Experts laud state efforts to lure auto suppliers

Experts laud state efforts to lure auto suppliers

August 27th, 2010 by Mike Pare in Business Around the Region

As Chattanooga emerges as more of an auto hub, parts suppliers aiming to do business with Volkswagen and Nissan find the state highly competitive when it comes to incentives, experts say.

"Tennessee is way up there compared to other states," said Joe Conner of the law firm Baker Donelson Bearman Caldwell & Berkowitz's Chattanooga office.

But, Conner said companies need to take the steps to seek tax breaks and other incentives, and he noted there is no one-stop shop.

"You have to ask for them," the Tennessee Automotive Manufacturers Association board member told a group of companies at a so-called "auto supplier boot camp" on Thursday.

STATE/LOCAL INCENTIVES

* Basic Jobs Tax Credit

* Integrated Supplier Additional Annual Jobs Tax Credit

* Industrial Machinery Tax Credit

* Industrial Machinery Sales/Use Tax Exemption

* PILOT Agreement (Real and Personal Properties)

* Fast Track Job Training Assistance Program Grant

* Fast Track Infrastructure Development Program Grant

Source: Baker Donelson

Louann Smith, also with Baker Donelson, said companies have to take responsibility for finding and following through on securing incentives.

"There's no harm in asking," she added.

While Chattanooga isn't known as an auto center, it has started to woo suppliers since landing Volkswagen's assembly plant that's under construction and set to start production in early 2011.

Close to a dozen suppliers have already set up shop in Hamilton County or plan to do so, creating over 800 jobs. An auto consultant said Wednesday he expects VW to press more suppliers to move closer to the plant for transportation and quality reasons.

Diana Bullock, EPB's vice president of economic development and governmental relations, said suppliers are taking advantage of incentives offered by the power distributor.

"We work with suppliers in the supplier park," she said, citing the $21 million facility VW developed where seven of its key suppliers are locating next to the assembly plant.

Randall Hatcher, president of Augusta, Ga.-based work force company MAU Inc., said it's more common for American auto businesses to use contract employees. He said those workers take on tasks which aren't deemed central to the auto company's core business.

Hatcher said that model is "fairly accepted" in Europe and evolving in North America.


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