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Whitfield Hopes for Piece of Volkswagen Pie

July 27, 2008

By Charles Oliver, The Daily Citizen, Dalton, Ga.

Jul. 27–Tennessee reportedly provided some $500 million in tax breaks and other incentives to Volkswagen to build its only U.S. assembly plant and manufacturing headquarters in Chattanooga. But Tennessee won’t reap all the benefits of that largesse. Officials in surrounding areas, including Whitfield County, are already scrambling to see how they can get some of the businesses and jobs that VW will bring with it.

“Because of the special economic impact that automotive assembly facilities have, we know that this operation will ramify through our regional economy and create many additional indirect jobs and also provide the kind of economic boost to many other kinds of businesses and small businesses that will allow them to do additional hiring,” said J.Ed Marston, vice president of marketing and communications for the Chattanooga Area Chamber of Commerce.

Members of the Dalton-Whitfield Joint Development Authority discussed the impact on the area when they met Thursday.

“This is incredibly significant for our community and surrounding areas,” said authority chairman Chuck Dobbins. “We are going to take some actions to make sure that opportunity does not slip by us.”

Authority vice chairman Phil Neff will be spearheading an effort to bring some of the spin-off businesses from the VW plant to the area.

Authority members say that Dalton has a number of characteristics that could make it attractive to such companies: It is close to Enterprise South where the Volkswagen plant will be located — around 40 miles or so — and connected to Chattanooga by I-75 and two rail lines.

Authority members say the suppliers to the VW plant can be divided into three tiers.

“The tier one suppliers are predominately the people that make the big components. They do the seats, the dash, the grills, the bumpers, most of the things you see,” Neff said. “The tier twos are the ones you don’t see. The things under the hood. The materials that fit under the things you see. The tier three are the people that put together the components to make the brakes and stuff. They all cluster together.”

Neff says it will be difficult for Dalton to attract a tier one supplier, though it’s possible. He says getting tier two and tier three suppliers is much more likely.

Authority members have already begun compiling lists of VW’s major suppliers in Germany and Mexico, where the company also has manufacturing plants.

Some of the chemicals and plastics companies in Dalton may also be able to benefit indirectly from the VW plant. Authority members noted those companies first came to the area to support the carpet industry but many of them have been looking to diversify as the carpet industry matures.

“The carpet industry is such a large manufacturer of plastic materials to make the miles and miles and miles of carpet. We use predominately nylon, polypropylene and polyester. And nylon and polypropylene resins are reclaimed from the carpet industry and reprocessed and sold in the millions of pounds already to the automotive industry,” Neff said.

Companies such as Neff’s Cycle-Tex take those plastics and sell them to companies that mold them into auto parts.

“We already have a footprint in place to support companies like Volkswagen,” he said.

But authority members also discussed challenges the area faces in attracting new businesses.

One of them is the lack of large “shovel ready” properties ready for companies to build on. Another is the fact that Whitfield County taxes inventory, which might discourage auto parts companies.

Board members noted that Dalton voters will decide in November whether to cut the city’s inventory tax.

With the Chattanooga VW plant scheduled to start operations in 2011, local officials say they will have to act fast to attract any of that business. Neff says he is already talking to officials in Georgia and Tennessee hoping to put together a plan.

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Copyright (c) 2008, The Daily Citizen, Dalton, Ga.

Distributed by McClatchy-Tribune Information Services.

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