\ Chattanooga: Economy - Major Industries and Commercial Activity, Incentive ProgramsNew and Existing Companies

Chattanooga: Economy

Major Industries and Commercial Activity

Chattanooga, the hub of a thriving economic region, is located at the crossroads of three states: Alabama, Georgia, and Tennessee. Among the city's economic advantages are abundant natural resources (chiefly iron and steel), a strong tourism industry, a trained labor force, and a centralized location. An extensive system of highway, air, water, and rail transportation helps make the city a major transportation and distribution center. In addition, the city has a designated Foreign Trade Zone.

One of the nation's oldest manufacturing cities, Chattanooga's employment in that sector has decreased slightly in recent years (mirroring national trends) to 16.5 percent. Again mirroring national trends, increases have occurred in information, financial activities, and professional and business services. In addition, Chattanooga has experienced a modest growth trend in transportation, trade, and utilities. As a whole, the city is a diversified and profitable business location with no single dominant industry.

Locally based UNUM Provident Corp. is a Fortune 500 service company. Other large companies with headquarters in the city include Blue Cross/Blue Shield of Tennessee, Brach & Brock Confections, Chattem Inc., Dixie Yarns, The Krystal Company, McKee Banking Company, North American Royalties, and Olan Mills, Inc.

The city is the headquarters for the Division of Power of the Tennessee Valley Authority (TVA), the largest utility in the United States. TVA is a federal corporation that works to develop the natural resources of the Tennessee Valley. Chattanooga is in an enviable position: both electricity and natural gas are readily available at very reasonable rates. Water supplies are also plentiful and sewage treatment has considerable excess capacity to support industrial expansion. In addition, TVA and its power distributors offer a growth credit program that provides significant savings to new commercial and industrial customers requiring a large capacity.

Items and goods produced: processed foods, iron and steel products, textiles, apparel, cosmetics, pharmaceuticals, clay products, furniture, machinery, paper, petroleum products

Incentive Programs—New and Existing Companies

Local programs

The city of Chattanooga, Hamilton County, and the state of Tennessee have joined with the private sector to form RiverValley Partners, a non-profit public-private organization that has responsibility for economic development in Chattanooga and Hamilton County. The organization provides assistance to new and expanding businesses and industry in securing business financing. Services include networking with community financial resources, assistance in obtaining state aid, and business counseling for start-up operations experiencing difficulties. The city of Chattanooga Community Development Block Grant Program makes loans to locating or expanding businesses for terms of up to five years. The Enterprise Fund of Greater Chattanooga provides capital on a loan or equity basis to new and existing businesses in Chattanooga, Hamilton County, and surrounding areas for purposes of creating jobs and strengthening the tax base. The Local Development Corporation Revolving Loan Fund can provide limited fixed asset financing when necessary to leverage other loan funds or bridge a financing gap. The Tennessee Valley Authority provides loans to business and industry in Hamilton County and other regional counties. Valley Capital Corporation provides long-term debt and equity capital to small businesses which are at least 51 percent owned by economically or socially disadvantaged entrepreneurs.

State programs

Tennessee, a right-to-work state, provides a low cost of doing business. It boasts the lowest utility costs in the nation and offers numerous tax incentives. State-administered financial programs for businesses include: the Small and Minority-Owned Business Assistance Program, currently being developed by the state Treasury Department and expected to provide assistance to small and minority-owned businesses through loans, technical assistance, and program services; the Small Business Energy Loan Program, which helps qualified Tennessee-based businesses upgrade their level of energy efficiency in their buildings and manufacturing processes; the FastTrack Infrastructure Program, which assists in the funding of infrastructure improvements for businesses locating or expanding in Tennessee; and the FastTrack Training Services Program, which helps companies provide training for their staff.

Job training programs

Tennessee's FastTrack Training Services Program is the state's primary source of financial support for new and expanding business and industry training. FastTrack staff work with businesses to plan, develop, and implement customized training programs. Training may be done in a classroom setting, or on the job. The Southeast Tennessee Private Industry Council also assists businesses in meeting labor force training needs. The Council strives to provide businesses with a more competent workforce, higher employee productivity, a reduction in employee turnover, lower employee retraining costs, and highly motivated employees. The council works with Chattanooga State Technical Community College on vocational training, and helps new companies combine resources to meet their training needs. Several four-year institutions and two-year colleges serve the area with a wide range of programs designed to train personnel for new and expanding industry. The Tennessee Industrial Training Service provides specialized services at low or no cost to manufacturing, warehouse/distribution, and service industry employers, including task and job analysis, training program design and material development, coordination of programs with employee recruitment activities, provision of facilities and equipment for developing specific job skills, and provision of funding.

