published Thursday, January 31st, 2013

More suppliers called key to VW making SUV in Chattanooga

Volkswagen builds vehicles in Hamilton County.
Volkswagen builds vehicles in Hamilton County.
Photo by Dan Henry /Chattanooga Times Free Press.

Chattanooga's top economic developer says wooing more Volkswagen suppliers to the area is key as the city's VW plant fights Mexico to produce a potential new sport utility vehicle.

Attracting more suppliers lowers logistics costs for VW by trimming delivery times, said Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development.

"That's one big priority for us," Wood said at a recent meeting organized by the East Hamilton Economic Development Council.

Wood said the Chamber is looking at real estate in Hamilton County that could work for companies interested in landing here.

He said there are flat tracts of farm land south of Collegedale that could work for companies. But, Wood said, the road network needs improvement.

"Companies don't want to travel down a winding road," he said. "Transportation and access are big issues long-term in Hamilton County."

Hamilton County Commission Chairman Larry Henry said there are a lot of companies who've been on the sidelines as the economy comes back.

"We've got a lot of good viable prospects sitting on money and waiting to go," he said. "We'll be in the catbird seat when they're ready."

Wood said he expects VW to benefit from the upturn in auto sales nationally.

"VW is going to ride the rebound in the market," he said.

Frank Fischer, chief executive of VW's operations in the city, said the plant produced 152,000 Passats last year, which was above the 145,000 planned.

Volkswagen earlier this month in Detroit unveiled a concept of a new SUV that it may sell in the United States.

The German automaker's top decision makers are expected to determine later this year whether to give production the green light. VW officials said they would aim at assembling the SUV in North America to stay away from currency fluctuations in Europe.

VW has been in Mexico since 1964 and has a big contingent of suppliers for its sprawling production plant in Puebla. That supplier base also provides many parts for Chattanooga's plant.

Wood said that in addition to attracting VW suppliers, the Chamber is trying to lure companies to help fill office space in downtown Chattanooga. He cited the financial services and insurance sectors as prospects for the city.

Additionally, Wood said the Chamber would like to build on the food industry business in the Chattanooga area. Collegedale already is home of the biggest independent bakery, McKee Foods Corp., which generates more than $1.1 billion a year in sales.

As home of TVA's power operations and energy manufacturing and training facilities operated by Alstom, Westinghouse and Aerisyn, Wood said energy is another sector the Chamber wants to grow.

about Mike Pare...

Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...

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