China's automotive industry is looking to increase its presence in the United States with a plant in the Chattanooga, Tennessee, area to supply interiors for Volkswagen AG's new midsize sport utility vehicle.
Yanfeng USA, the largest Chinese manufacturer of automotive interior components and unit of Shanghai Automotive Industry Corp, China's largest state-owned automaker, expects to eventually employ more than 300 at the Chattanooga plant.
Yanfeng USA is based in the Detroit suburb of Harrison Twp., Michigan. Shanghai Automotive is also in a joint venture with VW to produce vehicles in China. Michigan has become the home for several companies from China, where they manufacture a wide range of auto parts, including car batteries, seat belts and shock absorbers.
VW opened a plant in Chattanooga in 2011 to produce the Passat, a midsize car for the US and North American markets that employs about 2,000. It may employ over 4,000 as VW is expanding the plant to produce its new midsize SUV that also targets the North American and US markets.
According to a March 14 report in the Chattanooga Times Free Press, Kerri Salzony, human resources director for Yanfeng USA, said the company hopes to make a decision within two months on the location of the Chattanooga facility. She said the plant will provide interior trim parts for the SUV which VW hopes to start producing in 2016.
The VW SUV represents a critical part of the German car company's strategy said Frank Butler, assistant professor of management at the college of business at the University of Tennessee Chattanooga.
"VW has said they want to sell 17 million vehicles by 2017," Butler told China Daily in an interview Wednesday. "If they are going to do it, the midsize SUV market will be critical for them. Their current offering in that segment - the Touareg - is considered pricey."
Butler said VW's Chattanooga facility has been game changer for the city and the metro area. "I think the plant will employ as many as 4,500 when the new SUV line is up and running. In addition when you add in the supplier jobs that come with such a large manufacturing facility (like the Yanfeng plant), it's a huge economic boost," he said.
Chattanooga has a population of nearly 168,000 according to the 2010 US Census, and Butler said the metro area has about 350,000. This will not be the first time Chattanooga has been successful in luring foreign investment.
"Alstom (a French company) came here a while back and opened up a plant that makes components for wind turbines," said Butler. "They sold the plant to GE (General Electric Co.) which plans to keep it open," said Butler.
Chattanooga is part of a southern automotive manufacturing region that includes South Carolina where BMW has a plant and Georgia which has a Kia plant. In addition Tennessee has a Nissan (Smyrna) automotive manufacturing facility.
"I think Chattanooga has several factors working in its favor," Butler said. "We are at a crossroads of two major interstates (I-75 and I-24) which serve as gateways. Atlanta is only a little over 90 minutes away. We also have a strong railroad system. VW was eager to leverage the railroad system here. Finally we have the Tennessee River which flows right through the city. This also represents an important way to bring in and distribute goods."
Chattanooga also has a small but thriving Chinese community according to Dr. Lawrence Chien, a physician who serves as president of the Chattanooga Chinese Association. He said the community of about 300 is proud that a Chinese firm is moving into the area.
"Most of us are employed in the restaurant business or as professionals," he said in an interview. "Many are technology professionals who work at Blue Cross and Blue Shield (a health insurer) and the TVA (Tennessee Valley Authority - the nation's largest public power provider and a corporation of the US government)."
Chien said the Chattanooga area has been welcoming to the Chinese who have settled there. The Chattanooga Chinese Association is a nonprofit organization that also operates the Chattanooga Chinese School. "It offers instruction in speaking Mandarin and we have several American students in our classes," he said.