Development Projects

Perhaps the most visible sign of Chattanooga's renewal is its continuing revitalization to its riverfront area. The 21st Century Waterfront Project, a $120 million enhancement to 129 acres along both shores of the Tennessee River, is scheduled for completion in May of 2005. The project encompasses a $30 million expansion to the Tennessee Aquarium, a $19.5 million expansion to the Hunter Museum of Art, a $3 million renovation and enhancement to the Children's Creative Discovery Museum, a new pedestrian bridge with a lit glass deck, a new pier, waterfront parks and dining, unique retail, and a poignant pedestrian passageway, linking the downtown and river, that marks the beginning of the Trail of Tears and celebrates Native American culture.

Economic Development Information: Chattanooga Area Chamber of Commerce, 811 Broad Street, Chattanooga, TN 37402; telephone (423)756-2121; fax (423)267-7242; email info@chattanooga-chamber.com

Commercial Shipping

Chattanooga is located at the crossroads of several major U.S. highways, including Interstates 75, 24, and 59. The city is within one day's drive of nearly one-third of the major U.S. markets and population, and within 140 miles of Nashville, Atlanta, Knoxville, Huntsville, and Birmingham. Chattanooga is the distribution center for the region that includes southeast Tennessee, northwest Georgia, southwest North Carolina, northeast Alabama, and parts of several neighboring states. More than 70 motor freight lines are certified to transport shipments in the area. Two ports—the Port of Chattanooga and Centre South Riverport—are within city limits. Chattanooga remains an important port as a result of the Tennessee Valley Authority's system of locks and dams, and the Tombigbee waterway, which saves days, miles, and dollars on shipments to and from ports along the Ohio and Mississippi Rivers and the Gulf of Mexico. Freight rail transportation is provided by divisions of the CSX Transportation system and the Norfolk Southern Railway. Air cargo service carriers operate out of Chattanooga Metropolitan Airport/Lovell Field.

Labor Force and Employment Outlook

Chattanooga's work force is said to be distinguished by its pride in individual workmanship. Workers are prepared for specialized professions by the state's excellent industrial training programs. Tennessee is a right-to-work state, and the city's cost of labor remains lower than in many other areas of the United States. Between July of 2003 and July of 2004, Chattanooga netted 1,900 new jobs (the fastest job growth rate the city has seen in 4 years) and average wages rose 4.2 percent, compared with the national average of 2.7 percent.

The following is a summary of data regarding the Chattanooga metropolitan area labor force, 2003 annual averages.

Size of nonagricultural labor force: 233,500

Number of workers employed in . . .

manufacturing: 35,400

trade, transportation and utilities: 55,100

information: 2,800

financial activities: 17,800

professional and business services: 25,400

educational and health services: 23,100

leisure and hospitality: 19,200

other services: 10,600

government: 35,100

Average hourly earnings of production workers employed in manufacturing: $13.24

Unemployment rate: 3.6% (December 2004)

Chattanooga: Economy

Largest employers Number of employees
Hamilton County Dept. of Education 4,723
BlueCross BlueShield 3,683
McKee Foods Corporation 3,300
UnumProvident Corporation 3,147
Memorial Health Care System 2,583

Cost of Living

At the end of 2004, Chattanooga's cost of living, based on average cost of housing, utilities, gasoline, doctor visits, and taxes, was nearly eight percent below the national average.

The following is a summary of data regarding several key cost of living factors for the Chattanooga area.

2004 (3rd Quarter) ACCRA Average House Price: $238,224

2004 (3rd Quarter) ACCRA Cost of Living Index: 92.8 (U.S. average = 100.0)

State income tax rate: Limited to dividends and interest income

State sales tax rate: 7.0%

Local income tax rate: None

Local sales tax rate: 2.25%

Property tax rate: $2.52 per $100 of assessed valuation (2005)

Economic Information: Chattanooga Area Chamber of Commerce, 811 Broad Street, Chattanooga, TN 37402; telephone (423)756-2121; fax (423)267-7242; email info@chattanooga-chamber.com