Chinese auto parts company eyes Chattanooga for plant to supply VW

Chinese auto parts company eyes Chattanooga for plant to supply VW

March 14th, 2015 by Mike Pare in Business Around the Region

VW's CrossBlue is shown at the North American International Auto Show.

VW's CrossBlue is shown at the North American...

Photo by Contributed Photo /Times Free Press.

A Chinese auto parts company aiming to supply interiors for Volkswagen's new sport utility vehicle has plans to open a plant in the Chattanooga area and create 330 jobs.

Yanfeng USA officials are eyeing the area for a building in which it would set up a multimillion-dollar operation, said Kerri Szalony, director of human resources for the company at its American headquarters in Michigan.

"We have a few options on the table," she said Friday, adding that officials hope to make a decision on a building within two months. "We're currently working with local government from an incentive perspective."

Szalony said the plant would provide interior trim components for the midsize SUV, dubbed the CrossBlue, that VW is to start producing in late 2016.

An online job recruitment ad for Yanfeng says that "we are looking to grow our engineering staff in Michigan and in our new facilities in Riverside, Mo., and Chattanooga, Tenn."

Chinese-owned plants are rare but becoming more common in the South, said Mike Randle, editor of Southern Business & Development magazine.

About Yanfeng

* Headquarters: Harrison Township, Mich.; world headquarters, Shanghai, China
* Products: Maker of automotive door panels, floor consoles, instrument panels, garnish trim
* U.S. operations: Harrison Township, Mich.; Riverside, Mo.
* Sales: $7.5 billion annually (worldwide)
* Employees: 30,000 globally
Source: Yanfeng

He said Chinese companies need to have operations in the U.S. to achieve profitability.

"You've got to come here and make it where you sell it," Randle said.

Yanfeng last year agreed to a joint venture with Johnson Controls to create what it calls the largest auto interiors company in the world with revenues of about $7.5 billion. Yanfeng holds a 70 percent share in the venture.

Yanfeng is part of Shanghai Automotive Industry Corp. (SAIC), which has a joint venture with VW to produce vehicles in China. VW has a number of assembly plants in China and has become the No. 1 selling automaker in what is now the world's top market by sales.

Christian Koch, who heads VW's Chattanooga plant operations, was stationed in China before taking his current post last year.

Yanfeng, with its world headquarters in Shanghai, has supplied parts to VW in China but not in the U.S., Szalony said.

Szalony said plans are for Yanfeng to hire a few people this year and then ramp up operations in 2016. The company is targeting creating the 330 jobs by 2019, she said.

Bill Kilbride, the Chattanooga Area Chamber of Commerce's chief executive, declined to comment.

Yanfeng would be the second auto supplier to come to the Chattanooga area to produce parts for the new SUV.

Last year, French auto bumper maker Plastic Omnium started work on a new plant at Enterprise South industrial park. The company's $70 million facility is to employ about 300 people and support not just business in Chattanooga but other auto plants in the region, officials said.

VW is spending $900 million on an expansion to its Chattanooga factory to build the SUV in addition to the Passat sedan, which it has assembled there since 2011.

The SUV is seen as helping boost the car maker's U.S. sales, which have slumped in the past year or so.

Akshay Anand, an analyst for Kelley Blue Book's KBB.com, said VW's new SUV can't come soon enough.

"If the market is in a similar state next year, the SUV should sell well, as Volkswagen always puts out quality product," he said.

VW plans to hire 2,000 more workers in addition to the 2,400 that already work at the plant.

Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318.