Chattanooga's Economic Development Edge

Not since 2008, when Green Mountain Coffee started roasting here and Sysco opened its big distribution center, has Knoxville seen a major new employer come to town.

That's not surprising considering the deep economic downturn started that year, from which a recovery is sputtering. Nor is it because the Knoxville Chamber and the three other counties with whom it partners in what's called Innovation Valley have slacked off on their job recruitment and other economic development efforts. Indeed, Innovation Valley's $1.8 million budget in each of the past four years is just about what was spent on a four-year Jobs Now! campaign in the preceding years, and which claimed credit for employment growth exceeding 40,000 (or more than 10 percent) in the metropolitan area during that span of time.

What is surprising is the incredible roll that our sister city to the south, Chattanooga, has been on during the stark years that have followed. The mother-lode of Chattanooga's job recruitment is, of course, Volkswagen's $1 billion investment in a plant that will employ about 2,000 when the VWs start rolling off its assembly line this fall. And that's not counting close to 1,000 other jobs at no fewer than 15 supplier plants that have sprung up nearby.

Nor does Chattanooga's success story stop there. Amazon is investing $140 million in two distribution centers that are expected to employ more than 1,400 full-time workers and 2,000 part-time workers in Chattanooga and adjacent Bradley County. Beyond that, another German-based company, Wacker Chemie, recently started construction of a $1.5 billion plant in Bradley County that will make polycrystaline silicon primarily for solar panels with an expected workforce of 650 upon its completion in 2013. And French-based Alstom last year added 350 jobs at a new $300 million facility to produce steam and gas turbines for power generation at a Chattanooga riverfront site.

So why has Chattanooga been having such success in attracting big new employers while Knoxville has been at a virtual standstill?

"It's very simple," says the Knoxville Chamber's executive vice president, Rhonda Rice. "They have land. We don't. End of story."

Both the Volkswagen plant and Amazon's primary facility are located in Enterprise South, a 1,200-acre tract that was originally developed as an Army munitions plant during World War II. After jointly acquiring it in the 1990s, the city of Chattanooga and Hamilton County invested some $80 million (including state funding) in priming it for industrial use. And the site also had the advantage of being close to two interstate highways (I-75 and I-24) and being served by two rail lines (CSX and Norfolk Southern).

By contrast, Knox County's largest business park, Eastbridge, only has about 180 contiguous available acres and it's 12 miles removed from I-40 and five miles from the nearest rail line. But wait—within the city limits of Oak Ridge, there's a 1,300-acre tract known as the Clinch River Breeder Reactor site, reflective of its intended use for that purpose until costs spiraled out of control and work on the reactor was halted in 1981. The site, by all reports, was one of three finalists for a Mercedes-Benz plant that ended up going to Alabama in the early 1990s. But TVA, which now owns the site, no longer considers it suitable for industrial development and is reserving it for potential construction of a new breed of nuclear power plants much smaller than existing ones, at undetermined future dates.

Rice recoils from the notion that trying to bring more manufacturing jobs to the Knoxville area is passe. "I don't think it's passe at all," she says. "Our prospects probably aren't as large as they used to be [i.e., plants with on the order of 200 to 300 workers], but there's still a lot to be done." She claims that her Innovation Valley recruitment team is currently working with a list of 38 prospects "no fewer than 30 of whom are manufacturing."

Up to now, though, the well situated, 95-acre Hardin Business Park, which Knox County's Development Corp. acquired and site prepped in 2007 at a cost of $8.4 million, remains completely vacant. So does the 450-acre Pellissippi Place business park at I-140's eastern terminus in Alcoa in which Knox County, Blount County, and the cities of Maryville and Alcoa each invested $5 million. And all of that's before even mentioning the $9.3 million spent to acquire 378 acres of farm land near I-40's Midway Road interchange, only to have County Commission succumb to pressure from East Knox ruralists and nix its use for a business park—this despite the fact the Development Corp. had gotten and continues to hold an additional $16 million from the county for development of the site with no use in prospect.

Innovation Valley's efforts shouldn't be judged by all this land banking alone, given current economic (not to mention political) conditions. Landing employers to locate new facilities in the Knoxville area is just one element of IV's multi-faceted mission. Others include:

• The retention and expansion of existing employers.

• The start-up of new businesses, drawing especially on all of the research and technology emanating from ORNL and UT and pairing it with the entrepreneurial talent and sources of financing needed to make new ventures flourish.

• Education and workforce development, starting with the strengthening of public schools to assure their graduates as ready for college and 21st century careers.

All of these efforts have met with some successes and are worthy of elaboration. But space constraints dictate that they be addressed in a separate column.

(It also deserves to be noted that the Chattanooga area's 8.8 percent unemployment rate in August exceeds the Knoxville area's 7.9 percent.)