Chattanooga: Regional suppliers will feel ripples from VW's impact

Jul 16, 2008 (Chattanooga Times/Free Press - McClatchy-Tribune Information Services via COMTEX) -- VLKAY | Quote | Chart | News | PowerRating -- Several auto suppliers in Southeast Tennessee and North Georgia already have connections with Volkswagen AG and could be gunning for additional business as the company locates an auto assembly plant in Chattanooga, industry experts said.

"They have people already talking to auto suppliers," said Mark Sweeney, an auto industry site consultant for McCollum & Sweeney Corp. in Greenville, S.C. "They are probably not anywhere near completing a deal, but they are getting communication started."

Auto suppliers dot the landscape in Southeast Tennessee and North Georgia are capable of supplying an assembly or engine plant with parts, experts said.

Officials with two companies in Southeast Tennessee -- ThyssenKrupp Wapauca in Etowah and International Automotive Components Group in Dayton -- said they already serve Volkswagen and could talk further with the German-based company about providing more business.

IAC spokesman David Ladd said he could not speak directly about whether the company was in negotiations with VW, but he said the company's product line puts it in a "pretty good condition to support" Volkswagen.

The Dayton plant manufactures door panels, overhead systems and sun visors for automobiles, Mr. Ladd said. Customers includes Nissan, Hyundai, GM, Ford and Chrysler, he said.

The company also recently announced plans to double the plant's size.

ThyssenKrupp's Waupaca foundry manufactures iron brake calipers and supports, automotive chassis components and other castings for the automotive industry. The company recently announced it is near the end of a $54 million expansion but has delayed a second planned expansion phase until the auto business picks up.

RIPPLES IN A POND

Between Rome, Ga., and Athens, Tenn., there are more than 100 auto suppliers, state records show. Matt Murray, associate director of the University of Tennessee's Center for Business and Economic Research, said the area has a "rich supply of suppliers."

He said the region could have gained jobs even had VW landed in Huntsville, but the Chattanooga announcement will generate more area growth.

"It will be more pronounced if it is in your backyard," he said.

Mr. Sweeney said auto assembly plants want three types of suppliers. The first tier are on site and fill immediate needs, he said. The second group is in close proximity to fill "just-in-time" demands, he said, while the third tier can be farther away and fill orders not requiring timeliness, he said.

Mr. Sweeney predicted the assembly plant would generate at least 10 additional suppliers that could locate in Hamilton County or the region. Those in turn will generate more ripples, he said.

"They have a huge impact on their own, and then they spread out," he said.

Heidi Green, deputy commissioner for global commerce with the Georgia Department of Economic Development, said a new Kia auto assembly plant in West Point, Ga., has attracted eight suppliers so far. She said the Chattanooga site will spill business over the border.

"You don't get much closer to Georgia than Chattanooga," she said.

Al Hutchison, vice president of economic development programs at Northwestern Technical College in Rock Spring, Ga., said Volkswagen and any suppliers it creates will help grow area businesses.

"Those other companies would be interested in working with our manufacturers, and I would think our manufacturers would be interested in talking to them," he said.

Japanese supplier Denso Corp. has a plant in Athens, Tenn., that makes injectors, oxygen sensors, spark plugs and airflow meters -- all engine parts.

Denso spokeswoman Julie Kerr said the company would like to do business with VW.

"We're always looking to expand our business," she said.

Jack Hammontree, director of the McMinn Economic Development Authority, said several manufacturers in that county could reap benefits as direct or indirect suppliers.

"Any company within 200 to 300 miles would benefit," he said.

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