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Tennessee: Automotive and Alternative Energy Stimulate Economic Optimism

Aug/Sep 09
In a challenging economy, Tennessee's optimism is fueled by sectors that promise to lead the way to recovery - advanced manufacturing, renewable energy, distribution and logistics, and technology and electronics.

"There's no question about the challenges faced by the auto industry," says Matt Kisber, commissioner of Tennessee Economic and Community Development, "and with over 900 auto suppliers and two OEMS in operation, GM being one of them, we have certainly felt those effects." However, he adds that Volkswagen's $1 billion capital investment in Chattanooga (factory under construction pictured on next page) is already resulting in contracts with suppliers and other related businesses. Volkswagen reports that contracts awarded total more than $238 million on an annual turnover basis with local parts suppliers for the new mid-sized sedan slated for rollout early in 2011.

"We chose Tennessee based on a number of factors - readiness of the site, workforce, strong manufacturing base, infrastructure, and supplier network, says Jill Bratina, a Volkswagen spokesperson. "But there were also intangible elements that made Chattanooga and Tennessee stand out. First the city's commitment to a sustainable future is in line with Volkswagen's commitment to the environment. Second, we announced an aggressive start of production timeline. We were impressed by how the state, local, and federal elected officials worked together on the project and recognized that they would be excellent partners in reaching our goals in Tennessee."

Another vehicle for good news is Nissan's plant in Smyrna. A Department of Energy grant of $1.6 billion is assisting in retrofitting the plant for manufacture of an electric sedan; production is slated to begin in late 2012.

In semiconductors, Germany-based Wacker Chemie AG and Hemlock Semiconductor's new manufacturing facilities will produce polycrystalline silicon for the solar industry. With capital investments in excess of a $1 billion each, Wacker's site near Cleveland is slated to create 500 jobs and Hemlock's Clarksville plant is expected to create 800 jobs. "Clarksville, Tennessee, is an attractive location for expansion for a number of reasons, including very competitive electricity rates, an available skilled work force, and an overall supportive business environment," says Jay Erpelding, a spokesperson for Hemlock. "Also, we believe that Tennessee.supports Hemlock Semiconductor group's objective to help the solar industry move towards being economically competitive with conventional energy sources, and to become a sustainable energy option globally."

As part of the Volunteer State Solar Initiative, partially funded by the federal American Recovery and Reinvestment Act, Governor Phil Bredesen is working to facilitate the creation of the West Tennessee Solar Farm at the Hayward County Industrial megasite, as well as the Tennessee Solar Institute located at the University of Tennessee at Knoxville and at Oak Ridge National Laboratory. "The governor has worked out a plan with the TVA to buy the power generated and to reinvest the revenues into growing the farm," says Kisber. Pending approvals, activity is expected to begin in the next six to 12 months.

Kisber notes that French energy company Alstom is working on a $300 million expansion in Chattanooga to produce steam turbines, gas turbines, generators, and machinery needed to upgrade existing power plants. "Besides their work force, their location on the Tennessee River was one of the main deciding factors for the project," says Kisber, describing, "They can barge down to the Gulf of Mexico and to other ports for international and domestic shipments of turbines and power generation components." 

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