After shedding nearly one of every 11 jobs over the past two years, Chattanooga is gaining jobs this year at one of the fastest rates of any major metropolitan area in Tennessee, Georgia or Alabama, according to a study released Tuesday.
While most major U.S. cities still were losing jobs last winter, employment in the six-county Chattanooga area grew by 0.3 percent in the first quarter of 2010, according to the Brookings Institution.
PDF: Brookings study of metro areas
The employment rebound follows the city’s worst downturn in employment in decades.
In a new quarterly assessment of metro areas, Brookings reported that employment in the Chattanooga area was hurt more than in most areas during the economic downturn in 2008 and 2009. From its peak in the first quarter of 2008, the region lost 9 percent of all jobs in the next seven quarters, placing Chattanooga second only to Birmingham, Ala., for the biggest share of job losses among Mid-South cities.
But with hiring in recent months for new or expanded plants by Volkswagen of America, Alstom Power and Chattem Inc., among others, Chattanooga appears to be rebounding faster than most of the country from the Great Recession. Among metro areas across the Southeast, only Augusta, Ga., had faster job growth in the first quarter of this year than Chattanooga, Brookings reports.
“East Tennessee — and particularly Chattanooga and Kingsport — has historically been a heavy manufacturing urban area, so the transition in our economy away from much of the old-line manufacturing firms hit areas like Chattanooga much harder,” University of Tennessee economist Bill Fox said. “But with Volkswagen and other new manufacturing investments in the region, Chattanooga is now one of the few areas where manufacturing will help lead the economic recovery in the next few years.”
VW, NUKES POWER GROWTH
The Chattanooga Area Chamber of Commerce estimates the Volkswagen plant will create 7,898 jobs in the Chattanooga area, including 2,000 direct employees at the plant and nearly 6,000 indirect jobs at suppliers and related businesses.
Tom Edd Wilson, president of the Chamber, said Chattanooga also is poised to capitalize on the expected renaissance of America’s nuclear power industry with new and expanded facilities from Alstom Power and Westinghouse Electric in Chattanooga and Chicago Bridge and Iron in Marion County.
“We have tremendous opportunities for growth, especially with the growing automotive and nuclear power generation businesses in our region,” Mr. Wilson said. “These are emerging industries that should help us to continue to grow faster than most cities during this recovery.”
The Chattanooga region was battered during the recent recession by the housing slump, which curbed demand for locally produced carpet and appliances linked with home sales and values nationwide.
But the Brookings study found that Chattanooga home prices held up better than those in most cities during the recession. Over the past three years, housing prices fell by an average of 7.9 percent in metro Chattanooga, or only about one-third of the 21.4 percent drop in housing prices nationwide during the period.
SIGNS OF RECOVERY
OPENINGS AND CLOSINGSIn the six-county Chattanooga metropolitan area, plant closings during the recession included:* Shaw Industries’ Trenton Spinning Mills in Trenton, Ga., 440 jobs in 2008* Mohawk Industries’ Fort Oglethorpe mill, 235 employees in 2008* Prebul Auto Group closed area dealerships, 230 employees in 2009* Tecumseh Power Co. in Dunlap, Tenn., 180 employees in 2008* Arcade Marketing cutbacks, 150 employees in 2008* Three area Goody’s stores closed, 120 employees in 2008 and 2009MAJOR PLANT INVESTMENTSMetro Chattanooga is adding jobs this year, including:* Volkswagen of America, $1 billion vehicle assembly plant adding 2,000 jobs* Alstom Power Inc., $300 million new fabrication plant adding 360 jobs* Gestamp Corp., $90 million automotive supply plant adding 230 jobs* Chattem Inc. $42.5 million in expansions, adding 103 jobs* SAIG Aerisyn LLC, $3 million expansion of wind turbine plant adding 120 jobs* Westinghouse Electric Co., $25.2 million plant expansion adding 52 jobsSources: Tennessee Department of Labor and Workforce Development, Chattanooga Area Chamber of Commerce
During the downturn, Chattanooga landed the $1 billion Volkswagen assembly plant, scheduled to open next year, and a $300 million plant expansion by Alstom Power that begins production this summer. In neighboring Bradley County, Wacker Chemical is planning to start work soon on a $1.2
billion solar panel production facility.
“There will be probably only be a few places that are manufacturing winners coming out of this recession, and Chattanooga is one of them,” Dr. Fox said.
Across most of America, the new Brookings study underscores the depth of the recession — worse than any in the past generation — and the relatively slow pace of the recovery in lost jobs.
Howard Wial, an economist and Brooking Institution fellow who authored the new study of metro growth patterns, said most U.S. cities continued to lose jobs during the winter months compared with the fourth quarter of 2009.
“It looks like a gradual and still jobless recovery in most areas,” he said. “There’s tremendous uncertainty about the business outlook. While some sectors are improving, we also know that some of the government stimulus that helped sustain the economy during the recession is being phased out.”
Mr. Wial and other economists don’t expect a double-dip recession with another downturn in economic activity this year. But most expect it to take another four or five years to fully regain all the jobs lost over the past three years.
“It will probably be 2015 before we return to the employment levels we saw before this downturn,” said Mark Vitner, senior economist for Wells Fargo Economics in Charlotte, N.C.
Mr. Vitner said the rebound is being challenged this spring by the debt woes of Greece and other European countries, which are pushing down the value of the euro, and by the ongoing BP oil spill in the Gulf of Mexico.
The Wells Fargo economist estimates the oil spill may cost up to 250,000 jobs, at least temporarily, due to cutbacks in tourism, fishing and oil drilling industries in the region.
The European debt crisis also potentially could thwart the nascent recovery in the housing industry because of credit concerns around the globe, he said.
“We actually think that the unemployment rate will rise during the summer months, not because of more layoffs but because, as conditions improve, more people are likely to enter the work force to try to find a job,” Mr. Vitner said. “Businesses have learned to make do with fewer workers, so we’re not likely to see major hiring activity in the near future and, because unemployment will remain high, that in turn may keep consumers more cautious about spending.”
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