Meet Tennessee's Big Three.

Volkswagen, which has begun making cars in Chattanooga, joins General Motors and Nissan in building new vehicles in the state, part of an automotive ecosystem that employs 105,000 people in Tennessee and generates a payroll of more than $5.5 billion.

Tennessee is in the heart of the nation’s new, Southern auto alley, with foreign and domestic auto assembly operations driving development of a supplier base of more than 860 companies in the state. Business Facilities magazine named Tennessee the No. 1 state for automotive manufacturing strength in 2011, the second year it has received such recognition.

“Tennessee's automotive cluster is very diverse and densely populated, with multiple-tiered automotive industries that support one another and the end OEM users, thus creating a great synergy,” says John Bradley, senior vice president of economic development for the Tennessee Valley Authority, which provides power to more than 9 million people in seven Southeastern states and is a key economic development catalyst.

Auto Manufacturers Expand

Volkswagen has begun rolling out vehicles from its $1 billion assembly plant in Chattanooga, which will employ about 2,000 workers at full production. Indirect employment at local suppliers and other spinoffs is expected to exceed 11,000 additional jobs.

VW’s investment in Tennessee is expected to boost incomes in the region by $511 million annually and generate more than $55 million per year in new state and local tax revenues, according to an analysis by the University of Tennessee.

In Spring Hill, General Motors plans to ramp up operations at its manufacturing complex with a $61 million investment that will add 685 jobs for flexible operations. The revitalized plant will be able to assemble any GM car or crossover vehicle. GM also plans to invest an additional $183 million for future vehicle production capabilities.

Nissan, which has its North American headquarters outside Nashville and major manufacturing operations in the state, has invested $1.6 billion in a production complex in Smyrna to assemble its Leaf electric vehicles and the battery modules that power them. That's in addition to the 1,000 jobs the company is adding to build the new Infiniti JX, the next generation of the Nissan Pathfinder, and Nissan sedans, SUVs and trucks.

Sum of All Parts

Automotive suppliers are ramping up in Tennessee. Bridgestone Americas, which has its North American headquarters in Nashville, will invest $36.6 million to increase truck and bus tire production capacity at its Warren County plant. Its Bridgestone Metalpha U.S.A Inc. subsidiary in Clarksville will begin producing the steel cords to be used in a new off-road radial tire after a $75 million investment creating 45 new jobs.

DENSO, a Japanese company, manufactures electronic products, instrument clusters, starters and alternators for automotive manufacturers around the world. The company plans to manufacture stop/start starters, to help vehicles improve fuel economy, at its plant in Maryville. DENSO employs more than 3,000 people at four Tennessee locations.

Auto parts supplier Eagle Bend Manufacturing is expanding its Clinton facility, creating 188 new jobs and investing $64 million over the next five years. NYX Inc., a Michigan-based automotive supplier, is building a $23 million manufacturing facility in Perry County to produce injection molded plastics for a wide variety of automotive manufacturers, creating 400 jobs over a five-year period. Kyowa America, which makes automotive plastic-injection molding, is opening a facility in Robertson County, creating 160 jobs and investing $12 million

In The Right Place

Transportation and logistics plays a key role in investment planning, and Tennessee’s connections with the rest of the country and the world make it an attractive location. About three-fourths of the country’s population is within a day’s drive on the state’s eight interstate highways. Tennessee is also home to the second-largest freight airport in the world in Memphis.

“Our infrastructure just makes it really easy to get around,” says Tom Brewer, president of the Tennessee Automotive Manufacturers Association.

Otics USA, a manufacturer of automotive components, operates a plant in Morristown. The Japanese-owned company came to Morristown in 2001, its first transplant company in the United States.

In February 2012, the company announced a $24.8 million expansion that will add 67 jobs in Morristown, the third expansion since it came to the region. Relationships with state and local governments and the availability of a skilled workforce drove the expansion.

Charlotte Jennelle, Otics general manager, says she appreciated the effort Tennessee put into supporting business expansion and attracting new investments.

“I see a more diligent effort to bring businesses into the community to get people working,” she says. “Tennessee is a little more aggressive than other areas to showcase the state for business opportunities.”