Auto parts manufacturers are hitting the gas and hiring at a record pace in Chattanooga as they position themselves to supply Volkswagen's assembly plant and other car companies.
Three suppliers have revealed plans within the past three weeks to hire more than 1,000 people and inject nearly $250 million into new facilities in Hamilton County.
By the numbers
* Manufactures: Interiors, consoles
* Plans to hire: 325
* Investment: $55 million
* Manufactures: Floor mats
* Plans to hire: 89
* Investment: $4 million
* Manufactures: Sheet metal, chassis
* Plans to hire: 600
* Investment: $180 million
"You'll see more of these," said Mike Randle, Southern Business and Development magazine's publisher.
Chinese supplier Yanfeng Automotive Interiors on Tuesday unfurled a $55 million investment in a new manufacturing operation in the city. It will provide components such as floor consoles, instrument panels and trunk trim for VW, including its new SUV.
The company plans to create 325 jobs by the time it starts production in late 2016.
Also, Ooltewah-based RemSource- USA Inc. unveiled plans to hire 89 more workers, more than doubling its headcount of 40 employees. It will make injection molded plastic parts and compound rubber parts at a 63,000-square-foot plant in Ooltewah.
A part of Remington Industries, which makes floor mats for the auto industry, RemSourceUSA is investing about $4 million.
About two weeks ago, Spanish auto supplier Gestamp announced it will plow $180 million into Chattanooga, expanding its existing plant and building another. The company expects to hire close to 600 employees within three or four years, a Chattanooga Area Chamber of Commerce official said Tuesday. That's up from the 510 new employees the company earlier said it would hire.
Bill Kilbride, the Chamber's chief executive, said companies want to be close to VW to keep costs down and meet the automaker's just-in-time needs.
"A minute of waiting for a part on the assembly line can cost you," he said.
At the same time, Kilbride said, the city has to make a compelling business case for auto suppliers to be here.
"It still has to be a good business decision for those companies," he said.
Chattanooga Mayor Andy Berke said there are more supplier options that could land in the city.
"They may not be as large as Gestamp and YF," he said. "I think we'll remain competitive over the next several years. We want to bring good middle-class jobs to our community. These auto workforce supply jobs fit that bill."
Yanfeng, the world's largest auto interiors supplier with 100 locations worldwide, will set up a facility to support the Chattanooga VW plant at a nearby leased building on Bonnyshire Drive.
"We appreciate the partnership with our customer, as well as local and state officials, who are working closely with us to launch this new manufacturing location," said David Wang, a Yanfeng vice president.
Tim Parkes, chief executive of RemSource parent Remington Industries, said his company's expansion will bring its manufacturing operations to Chattanooga for the first time. Now it employs about 40 people in headquarters-type jobs in Ooltewah.
"We bought the facility last December and have been renovating it," he said about the new manufacturing plant. "Equipment started to arrive three weeks ago."
Hiring will start soon with plans to begin making products such as floor mats in late July or early August, Parkes said. He said he doesn't supply VW now but would like to in the future.
Dr. Bill Fox, who heads the University of Tennessee's Center for Business and Economic Research, said that as VW increases the number of vehicles it produces in Chattanooga, that's more reason for suppliers to land closer to the factory.
Overall, Fox said, he expects that spin-off jobs, such as from suppliers, and the added effect of people spending in the local economy will generate more impact than the VW expansion. The company is spending $900 million and hiring 2,000 more workers.
"The overall impact will much exceed the announcement by VW," Fox said.
In addition to providing jobs to local workers, people will move into Chattanooga for jobs, he said.
"People move to a place for two reasons — quality of life and job opportunities," Fox said.
Yanfeng will receive an incentives package and final agreements are being drafted. But, for the city, Yanfeng will pay roughly 74 percent of the amount of property taxes due for the 14-year term of the abatement, according to the mayor's office. Some $265,000 in new revenue will be gained by the city in the first year.
Gestamp Controller Mark Vallee said its incentives amount to about $13.5 million, including a 10-year payment-in-lieu-of-taxes agreement.
Vallee said the existing plant, which makes stamped parts and welded assemblies, is about 60 percent devoted to VW with the remainder for other companies. But, he's hopeful of driving the VW percentage up.
Parkes said RemSource also will receive a local incentives package, as well as from the state, TVA and EPB.
Hamilton County Mayor Jim Coppinger said Yanfeng's new plant validates the wisdom of investing in and creating Enterprise South industrial park, where VW is located.
"We're striving to enhance our career readiness," Coppinger added, focusing on science, technology, engineering and math in the schools.
State Senate Speaker Pro Tempore Bo Watson, R-Hixson, said it's no surprise Yanfeng joins other auto companies' "march to the South."
"What companies are realizing is the same thing that Volkswagen realized several years ago and McKee Foods has known for decades — Southeast Tennessee is a great place to live and do business."
Contact Mike Pare at email@example.com or 423-757-6318.