VW, Nissan Rev Up Tennessee Auto Industry

Volkswagen's Chattanooga, TN Plant
Volkswagen's Chattanooga, TN Plant
The Volkswagen plant in Chattanooga, TN cements Tennessee as a center of what has been described as America’s new Auto Belt.

The road ahead for the auto industry in Tennessee is paved with new investment, new jobs and new opportunities.

The May 2011 opening of the $1 billion Volkswagen plant in Chattanooga cements Tennessee as a center of what has been described as America’s new Auto Belt. The Chattanooga Volkswagen plant will employ 2,000 workers and produce an estimated 150,000 cars annually, generating about $12 billion in income growth and an extra 9,500 jobs for the East Tennessee economy.

The Chattanooga region is the right place for the Volkswagen plant, says Tim Spires, president/CEO of the Chattanooga Manufacturers Association.

“Our location is ideal and our strong workforce is capable of meeting the needs of advanced manufacturing techniques that Volkswagen and their suppliers require," he says.

Tennessee’s rise in the auto industry began with Nissan’s construction of its plant in Smyrna, Tenn., in the 1980s – a project that put Tennessee on the map as a good place to build cars.

Suppliers Create Thousands of Jobs

“Tennessee's location gives it a strategic advantage,” says John Bradley, senior vice president of economic development for the Tennessee Valley Authority. “Nissan, VW and GM all have major automotive operations in the state, and Tennessee enjoys close proximity to other auto assembly plants within a few hours of the state's borders. That concentration makes Tennessee a natural for the location of new auto suppliers and continued expansions by existing suppliers.”

Indeed. In just the first six months of 2011, four automotive-related industries announced new investment in the state, adding to the nearly 900 automotive-related enterprises already employing more than 105,000 workers.

“From their base in Tennessee, these suppliers can easily access multiple customers, as well as cut their transportation costs when contracting with other tier suppliers,” Bradley says. “Conversely, Tennessee's high concentration of suppliers makes it attractive for future assembly plant operations. So, there is this clustering that provides great synergy between supplier and supplier, and between supplier and assembly operator.”

Economic development publication Business Facilities in its annual State Rankings Report in 2011 named Tennessee the No. 1 state in the nation for automotive manufacturing strength, the second consecutive year the Volunteer State received that recognition.

"With new VWs rolling off the assembly line at a world-class, energy-efficient manufacturing facility and top-tier suppliers lining up to set up operations in the Chattanooga area, Tennessee has cemented its position as the top automotive powerhouse in the U.S.," Business Facilities said in its report.

Companies Invest and Expand

That synergy creates a ripple effect of new investment and new jobs:

  • SL America, an automotive parts supplier for GM, is expanding its Clinton plant for the fourth time in a decade. The $14 million expansion will create 100 new jobs.

  • DLH Industries, specializing in air and fluid management assemblies, will begin manufacturing in the fall in Bristol and is expected to create 75 jobs over the next two years.

  • Tottser-Iroquois Industries will create 25 jobs in La Vergne to provide stampings and assemblies to the automotive industry.

  • Valeo will produce front-end modules for Nissan in its $5.4 million plant in Smyrna, which will create 63 jobs within the first year.

  • Koyo Corp. of USA, a Japanese company located in Washington County, is investing $30 million in an expansion that will double its workforce to 125 by 2014. The company produces taper roller bearings used in vehicle axle and transmission systems.

In addition, in 2012 production will start in Tennessee on the Nissan LEAF, a zero-emission, all-electric vehicle, and the lithium-ion batteries that will power it. Side-by-side plants in Smyrna will employ more than 1,300 workers and turn out 150,000 electric cars and 200,000 advanced-technology batteries annually.

Meanwhile, GM is investing $32 million in its Spring Hill engine plant to support the acceleration of the 2013 Chevrolet Malibu. The investment will create or retain 63 positions in the community.

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