How Tennessee became the epicenter of America's auto parts manufacturing explosion
Tennessee's multibillion-dollar auto industry is built on small machine shops like Industrial Maintenance Co. in Gallatin.
This 35-employee, family-owned business doesn't make cars in its 47,000-square-foot facility. It doesn't make parts for them, either. This quarter-century-old operation makes the parts that make the parts that produce the vehicles that help keep one of the state's biggest industries humming.
Shop manager Ross Porter points to a milling machine processing metallic parts.
"Our customers build automated equipment. If you're Ford Motor Company, and you come to me and say, 'I want a machine that's going to assemble this engine,'" Porter said, "Well, there's companies that build you a machine that will assemble you an engine ... That's part of that machine."
There are more than 900 places like this in 88 of the state's 95 counties, feeding Tennessee's booming, now 40-year-old continuously operating automotive manufacturing industry.
Industrial Maintenance Co. is one of the wheels in the cog, offering machining and metal shaping, fabricating and welding services. Clients include customers you've never heard of and some of the largest auto companies and suppliers, including Nissan and Bridgestone.
"We take the small guys who walk in off the street to the big guys. We run the gamut," said Trevor Groves, the company's vice president. "We do all kinds of stuff."
A growing industry
Tennessee became the auto manufacturing state it is today when automaker Nissan built its first plant here in 1983. Since then, the state has become one of the biggest car producers in the nation. (Historical sidenote: Memphis was home to a Ford Manufacturing Plant between 1924 and 1958 and reportedly produced nearly 1.6 million vehicles. Nashville was also home to the short-lived Marathon Car Factory.)
The state is now poised to become one of the biggest makers of electric vehicles in the decades to come, potentially once again revolutionizing the state's economy.
Electric and gas-powered cars have been rolling off of the same assembly line at the General Motors manufacturing facility in Spring Hill since March 2022. And in December, Gov. Bill Lee announced Ultium Cells LLC, a joint venture of LG Energy Solution and General Motors, will expand Spring Hill battery cell manufacturing.
Volkswagen started production of its first U.S.-assembled EV, the electric ID.4, at the Chattanooga plant during the summer of 2022. Tennessee is key in the company's future EV strategy, Volkswagen said in a statement to The Tennessean this week.
"The nation’s push to electric mobility underlines the strategic importance of our presence there," the statement read.
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The state's major auto manufacturing centers, including Nissan's North American headquarters in Franklin, and its plant in Smyrna in addition to General Motors, Volkswagen and Ford's BlueOval City in Haywood County, have led to a boom in ancillary businesses like Industrial Maintenance Co.
Collectively, these businesses make up an industry that helps employ more than 137,000 Tennesseans. Some employ a handful of workers. Others employ thousands.
All are part of an economy that now accounts for 12% of state exports, the state's largest such share, according to the Tennessee Department of Economic and Community Development. In 2021, 3% of all U.S.-made cars, light trucks and SUVs were produced in Tennessee, according to the department.
"Automotive jobs have grown from virtually non-existent in Tennessee in 1980 to one-third of our manufacturing jobs today," said former Tennessee Gov. Lamar Alexander, who is credited with bringing the auto industry to the state. "It's done more than anything else over the last 40 years to raise family incomes."
Industrial Maintenance started as a family business in a garage with two employees, Groves said.
"We may not be doing triple the work for Nissan directly, but we may be doing quadruple the work for some of their suppliers," he said. "It's definitely grown. In 25 years, we've probably quadrupled (in business) over those years. I don't seem to be slowing down much."
Why Tennessee?
It started at a White House dinner in 1979.
A newly sworn-in Gov. Alexander was listening to then-President Jimmy Carter speak about how governors needed to persuade the Japanese to make their cars in the United States. Tennessee was an unlikely choice, as it had no auto industry and only a single auto supplier in Nashville, Alexander told The Tennessean.
"There were three things that made the difference: One was a map — really a photograph of the United States taken at night from a satellite that I carried with me to Japan. What automobile makers wanted first was a central location," Alexander said. "We had a right-to-work law, and as a result, had a very different labor environment." And, he added: "Number three, I say it was a charm offensive. I was in Japan a lot."
That initial investment from Nissan in 1983 brought in more auto suppliers, which, in turn, led to an announcement from Saturn a few years later that it, too, would make cars in Tennessee, said Jennifer Safavian, president and CEO of Autos Drive America, a trade group that represents foreign automakers invested in the United States.
As of this month, the state counts 917 auto suppliers.
"I think a lot of it becomes kind of a domino effect. When one comes in, it makes it easier for others," Safavian said.
The auto industry's green future
Tennessee is also keeping pace with the green revolution in automating. The state and the South Korean company, LG Chem, announced plans in November to develop a cathode materials plant for electric vehicle batteries. The $3.2 billion investment, the single largest direct foreign investment in Tennessee history, is expected to bring more than 800 jobs to the Clarksville area.
The factory will make 120,000 tons of cathode battery materials a year — enough to power batteries in 1.2 million electric vehicles — once it's fully up and running, according to the company, which also said it was the largest plant of its size in the United States.
LG Chem chose Tennessee because of its "proximity to key customers, ease of transporting raw materials and active cooperation of the state and local governments," according to the company. It also noted that the United States was becoming a better market for such green technology, citing the Inflation Reduction Act of 2022 (that included green energy incentives) passed by Congress.
While this is the largest investment, it's hardly the only one.
Nissan has been building and exporting its EV Leaf at its Smyrna plant and electric motors at the Dechert powertrain since 2013.
"Given the diversity of automakers in the state and their investments in new technologies, such as advanced batteries, Tennessee will continue to play a critical role in the future of mobility," said Andrew Tavi, Senior Vice President, Legal, Sustainability and External Affairs, for Nissan Americas.
And green energy investment is coming in by the billions.
The Ultium Cells project announced in December represented a $275 million investment that is expected to create 400 jobs. That's on top of a $2.5 billion investment the U.S. Department of Energy announced that same month for new lithium-ion battery cell manufacturing facilities in Ohio, Michigan and Tennessee. The funding is expected to create 3,700 jobs at the Spring Hill facility.
"There's about to be a massive change in the auto industry to self-driving and electric," Alexander said. "And that's either a great threat to Tennesseans' jobs, auto jobs, or a great opportunity. And, so far, I think the state has made the most of it."
Frank Gluck is a reporter for The Tennessean. He can be reached at fgluck@tennessean.com. Follow him on Twitter at @FrankGluck.
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