of jobs at the time, before attracting Volkswagen's $1 billion assembly plant in 2008.

But officials believe nearby Huntsville, Ala., landing a Toyota- Mazda production plant last week will give the Chattanooga area a boost and further solidify the auto industry's place in the Southeast.

"Communities are hungry," said Charles Wood, the Chattanooga Area Chamber of Commerce's vice president for economic development. "The Southeast recognizes this is a competition. You have to compete for jobs and for investment."

The Toyota-Mazda plant is expected to eventually employ 4,000 people earning an average of $50,000 a year, according to Alabama officials. Production is to start in 2021 on assembling up to 300,000 Toyota Corollas and small Mazda SUVs annually.

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CBS News reported that Alabama's total incentive package to Toyota and Mazda will top $700 million after local perks are added to what the state offered. That tops the $554 million in local, state and federal incentives Tennessee offered to VW in 2008.

Wood said there's a lot of opportunity for the Chattanooga area's auto supply chain to grow due to the planned $1.6 billion Huntsville plant. Supplier firms provide auto parts and services to vehicle manufacturers.

"We're in a pretty good spot in terms of the supply chain," he said, citing nearby assembly plants from Nissan in Smyrna, Tenn., General Motors in Spring Hill, Tenn., along with Chattanooga's VW factory and Toyota-Mazda in the future.

Rick Rhoden, chief executive of the Greater Jackson County, Ala., Chamber of Commerce, said about 8,000 of its residents already go to the Huntsville area to work and there will be more with the new Japanese factory.

He, too, thinks his Northeast Alabama county will benefit in terms of supplier companies. Such firms often want to be within 60 miles of an assembly plant, Rhoden said.

"I'm sure [Jackson County economic developers] will make that a priority to go after," Rhoden said. The county already has a half dozen auto suppliers and "shovel-ready" industrial park space to hold more, he said.

Hamilton County Mayor Jim Coppinger said he sees potential benefits in terms of companies adding supplier jobs in the wake of the new assembly plant.

"It puts [the area] on their radar screen," he said about the addition of the Toyota-Mazda factory.

Tennessee economists estimate VW's initial $1 billion investment in the plant spurred 12,400 direct and indirect jobs. A $900 million expansion to produce the Atlas SUV should add another 9,799 posts in the state, projections show.


Tennessee state Sen. Todd Gardenhire, R-Chattanooga, said the recently convened legislative session in Nashville is expected to help provide more trained workers for the industry — both automakers and their suppliers.

He said legislators will work on offering high-tech training at Chattanooga State and Cleveland State community colleges in the field of mechatronics to give companies trained technicians to work on autos and plant equipment.

Rhoden said workforce is key for businesses in today's low-unemployment environment.

"That's a major concern. That's the No. 1 concern," he said, and not just in Jackson County with its 3.8 percent jobless rate.

The chamber official said the county has hired a full-time person to work on industry talent development to help companies meet needs.

"We'll get with our education partners and develop programs to fill those needs business and industry have," he said.

Auto network

Wood said that for the Chattanooga area to have another assembly plant within 100 miles or so will further develop the automotive network in the Southeast.

"There's no way it would not benefit us," he said.

Assembly plants want to be in close proximity to suppliers, which some speculated was a big reason Toyota and Mazda chose Alabama over North Carolina, also a finalist for the project.

The new production plant will be Alabama's fourth. Tennessee has three and Mississippi a pair. All that car assembly over the past couple of decades or so has led to the location of a lot of suppliers, while North Carolina has no auto production plants.

Wood said the supply chain is a critical component to cost for an automaker.

The land Alabama offered Toyota and Mazda is the same tract that it pitched to Volkswagen when the German company was looking for a site for its plant a decade ago.

One reason Chattanooga won out over Huntsville for the VW plant was because its Enterprise South industrial park location was already fitted with much of the infrastructure such as roads and water.

This time, Alabama officials said, they had the property officially designated as a Tennessee Valley Authority megasite and ready for plant construction.

Wood said that having a site "infrastructure- ready to go is table stakes."

"You don't have a site ready to go, you don't get a seat at the table," he said. "We learned that when we lost the Toyota project."

While Chattanooga was a finalist for that Toyota project, the company decided then to build a plant in Blue Springs, Miss., outside Tupelo.

Contact Mike Pare at or 423-757-6318.