The longest economic downturn since the Great Depression has touched every corner of the globe, and the Chattanooga area has not been immune to its effects. However, to paraphrase the Victorian author Charles Dickens: the years since 2008 have been both the best of times and the worst of times for the city.
While some national economists have ventured to say that the recession is over, using back-to-back quarters of ever-so-slight economic growth as their measure – it is apparent to Americans that the difficulties of a housing bust, a banking crisis, lost jobs and wages, and more dismal events have not come to an end.
Times have been tough in Chattanooga. In 2008, 19 local manufacturers closed their doors, and the number of businesses operating in Chattanooga fell by a solid 2 percent. Local payrolls have dropped by 2.3 percent (a whopping $175.4 million) in the six-county region including Hamilton, Marion, Sequatchie, Dade, Walker and Catoosa counties. A graph of local home sales has looked something like a rollercoaster, and unemployment figures have flirted with double digits.
Still, the Chattanooga area has fared better than many other mid-sized cities across the United States as more than $4 billion in corporate investment has been slated for the region, and a major portion of that investment is in motion today. Although 1,770 jobs were lost in 2009 in the six-county metropolitan area, new and existing businesses and industries are steadily picking up the slack.
Among the most prominent corporate investors in Chattanooga’s future is Volkswagen of America, whose $1 billion auto assembly plant is nearing completion with a portion of the 2,000 direct and 6,000 indirect jobs it is creating already filled. Gestamp, a major supplier for Volkswagen, has located a $90 million facility in the Chattanooga area and plans to employ 230 people. Other Volkswagen related events include the location of several tier one suppliers at Enterprise South Industrial Park, near the sprawling plant that will produce its first mid-sized sedan for domestic and foreign markets in 2011.
Chattanooga is further positioned as a leading center in the energy sector, including the development and servicing of nuclear energy. Alstom is investing $300 million in a 350,000-square-foot facility and plans to hire 350 employees by 2013. TVA holds potential plans to build 27 nuclear reactors at 18 sites, including Watts Bar and Bellefonte. Westinghouse Electric is constructing a new $21 million training facility at Centre South Riverport, and Wacker Chemie AG has announced plans for a $1 billion manufacturing facility in Bradley County that will manufacture solar panels and employ up to 500 people.
Other companies that have announced expansions, relocations or job creating initiatives in the Chattanooga area read like a “who’s who” of corporate giants and illustrate the diversity of the local economic base. Chattem, a 131-year-old manufacturer of health and beauty aids, now part of Sanofi-Aventis, has undertaken a $35 million expansion and acquired several brands from major manufacturer Johnson & Johnson. Convergys announced that it will be adding 200 jobs to its customer service center. LJT Tennessee, a manufacturer of steel tubing, will be investing $11 million to expand operations and add 84 new jobs. Wrigley, one of the world’s best known snack makers, is planning a $28 million expansion, which will add another 54 jobs. T-Mobile, Arcade Marketing, SIAG Aerisyn, and Southern Tool Steel are among a number of companies investing in infrasture and creating jobs as well.
“I think there is some optimism beginning to develop in the Chattanooga area business community,” comments Chamber of Commerce President and CEO Tom Edd Wilson. “Things are getting better, but there are still many challenges, and there is uncertainty with some of the policies coming out of Washington, D.C., right now. So, you still have some businesses acting very cautiously. I think the recession has had less of an impact here than in many other cities because our economy is very diversified and not dependent on one predominant industry. During this time there has been a great deal of internally generated optimism with VW and Alstom and other projects. Not only has that produced jobs in a down economy, but it has also lifted the attitudes of most citizens of Chattanooga.”
During a national economic slump of epic proportion, Chattanooga has been listed by Business Facilities magazine as its #1 pick among metropolitan areas for economic growth potential, and the Tennessee Department of Economic and Community Development has identified the area as one that exhibits effective partnerships between state and local economic developers.
For the citizens of the Chattanooga area, economic recovery and continuing prosperity are more than simply hopes or wishes. Tangible results and evidence of progress are readily apparent in numerous sectors of the local economy.
The local airport authority has announced a $10 million investment to better serve the business community, including a new 9,000-square-foot general aviation terminal and a new 12,000-square-foot hangar and fueling center.
The homebuyer tax credit helped to push up housing sales and stabilize home prices. Home sales have improved year over year and values have stabilized without realizing the sharp declines experienced in other markets. Erlanger Medical Center has initiated the construction of a $10 million dollar, 32,000-square-foot health and wellness center at Enterprise South near the Volkswagen plant.
