Tennessee Valley’s Automotive Fast Lane
Spurred by the presence of four automotive OEMs, the Tennessee Valley’s automotive sector is the second largest in the nation—and poised to leave Michigan in its taillights.
“Today, the world knows Detroit, Michigan, as the center of the automotive universe, but if Henry Ford had his way, the nation’s auto hub would have been the Tennessee Valley,” says Chris Berryman, target market specialist for TVA Economic Development.
It was 1921, and Ford saw in Muscle Shoals, Ala., the opportunity to snap up cheap and plentiful power from a dam still under construction—Wilson Dam, to be precise—and build an automobile-manufacturing city that would forever change the course of a sleepy corner of North Alabama.
In 1922, the New York Times jumped on the story, publishing an article called “Rush for Muscle Shoals.” It read, in part, “The dream city reared suddenly at Muscle Shoals by Henry Ford somewhat after the fashion of Aladdin with his wonderful lamp is already being proposed.”
Ford submitted a proposal to congress to lease Wilson Dam for $5 million, promising to employ one million employees in Alabama. But it was not to be. Senator George Norris launched a fight to retain the dam as federal property. By 1926, Ford’s hopes had gone flat—though the seeds of the idea for TVA were planted. That year, Norris introduced a plan for the federal government to not only retain management of manage Wilson dam, but to build more dams like it.
“Although Ford never got his operations going in the Tennessee Valley, today—with four automakers calling the Valley home—our region is the second in the nation for auto manufacturing,” says Berryman. “And we’re making up for lost time.”
GM, Nissan, Toyota and Volkswagen call the region home, as do countless support and supply industries who’ve moved in to service the four giant manufacturers.
“Automotive is a benchmark industry for us here at TVA,” explains Berryman. “That’s not only because we were pioneers, but because we’re well placed to be a springboard for the entire southeast. In terms of jobs creation and economic stimulation, it’s just a powerhouse.”
Berryman there are 90,000 jobs in the automotive sector throughout the seven-state Tennessee Valley region. Widen your scope to include all transportation-related manufacturing, and you’re looking at 300,000 jobs. And these are only the direct jobs.
Consider the indirect jobs. A study at the University of Tennessee in Knoxville showed that while the Volkswagen plant in Chattanooga, Tenn., created 4,700 direct jobs, it had the economic impact of creating 12,400 full-time jobs and is responsible for $643 million in annual income apart from the direct salaries it pays its employees.
“It’s easy to see the economic impact is huge,” Berryman says. “The automotive industry is one of the most significant in terms of jobs creation, and it’s only getting stronger. We’re moving toward having four jobs created for every one job in the automotive industry. That’s why we play an active role in recruiting automotive companies to the Valley.”
Targeting the Supply Chain
Or maybe “did” play an active role might be a better way to phrase it. Whereas Berryman used to spend the better part of his day calling auto companies, now they’re calling him.
“The supply pipeline for these automotive OEMs is huge, and many companies want to move to the Valley to be a part of it,” he says. “I get calls from people who have already done their research and are sold on the Valley. They want us to verify what they’ve found out, or ask us for some site selection help.”
The region’s support and supply chain is—not to put too fine a point on it—awesome. Related OEMs include Bridgestone, Yokohama Tire, Hankook Tire, Titan Tire, Carlisle Tires, Komatsu, Caterpillar, PACCAR, Polaris and Cooper Tire and Rubber.
Other key companies include Magneti Marelli, Topre, RTI, Bilstein, Grammer AG, Bosch, Toledo Molding and Die, Yorozu, Shape Corp., North American Lighting, Denso, JTEKT, TRW, Komatsu, Calsonic Kansei, ThyssenKrupp, Magna, Hitachi Automotive, Rehau, Visteon, Comprehensive Logistics, Total Quality Logistics, Steel Dynamics and Gestamp.
And that’s just the short list.
“95 percent of our growth is in supply chain,” Berryman says. “We hear from companies who see what’s happening here and realize they need to come south to be a part of it. For suppliers it’s all about logistics—the closer they can get to the OEMs, the lower their costs. And that’s happening exponentially.”
Dedicated to the industry, Berryman lives and breathes statistics, and can rattle off impressive ones, the very factors that make the region such a draw for all things auto, and—to extrapolate—transportation.
“Number one: Logistics is a huge thing,” he says. “We have so much easy access to the eastern seaboard—and everybody cares about speed to market.”
“Number two: Our power is extremely reliable and our rates are more competitive than ever before—in the top quartile of the country,” he continues. “That’s been huge in moving the needle for improvement in the sector.”
TVA relies on a diverse portfolio of coal, nuclear, gas, hydro, renewables and energy efficiency to supply the Tennessee Valley with abundant and competitively priced power. Since the year 2000, TVA has maintained 99.999 percent reliability. With recent enhancements and flexibility improvements to its energy credit program, rates are more competitive than ever before.
“Number three: We have here a ready and available workforce,” he says. The Valley is home to 900,000 machine operators and 500,000 production workers, all at wages significantly lower than the Midwest and other parts of the country, according to a March 2012 U.S. Bureau of Labor Statistics report. TVA continues to invest in the workforce of tomorrow through supporting STEM education in schools, and sponsoring robotics programs.
And then there is sustainability. “TVA is very green and can help manufactures meet their sustainability goals,” Berryman says. “By the year 2020, 60 percent of TVA’s electricity will be produced from non-carbon emitting sources. Companies can move here and cut their carbon footprint in half.”
What’s more, TVA offers a unique program that allows directly served customers to completely personalize their carbon numbers based on their operations.
Add to all of the above a suite of Economic Development services that includes site selection assistance, energy credits, technical and engineering services, incentives and more and—for anyone in the automotive sector—life is good in the Tennessee Valley.
“I can’t predict when we will become number one in the nation for automotive manufacturing, but that is my goal ,” Berryman says.