Chattanooga's economic landscape is becoming increasingly global, with seven out of the top 10 new business investments in the metropolitan area over the past five years coming from foreign-based companies.
In a global economy with foreign-based companies eager to enter the U.S. market and take advantage some of America's production and sales opportunities, the Chattanooga region has landed more than $5 billion of new business projects from companies headquartered outside the United States just in the past five years.
More than 10,000 workers in the six-county Chattanooga metropolitan area now work for foreign-based businesses, including the German-based Volkswagen and BASF, the Chinese-owned GE Appliances and the Japanese-based Komatsu. Tennessee as a whole is home to more than 1,000 foreign-based businesses that have collectively invested over $47 billion in capital and employ more than 161,900 Tennesseans, according to the Bureau of Economic Analysis estimates.
Charles Wood, president of the Greater Chattanooga Chamber of Commerce who has worked to recruit nearly $10 billion of business projects from overseas companies since he joined the chamber in 2012, says he expects such foreign investment to continue to grow.
"We will continue to see more direct foreign investment and for us it is a really important part of our economic development strategy," Wood says. "We're fortunate to have a number of companies from around the world that base their operations out of Chattanooga and I think their success here has helped draw even more foreign investment."
In the broader region of Southeast Tennessee and Northwest Georgia, three of the biggest business investments in the past decade have come from companies headquartered outside the United States.
The German-based Wacker Chemie has invested more than $2.5 billion in its chemical plant in Charleston, Tennessee in the biggest new business investment ever in Southeast Tennessee. Rhea County got its biggest new outside investment ever from the Finland-based Nokian Tyres, which has spent $700 million on its tire production plant in Dayton.
Just over the state line in Northwest Georgia, the Korean-based Hanwha Qcells is investing $2.5 billion to build new solar panel production plants in Dalton and Calhoun, Georgia.
"This city is home to one of the largest solar panel factories in all of the United States and equally significant, the panels being produced here are some of the best in the world," Vice President Kamala Harris said last year during a visit to the Dalton plant. "President Joe Biden and I know this is just the beginning. Dalton, we see what you have accomplished, and we see the path that you've laid. We see a future with more jobs, more factories, and more opportunity."
Harris said the federal government has strengthened domestic supply chains for solar panels and provided tax credits for both solar power generation and solar-related manufacturing investments to help encourage more of the leading solar panel makers now based in Asia to build their products in the United States.
Selling the South
Tennessee and Georgia have been leading states in recruiting direct foreign investment and both states are vying to recruit more investment from overseas companies. The Tennessee Department of Economic and Community operates sales offices in eight European and two Asian cities to promote Tennessee to foreign companies seeking to grow production and sales.
"By investing in a broader international footprint, we've ensured that Tennessee is firmly entrenched in the new global economy," Stuart McWhorter, commissioner for the Department of Economic and Community Development, says on the state's international website. "Our state has offices courting foreign direct investment in Japan, South Korea, Ireland, Spain, Austria, Germany, Switzerland, Italy, the United Kingdom, Belgium, Luxembourg and the Netherlands."
Steven Livingston, a professor of political science and international relations and editor of Global Commerce at Middle Tennessee State University, says Tennessee gets twice as much per capita as other states from foreign investments. According to the U.S. Bureau of Economic Analysis, Tennessee comprises only 1.9% of the total American economy but gets 3.8% of the direct foreign investments.
"Tennessee has four big advantages," Livingston says. "It is a low tax; it is well located for reaching North American population centers; it is relatively non-unionized, and it is the center of the automotive industry, which is one of the largest sectors for foreign investment. Over the past two years, it has cemented its position within the electric vehicle sector of that industry."
Tennessee recruited the first foreign automotive transplants to the South in the 1980s when Nissan located its first U.S. auto assembly plant in Smyrna, Tennessee. Since then, Nissan has built the facility into one of the biggest car plants in America and has moved its North American headquarters to nearby Franklin, Tennessee.
Nissan's success helped convince the Detroit-based General Motors to locate its Saturn plant to Spring Hill, Tennessee in 1985. GM, which has since converted the plant to making the electric-powered Cadillac Lyriq, has also partnered with Korea's LG Energy Solution to build a $2.3 billion battery plant in Spring Hill.