Tourism has long been a driver of Chattanooga’s economic engine, and the results for 2009-2010 have been quite encouraging. Requests for information on the city’s attractions have increased 30 percent this year while visitor center in-person inquiries are up seven percent. According to Convention and Visitors Bureau President and CEO Bob Doak, leading tourism and convention indicators are moving positively on a broad front.
“We had an absolutely terrific summer,” Doak comments. “Hotel tax collections are a key barometer, and for June through August we were up a collective 20.7 percent over this time last year. We kept our message loud and strong and kept advertising. When times are tough, the worst thing you can do is pull back on advertising and promotions. We crafted a new ad for this summer, and it has been highly effective and helped us to gain market share from some of our competitors.”
During fiscal 2009, which ended June 30, 2010, Chattanooga booked 141,000 hotel room nights. “This was a record number not only in travel but also in the number of rooms,” continues Doak. “Many of those nights are out into the future, but to give you an idea of how busy it is, we had to book the bureau’s annual luncheon for September 28 at the Convention Center, and it is usually held in August.”
The Tennessee Aquarium has experienced double digit growth in attendance from travelers living within several hundred miles of the city. “As we planned for this year, all of the research indicated that people would be ready to take smaller-budget, regional trips after staying home for the last two years,” explains Marketing Director Cindy Todd. “With that in mind, the Aquarium invested significantly more and partnered with the Convention and Visitors Bureau to run back-to-back television commercials in outlying markets. One thing that has helped us is our strong message. The Tennessee Aquarium is very proud to be rated the #1 aquarium in the country for visitor satisfaction based on a survey of 30,000 people.”
Todd says that the Aquarium is adding value wherever possible, delivering animal encounters in the galleries every hour of every day, allowing visitors to pet a woodchuck or interact with other animals while viewing all of the species of fish and marine life. She adds, “Other aquariums are calling us to learn our secret. They want to know how we are keeping our numbers from falling. The last several years have been very difficult for any business that deals with discretionary spending.”
Another strong indicator of returning economic vitality in Chattanooga is an upswing in retail and restaurant activity. Warehouse Row recently added three new retailers, and the center’s retail space is more than 50 percent leased for the first time since 2008. Restaurant chain Applebee’s Neighborhood Grill and Bar recently opened a new location downtown; Buffalo Wild Wings constructed a freestanding location on Market Street; and Sugar’s Ribs announced its second location with a build-out project on Broad Street.
“The year 2010 has been very positive for Big River Grille Downtown and Bluewater Grille,” comments Kelly Wilson, director of marketing for Gordon Biersch Brewery Restaurant Group. “We have all taken a hit in the past due to various economic experiences, but both Big River and Bluewater have been steadfast to the company’s values and culture, which is focused on concept attributes, fresh products, outstanding customer service and guest loyalty. Both restaurants offer a uniquely positioned dining experience with unique décor packages and inviting bar areas.”
Longtime local restaurateur Tim Hennen believes an outstanding dining experience has also helped Hennen’s weather the economic downturn. “I think we have a quality staff, which means good service, along with a great management team and a price value that the customer likes, and that makes the difference,” he remarks. “We have had great foot traffic. Conventions are helping, and local people are spending money again. We are trying to beat 2008 now. We are up 10 percent over 2008 this year, and that is a 20 percent improvement from 2009. Right now, we are ahead of where we were in September 2008 and look forward to closing out a strong fourth quarter.”
With the outlook improving for business and services, Chattanooga continues to develop infrastructures needed to support an expanding ecologically-friendly economy. EPB recently announced that it now provides the nation’s fastest broadband service, delivering information at one gigabyte per second. The advancement provides a new level of support needed by business and services involved with the transfer of large levels of information.
With the advent of the electric vehicle, Chattanooga is now among 16 major metropolitan areas to be included in the national EV Project. Funded by a $99.8 million grant from the U.S. Department of Energy, the project is the largest deployment of electric vehicles and charge infrastructure in history. The project will ultimately install more than 15,000 home and commercial charging stations in Tennessee, five other states and Washington, D.C.
Tom Edd Wilson concludes, “I am optimistic. I don’t think there is a city in this country that wouldn’t change places with Chattanooga right now. We have more outstanding potential job growth and 45 companies in our pipeline at the Chamber. We are working hard right now, and new companies are calling every day. Chattanooga is positioned for growth.”
The signs of things to come are promising, and Chattanooga will no doubt continue to weather the storms. With a bright future within reach, the city looks forward to continued economic growth, continued visitor interest, and a growing base of residents. Chattanooga is forging ahead, and the future is looking
bright.