Hamilton County and state officials say more suppliers are coming to service Volkswagen's $1 billion assembly plant despite the tough economy and credit crunch.

County Mayor Claude Ramsey said Wednesday that plans by a seat maker to operate in the city and create 120 jobs to supply VW is "what we anticipated when VW agreed to locate" here and that more businesses are on the way.

Chattanooga Mayor Ron Littlefield said he "absolutely" sees more such announcements, adding that "Volkswagen is a very aggressive company."

Chattanooga Seating Systems, a joint venture between Hollingsworth Logistics and Magna Seating, has leased space at a Shallowford Road business park and is in negotiations for another building. Officials declined to say if the building space will be inside VW's planned on-campus supplier park.

Matt Kisber, state Department of Economic and Community Development commissioner, said that when VW picked Chattanooga in 2008, those sorts of supplier relationships were anticipated.

"Now the reality of that is being seen," he said.

However, the supplier announcements have been slower coming for the VW plant than some earlier had believed. The economic meltdown that especially hit the auto industry is blamed.

A number of suppliers to the VW factory, which is slated to start production in about a year, plan to provide the company with parts from existing facilities.

Cheryl Millsaps, the Chattanooga Area Chamber of Commerce's vice president for administration and finance, said the economy created a challenge for suppliers.

For auto plants, the existing situation may be "a new model" going forward, she said.

Mr. Ramsey said that after the VW plant starts operations and grows production, it will become easier for suppliers to locate here.

"It will be further incentive to companies to make more additional investment here as suppliers," he said.

So far, VW officials have said its supplier park is expected to initially hold six companies and about 500 workers. The businesses haven't been identified yet.

"We'll keep on pushing to expand the park," said Frank Fischer, chief executive of VW's Chattanooga operations, earlier this year.


Joint venture creating seating company is 51 percent owned by Hollingsworth Logistics. Magna Seating owns the remainder.

Meanwhile, Gestamp Corp., the first VW supplier landing near the automaker at Enterprise South industrial park, has started work on a $90 million plant that will make parts for the midsize sedan the automaker will produce in Chattanooga.

Gestamp plans to employ 230 people within three years at the plant.

Mr. Littlefield said he was in Brazil recently speaking at an environmental sustainability conference and toured a VW assembly plant that employs 3,600 and is surrounded by suppliers.

"I believe we have a brighter future," he said.