Volkswagen picked Chattanooga for its only U.S. assembly plant in 2008 and opened its $1 billion facility at Enterprise Center in 2011. VW's plant has attracted a number of other foreign-based companies to Chattanooga, including $180 million of investments from the Spanish automotive supplier Gestamp, $60 million of investments in a new Nippon Paint USA plant and $55 million of investments from the Chinese automotive supplier Yanfeng. At the same time, the Canadian-based Magna International is expanding one of its partnerships, Chattanooga Seating Co..
The VW supplier park adjacent to the Volkswagen assembly plant includes other foreign-based suppliers such as Faurecia Seating and Plastic Ominum (based in France), Kasai (based in Japan), Grupo Antolin (based in Spain), DRX (based in Canada) and Schnellecke Logistics (based in Germany).
"In the Chattanooga region, we've seen particular success out of Europe," Wood says. "We keep adding new flags, which is really impressive."
Wood says the Chattanooga Chamber pitches Chattanooga to European companies at least twice a year, attending bi-annual VW supplier fairs in Wolfsburg, Germany and the Hannover Messe industrial trade show every April in Germany.
"We spend time at both of these fairs meeting with companies and letting them know what we have to offer in Chattanooga and why they should invest here," Wood says. "For European countries interested in the U.S. market, we think we have some key advantages.
"We're in the Eastern time zone so the ability to communicate with headquarters offices during work hours is easier. Logistically we're within a day's truck drive of more than a third of the U.S. population and are really a logistics hub for any business. And in Tennessee, we're the closest market to a major international air hub, which is Atlanta."
Wood says the Chattanooga region has developed a proven track record with many foreign-based companies "and those testimonials help sell our city to other business prospects from around the globe."
Foreign investments boost region
In the past five years, foreign-based companies have invested more than $5 billion into the Chattanooga area region. The biggest projects include:
1. Hanwha Qcells, headquartered in Seoul, Korea, is investing $2.5 billion to build solar panel production plants in Dalton and Calhoun, Georgia.
2. Volkswagen, headquartered in Wolfsburg, Germany, announced expansions in 2018 and 2019 totaling $1.14 billion in Chattanooga.
3. Nokian Tyres, based in Nokia, Finland, has invested more than $700 million in its Dayton, Tennessee tire plant.
4. Wacker Chemie, based in Munich Germany, announced a $200 million expansion of its Charleston chemical plant to make polysilicon products, adding to more than $2 billion invested since 2016.
5. GE Appliances, owned by the Chinese-based Haier, announced two expansions totaling $161 million to expand its Roper appliance plant in Lafayette, Georgia.
6. Novonix, headquartered in Brisbane, Australia, announced in 2021 a $160 million investment in a battery material plant in Chattanooga.
7. Gestamp, an automotive supplier headquartered in Madrid, Spain, announced expansions in 2019 and 2020 totaling $143 million in Chattanooga.
8. Nippon Paint, headquartered in Osaka, Japan, is building a $61 million automotive paint plant in East Chattanooga
9. Kordsa Inc., based Kocaeli, Turkey, invested $50 million in the former DuPont nylon plant in Hixson.
10. Sese Industrial Services, headquartered in Zaragoza, Spain, invested $42.1 million in an axle assembly plant to supply VW in Chattanooga.
Source: Tennessee Department of Economic and Community Development and Chattanooga Area Chamber of Commerce, 2018 to present.
Top countries for foreign investment in Tennessee
The top countries making direct foreign investments in Tennessee and employing Tennessee workers are:
1. Japan: 56,045 employees from $20.4 billion in investments
2. Germany: 20,935 employees from $6.8 billion in investments
3. United Kingdom: 11,717 employees from $1.7 billion in investments
4. Canada: 8,672 employees from $3.5 billion in investments
5. France: 11,120 employees from $939.2 million in investments
Source: Tennessee Department of Economic and Community Development, March 2023.
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* Chattanooga companies maximize market share through strong international business ties