VW supplier increase eyed

VW supplier increase eyed

August 26th, 2010 by Mike Pare in Volkswagen

DALTON, Ga. - Volkswagen relied a lot on an existing supplier base for the car it will make in Chattanooga, but it increasingly will prod firms to locate nearer the plant, an auto consultant said Wednesday.

"In the next five to 10 years, VW will require all suppliers to establish themselves around the factory," said Andreas Geiger, managing director of RMG Consult GmbH.

Geiger, whose company is located in VW's home of Wolfsburg, Germany, said the automaker will urge suppliers to locate within about 30 miles of the plant for transportation and quality reasons.

Contributed photo Aerials of the Supplier Park of Volkswagen of Chattanooga. These aerial photos taken in mid-July show VolkswagenĂ­s plant and its supplier park.

Contributed photo Aerials of the Supplier Park of Volkswagen...

"Mexico is not the solution for them," he said, noting the sizable number of suppliers sited near VW's existing Puebla assembly plant that are providing parts for the new midsize sedan.

Geiger, whose company works with suppliers, offered tips Wednesday to more than 100 business people on building ties with the carmaker. If they were left out during the initial go-around of supplying VW, he urged them to keep trying because it could lead to big business contracts.

"It's complicated. Joining the big group is not easy," he said. "But once you're established it becomes easier."

Geiger said he expected openings for contracts to start within a year or so.

Some local economic developers have said the auto industry meltdown in late 2008 and 2009, along with the banking crisis and the recession, limited the number of suppliers locating in the Chattanooga area so far.

Still, VW has developed a $21 million supplier park next to the Chattanooga assembly plant, where production of the car is to begin early next year. Seven suppliers creating 500 jobs are moving into the park, and VW officials said they're looking for more.

Also, Gestamp Corp., which is providing stamped parts for VW, built a new factory at Enterprise South industrial park near the automaker's plant. It expects to create 230 jobs.

Frank Fischer, chief executive of VW's Chattanooga operations, said this month that more than 85 percent of the parts for the new sedan to be made here are sourced in North America.

"That's very important to us," he said. "We want to be independent from exchange rate changes."

At the same time, Alex Stall of the Dalton-Whitfield Chamber of Commerce said no VW suppliers have located in that county. But he said he's hopeful that will change.

Elyse Cochran of the Dalton-Whitfield County Joint Development Authority said the auto sector is one of its target industries.

She said a new 184-acre business park off Interstate 75 could help it woo suppliers, although helping existing businesses is a key, too.


Cochran said Wednesday's seminar drew a number of Northwest Georgia companies, though firms from as far away as Ohio and South Carolina took part, as well.

"It will help better position themselves to be suppliers," she said.

Alan Guyatt, plant manager of F&P Georgia Manufacturing in Rome, said his business supplies auto components to both Honda and Nissan and it's looking at future VW business.

When VW localizes some of its Mexico business, "there will be an opportunity for us," he said.

Frank Cole of Viam Manufacturing in Manchester, Tenn., said the tier one company already does a lot of business supplying floor mats to Japanese and American auto companies.

"We're already working hard with a relationship with VW," he said.

Sam Jeffers of Honda Lock of America in Bremen, Ga., said he's looking possibly to supply parts for a second vehicle that VW officials have said they're eyeing for production in Chattanooga.


About 9,500 supplier and other jobs are expected to be created over time due to the VW plant, according to the University of Tennessee. That's in addition to the 2,000 jobs at the factory.

Although his business is outside the 30-mile mark, the company that supplies exterior components would be "a good fit," he said.

Geiger said VW officials are convinced more companies will come to the Chattanooga area even though it's not known as an automotive center.

"The second wave is a real opportunity for this region," he said.

VW earlier this month brought in about 150 of its suppliers to Chattanooga, many of them chief executives of their companies, to see the new sedan it will make in the city and talk about quality.

"The main point is quality," Fischer said. "We want them to buy into the process."