With Chattanooga outperforming US economy, mayor says city should be more selective with business opportunities

Staff Photo by John Rawlston / The Chattanooga Volkswagen assembly plant, located in the Enterprise South industrial park, is adding 1,000 jobs to make electric vehicles.

Chattanooga should outperform the U.S. economy and continue to grow in the new year, according to forecasts by the Federal Reserve Bank of Atlanta.

But with the local jobless rate near historic lows, community leaders said Wednesday one of the biggest challenges for employers and their workers is to get the right skills to make living wages and to promote the right type of regional growth.

Dr. David E. Altig, executive vice president and director of research at the Federal Reserve Bank of Atlanta, said Chattanooga is benefiting by continued gains in manufacturing jobs, contrary to the dip in factory jobs expected across the U.S. in 2020 following eight years of sustained growth.

Although the U.S. economy has continued to add about 180,000 jobs.a month, manufacturing employment nationwide has begun to decline as the global economy has slowed, uncertainty over trade has increased and businesses have trimmed their capital spending.

Biggest new investments

Among the 2,134 jobs announced in Hamilton County in 2019, most were expansions of existing industry. The biggest included:1. Volkswagen of America, $800 million expansion of Chattanooga plant to make electric vehicles, 1,000 jobs2. Arrive Logistics, $3.6 million logistics brokerage office in Chattanooga, 500 jobs3. Mueller Water Products, $41 million expansion of water valve production plant, 325 jobs4. Nippon Paint, $61 million automotive coatings plant in East Chattanooga, 160 jobs5. Gestamp, $48 million automotive supplier expansion in Chattanooga, 150 jobsSource: Chattanooga Area Chamber of Commerce

"We've seen growth in the economy despite the really strong headwinds from manufacturing and business investment," Altig told several hundred members of the Chattanooga Area Chamber of Commerce during the Chamber's annual economic outlook breakfast. "Now, the Chattanooga story of manufacturing is different with the growth you are seeing here so we expect Chattanooga to do better this year than most of the country."

Last year as the Chattanooga Area Chamber of Commerce launched its Chattanooga Climbs campaign for the next five years, the Chanmber worked on projects expected to add 2,134 more jobs. Over 80% of those new jobs are coming from the expansion of businesses already in Chattanooga, including an $800 million expansion announced by Volkswagen of America that will add 1,000 jobs making electric vehicles.

photo Christy Gillenwater, president and CEO of the Chattanooga Area Chamber of Commerce / Staff photo by Tim Barber

"We certainly welcome new business into our community, but it is always exciting when you see your current customers expanding and that is what we saw a lot of in 2019," said Christy Gillenwater, president of the Chattanooga Area Chamber of Commerce.

Chattanooga Mayor Andy Berke also expects Chattanooga will do better than most of the country in 2020, citing the forecast by Forbes magazine that Chattanooga will lead all U.S. cities in the rate of job growth this year and the prediction by Realtor.com that Chattanooga will be one of the five best housing markets in the country in 2020.

"We built our community as a place where people want to live and built their businesses and we've gotten a lot of national attention and recognition," Berke said. "As we've seen these changes and the some of the problems. that come with success, I will tell you every day of the week I prefer the problems that come with success than the problems that come with failure."

photo Chattanooga Mayor Andy Berke / Staff photo by C.B. Schmelter

With Chattanooga's jobless rate hovering near historic lows, including a record low unemployment rate of 2.6% last spring in Hamilton County, Berke said Chattanooga now has the luxury to be more selective with the businesses and developments it recruits and cultivates.

"We're not a city that has to be desperate for every opportunity," Berke said. "We can take our time and think about what the right thing is and make sure we are growing a community that we want. Not every opportunity that comes along is the right one."

With more growth, Hamilton County Mayor Jim Coppinger also said more investment in infrastructure, including school buildings, sewers and roads.

Berke, Coppinger and Gillenwater all said the quality of jobs and the opportunities and pay they provide are often more important than simply the quantity of jobs at a business.

"We want to work alongside the United Way and others in helping people grow family-wage jobs and opportunities," Gillenwater said.

Nationwide, Altig said wages are showing some improvement, but overall pay and inflation remains muted, especially after a decade of economic growth since the Great Recession. Although the Fed is not predicting a recession for 2020, Altig said economic uncertainty is rising, causing a drop in business investment in 2019, and the 2020 elections are likely to create additional uncertainty about the future this year.

photo David Altig / Contributed photo

"Every uncertainty that gets released seems to get replaced by another one coming around the corner," Altig said, calling the uncertainty the "Roseanna Roseannadana" syndrome. "It's always something."

But consumers remain optimistic and continue to spend, which is powering the overall U.S. economy and limiting chances for a national recession in the near term, Altig said.

While manufacturing employment began to drop in 2019 across the country, metro Chattanooga continued to add factory jobs, which were up by 1,000 jobs over a year ago in November 2019 and have risen by more than 7,600 jobs - or more than 27% - since a decade ago, according to the U.S. Bureau of Labor Statistics.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.