As big as nine football fields, Volkswagen's new supplier park is key to powering the success of the Chattanooga assembly plant and its new car, officials said Thursday.
"It's a big advantage," said Frank Fischer, chief executive of VW's Chattanooga operations. "The supplier park is a big element of the overall strategy."
On Thursday, VW named five suppliers of vital parts for its new midsize sedan, and the German automaker said two more companies are expected to join them later in the supplier park, expected to be ready by mid-summer.
The supplier park now is under construction next to the assembly plant at Enterprise South industrial park. The supplier companies will assemble parts in the park as well as ready them for use there.
In all, the seven businesses will create about 500 new jobs, helping meet some of the pledge of spin-off employment that officials promised when the $1 billion assembly plant was announced in July 2008.
Officials at each of the suppliers said they intend to hire locally.
"We understand it's important to have local people here," said Tim Buss of ThyssenKrupp, which will provide front and rear axles and employ about 90 workers.
Mr. Fischer said the supplier park is an advantage to VW for vehicle quality and the just-in-time flow of parts.
"It's good for safety and productivity," he said.
Production at the plant, which is to employ more than 2,000 people, is scheduled to start early next year.
Outside the assembly plant, exterior walls of two 223,000-square-foot buildings are going up in the supplier park, developed by VW with a $21 million loan from Bank of America.
Mr. Fischer said the supplier park wasn't easy to pull together amid the shaky economy.
"It took quite some convincing within VW," he said. "Financials are tight."
Supplier company officials said wages for the new jobs will be "competitive" with area businesses, though none would cite any exact figures.
VW is starting its production work force, which now numbers more than 120, at $14.50 per hour, growing to $19.50 per hour over 36 months.
Supplier company pay isn't likely to be so rich.
In West Point, Ga., where Kia Motors late last year fired up a new assembly plant, one of its biggest suppliers begins its workers at $10 an hour plus benefits.
Matt Kisber, the state's economic and community development commissioner, lauded the supplier park and also that a Tennessee Valley company will make "a world-class product" at the plant.
"I can't wait to see the prototype vehicle," he said.
Hamilton County Mayor Claude Ramsey called the supplier park announcement "another good day."
"We've got a trainable work force that's good for your businesses," he told the suppliers.
Chattanooga Mayor Ron Littlefield said he's hopeful many other suppliers will land in the area as VW's network unfolds.
"I look forward to the next chapter," he said.
Mr. Fischer said there's space for more suppliers within the park.
"There's still a lot of room to construct further buildings," he said.
Tom Edd Wilson, the Chattanooga Area Chamber of Commerce's chief executive, cited VW's commitment to the project in the face of the economy.
While some of the suppliers have started hiring locally, most will wait until mid- to late summer to bring on workers.
"They've never wavered one time," he said.
Mr. Fischer said VW employees, which now number about 650 in Chattanooga, are working on the first full prototype of the sedan that will be new to the American market.
Engines for the new sedan will be made at VW facilities in Mexico, Germany and Poland, while gearboxes are slated for production in Argentina and Japan, Mr. Fischer said.
Some auto analysts and others have raised the idea that VW later could put a new engine plant in North America to service the Chattanooga factory, and Hamilton County is expected to seek such a facility should the automaker move ahead.
Continue reading by following these links to related stories: