Posted on Thu, Oct. 22, 2009

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What we can learn from Chattanooga

"You can't sell what you don't have" is the simple truth spoken by Hamilton County Mayor Claude Ramsey last week in Chattanooga, Tenn.

Ramsey was speaking about the city's experience winning the competition for a new Volkswagen manufacturing project that is projected to generate 11,500 jobs: 2,000 directly and almost 9,500 from new suppliers and spin-offs. Independent research shows that total public investment for incentives and infrastructure was more than $577 million over 30 years. The plant is projected to generate $11.8 billion in personal income growth for citizens and $1.4 billion in new tax revenue over that same time.

While it's hard to sum up a half a day of learning in a few hundred words, the lessons people in Chattanooga shared are simple:

* They had to work as a team. Throughout the process, the private and public sectors had important roles and respected each other. The city, county and state made investments together, speaking with one voice to current and prospective companies. Some of Chattanooga's largest employers were the best salespeople, knowing full well that they were recruiting industries that could affect their own work force but ultimately would be good for the community as a whole.

Volkswagen started with a list of 400 sites. Competition for all projects, and especially for one of this magnitude, is fierce. Chattanooga was successful because the city, county and state governments worked together with the private sector to better their community and make it attractive to potential employers.

* It takes investment. In this case, the city and county spent millions of dollars buying land, remediating existing environmental issues, designing and building infrastructure, and marketing the site. They invested in rail, gas lines, electric power lines, sewer and water all without an identified customer. The site was ultimately certified as a Shovel Ready Mega-Site, meaning time to market is shorter for the customer. A $40 million technical training center dedicated to Volkswagen and an Interstate access ramp rounded out the investments.

The city and county knew their investment was about providing the opportunity for companies to create jobs leading to growth in personal income for their residents, and to diversify the community's economy.

* The effort required "patient capital." They began assembling the large site 15 years ago and resisted selling part of the land for a large sum of money because it would have limited future use with a higher return on investment. They had to be willing to wait for the right opportunity.

"You can't sell what you don't have" applied not only to the site, infrastructure and available work force, but also to the community. In 1969 Chattanooga was labeled as the "dirtiest city in America." Since that time Chattanoogans have worked hard to clean up their community and about 20 years ago came together in their own visioneering process. The fruits of their labor were evident when the president of VW North America said during an announcement for the new plant: "The intangibles became tangibles."

Important to note is that this announcement was not made at the new building site, City Hall or the Chamber of Commerce, but instead inside the newly expanded art museum, overlooking Chattanooga's redeveloped riverfront.

Wichita has much to learn from Chattanooga's successes. Over the past few years it has taken an aggressive approach to economic development, securing a major win. While we may not agree on specific means or methods of economic development, we can agree that we want Wichita to be the best that it can be, and work together to retain and attract employers to our community.

Ben Hutton is a vice president at Hutton Construction and was part of the Visioneering Wichita trip to Chattanooga last week. Interested in writing for "A Business Perspective"? Contact Dan Loving at 316-269-6706 or dloving@wichitaeagle.com.

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