City Council approves tax break for Chinese auto parts firm

A Yanfeng interior is pictured in this company image.
A Yanfeng interior is pictured in this company image.

The Chattanooga City Council on Tuesday approved a tax break of a little more than $1 million over a period of 14 years for a Chinese company building a local plant to manufacture automobile interiors for Volkswagen.

The vote was unanimous.

The company, Yanfeng Automotive Interiors, is investing $55 million to build a plant on Bonnyshire Drive near the Volkswagen plant.

photo A Yanfeng interior is pictured in this company image.

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photo Yanfeng logo

Yanfeng plans to hire at least 325 people for the plant, paying an average wage of $50,000, company representative Tom Dzu told the council in a presentation last week. He said most of those positions would be filled locally.

The company says it is the largest manufacturer in the world of auto interiors, with 22 plants in the U.S. and 100 worldwide. In Chattanooga, it will supply interior components including floor consoles, instrument panels and trunk trim for future VW models. Production is set to begin in late 2016.

Under the terms of the agreement with the city, Yanfeng must meet 80 percent of its goals in order to qualify for the tax break, known as payment in lieu of taxes, or PILOT agreement. That means they must hire at least 260 people by 2018, Deputy Administrator for Economic Development Nick Wilkinson told the council.

Under the terms of the deal, the city should start receiving about $190,000 in tax revenue from Yanfeng when the deal begins in 2017, Wilkinson said.

That is more money than the city has received in some previous PILOT deals, he said.

He noted that in the city's agreement with Alstom Power, for example, the city received no tax revenue in the first year.

"This is further proof Chattanooga is a world-class destination for the automotive industry and jobs," Wilkinson said.

Chamber of Commerce representative Charles Woods told council members Yanfeng will be included in a jobs fair set for February focused on the automotive industry.

The Hamilton County Commission is set to vote on a similar tax break for Yanfeng in its meeting today.

Helen Burns Sharp, who heads the group Accountability for Taxpayer Money, said that while the Yanfeng deal looks better than some others the city and county have negotiated, she was still not certain it would pass the "but for" test, in other words, "Would they have still come here without this deal?"

Sharp said she was concerned the average wage figure of $50,000 quoted by Yanfeng was boosted by including the salary of top executives.

Contact staff writer Steve Johnson at sjohnson@timesfreepress.com or 423-757-6673.

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