Sunday, July 28 2019
By the Tennessee Economic Partnership
In advance of the kickoff of the 2019 North American International Auto Show in January, General Motors unveiled its plans for the new Cadillac XT6, a seven-seat SUV described as the Escalde’s “little brother,” to be manufactured at its Spring Hill, Tennessee plant. This news means hundreds of new employees and a nearly $300 million investment at the Middle Tennessee facility in order to accommodate the production of the XT6.
Bob Rolfe, the state's commissioner of economic and community development, said GM's decision to add another vehicle to its product line in Spring Hill "speaks volumes about the high-quality workforce and business climate that global businesses can find in Tennessee."
GM's Spring Hill plant is the company's largest facility in North America, and GM is one of Tennessee’s leading employers. It employs 3,800 workers on a 2,000-acre campus providing quality wages for Tennesseans and positively benefiting Middle Tennessee’s economy enormously throughout the years since first opening its Spring Hill plant in 1990. Besides the XT6, XT5, and GMC Acadia, the site produces the Holden Acadia for export to Australia and New Zealand.
But the unveiling was about more than just the new vehicle production. General Motors CEO Mary Barra shared her vision for the company’s future with workers at the company’s Spring Hill plant earlier this year. “Today, we are living through one of the greatest technological revolutions in history,” she said, as she ticked off the way robotics, the internet of things and other technology is transforming the automotive industry. While the industry has always been on the forefront of developing technologies, now more than ever, changes are in high gear.
“The pace of change is only accelerating,” Barra added.
The automotive industry is undergoing a radical transformation, with most manufacturers stating that the decade ahead will see more change than the two previous decades combined.
As home to three major assembly plants and a base of more than 900 auto suppliers, Tennessee has been the nerve center of the South’s automotive sector for nearly four decades. Automakers like GM, Nissan and Volkswagen have invested billions of dollars in the Volunteer State, with Tennessee boasting automotive operations in 88 of its 95 counties. Nissan’s North American headquarters is in Franklin, and Nissan’s Smyrna plant is the most productive in North America. With General Motors in Spring Hill and Volkswagen in Chattanooga, Tennessee continues to invest in training for the state’s high concentration of automotive employment. With more than 139,000 Tennesseans working in the state’s auto industry, Tennessee ranks No. 1 in the Southeast U.S. for automotive employment.
But Barra’s comments are worth remembering. The pace of change and level of disruption in the auto industry present headwinds, but also tremendous opportunities for Tennessee’s economy.
Tennessee’s track record as an auto hub is by no means a guarantee of future success. It would be hard to ignore that Tennessee – and its peer states throughout the Southeast – have benefited from the shift in auto production from the Rust Belt in recent decades. If history has taught us anything, the jobs of today are not guaranteed to be here tomorrow.
So how is the State of Tennessee keeping up with the evolving automotive industry?
The State of Tennessee’s Department of Economic and Community Development cites that the focus is to continue to make Tennessee an inviting place where companies create jobs and invest their resources. Tennessee is dedicated to supporting the growth of advanced manufacturing and innovative industries.
In the automotive sector, that means electric vehicles, and Tennessee is confident that it can be a hub for electric vehicle manufacturing. Tennessee produces more than 20,700 electric vehicles annually, and today, only California and Michigan manufacture more.
Fortunately, major automotive companies are proactively investing in new technologies. Silicon Valley remains the nexus of new innovation and research in driverless technology. But as for electric vehicle production, Tennessee is grabbing its share of investments and new jobs.
It’s clear that even as GM, Nissan and VW produce traditional gas-powered vehicles at a prodigious clip here in Tennessee, they too are conscious about the future shifts in the industry.
Just take Volkswagen. Earlier this year, VW announced it would begin making electric vehicles in Chattanooga. The German automaker’s $800 million investment in electric vehicles will support 1,000 new jobs in Hamilton County. VW’s first electric vehicle will roll out in 2022, and the company expects to sell one million electric cars worldwide by 2025.
This expansion is considerable, and it will push VW’s headcount in Chattanooga to 4,500 employees. The plant – the current home of VW Atlas and Passat production – is positioned to be an important piece of the company’s future growth, according to VW CEO Dr. Herbert Diess.
Diess said, “The U.S. is one of the most important locations for us and producing electric cars in Chattanooga is a key part of our growth strategy in North America.”
VW’s announcement adds to the growth of electric vehicle production taking place in Tennessee. Since 2013, Nissan has produced the all-electric LEAF at its Smyrna plant. The LEAF is the world’s best-selling electric vehicle, with more than 400,000 sold worldwide and over 132,000 sold in the U.S.
Meanwhile, DENSO, a major supplier for Toyota, Honda and others, recently invested $1 billion in its Maryville operations, where the company produces electric vehicle products and systems.
DENSO’s investment expanded its production line to include advanced safety, connectivity and electrification products for hybrid and electric vehicles. As part of DENSO’s plan to make Maryville the North American manufacturing center for electrification, the company is creating 1,000 jobs.
For DENSO CEO Kenichiro Ito, the expansion in Maryville “will help position us to meet” the “dramatic shifts” in the transportation industry.
Tennessee has a recruiting strategy to attract more Tier 1 and Tier 2 suppliers for electric vehicles as automakers are buying a lot of EV technology from third parties.
From a consumer side, Tennessee has also made efforts to support the industry shift, with the introduction of Drive Electric Tennessee, a statewide electric vehicle (EV) consortium, with a mission to make the Tennessee Valley a leader in EV transportation in the Southeast over the next decade. The organization recently published a roadmap to increase the number of the state’s electric vehicle population to at least 200,000 by 2028.
To get there, the plan suggests adding to the state’s electric-vehicle-charging infrastructure, which currently includes 800 stations. “Range anxiety,” the group says, can be barrier to adoption. So, the group says charging stations should be located at homes, apartment buildings, workplaces, parking garages, restaurants, malls and more. Additionally, the group will push a public awareness campaign, which will include “ride and drive” promotions, educating fleet owners and consumer education.
The position of Tennessee as a leader in the automotive industry paired with the Drive Electric Tennessee initiative demonstrates Tennessee’s commitment to sustainable transportation solutions being an economic reality to benefit all Tennesseans. The success of these efforts will rely on its partner Tennessee automotive industry leaders to also play a role, and there is evidence that will be the case.
“We have committed to an all-electric future,” GM’s Barra told the audience in Spring Hill at the XT6 unveiling in January. “We are prepared to launch a number of new electric vehicles in the next several years. Earlier this month, we announced that Cadillac will be our lead electric vehicle brand.”
While GM has not unveiled specific plans to introduce electric vehicles to its Spring Hill plant, there are promising signs for the plant’s future vitality, especially as it doubles down on its Cadillac brands there. GM just completed a $300 million investment to begin producing a three-row Cadillac crossover. Since 2010, the company has poured more than $2 billion into the plant as its headcount pushes above 3,800 employees.
“General Motors is committed to U.S. manufacturing, and we are committed to Tennessee,” Barra said.
Music to Tennessee’s ears, and a welcome sign that the state’s auto industry will be well-positioned on sound footing for years to come. As the Southeast continues to emerge as the driving force in automotive manufacturing in the United States, Tennessee is committed to be its engine.
For more information about the automotive advances of the state or to learn about doing business in Tennessee, visit www.tnecd.com.
Visit http://www.expansionsolutionsmagazine.com/tennessee_ed for local economic development office directory listings.