Free Enterprise Staff  | June 18, 2015

The Untold Story of a Tennessee City’s Economic Miracle

It’s not every day—or even every decade, for that matter—that a city is able to reverse years of decline and reinvent itself as a hub of innovation. Yet that’s exactly what has happened in Chattanooga, Tennessee.

Located on the state’s southeastern border with Georgia, Chattanooga has staged an impressive recovery since the 1970s, when it was a casualty of the retrenchment that took hold of the U.S. steel industry. Like other Rust Belt cities, Chattanooga was left a shell of its former self, as manufacturing plants idled and retail stores and local businesses shuttered.

But Chattanooga was just down—not out. It’s now a model for other down-on-their-luck cities, having successfully clawed its way back from the brink. Reversing course required a collective effort among local citizens, business leaders, and public officials, all of whom worked together to rebuild and revamp the city’s infrastructure, jobs base, and business community.

So, what was the first item on their to-do list? Reversing years of decline fueled in large part by the disintegration of the city’s manufacturing base. To accomplish that goal, Chattanooga started thinking global, Ron Harr, the president and chief executive of the Chattanooga Area Chamber of Commerce, told Marketplace. “The community decided, we didn’t want to be known that way,” he said.

With their new international mindset, Chattanooga started courting international companies, enticing them to build new manufacturing outposts in the city and repurpose existing facilities. The strategy worked, with foreign businesses investing more than $4 billion in the metropolitan area between 2008 and 2013, according to Marketplace. That influx of cash, moreover, led to the creation of some 12,000 jobs over the same period of time.

That Chattanooga was able to leverage its existing infrastructure and skilled workforce to attract major global players has excited officials in cities across the U.S. Sure, the city invested in rebuilding and repairing roads and bridges, but it was most successful at demonstrating how businesses could come in and take advantage of systems already in place.

What’s more, though a majority of its manufacturing workers had been left without jobs, many had the core skills that high-technology manufacturing jobs demand. That’s what ultimately convinced many automakers, including Volkswagen, to expand their U.S. operations to Chattanooga. It’s easy to see just how successful the city has been at recharging its economy: The Bureau of Labor Statistics pegged Chattanooga’s April unemployment rate at 5.2%markedly lower than Tennessee’s 6% overall unemployment rate.

Chattanooga’s fascinating story of redemption is what just drove us to feature it this month for our ongoing #SiliconCitiesUSA series. Over the next few weeks, we’ll dive into Chattanooga’s economy to show how its unique idea of what infrastructure is enabled it to rise from the ashes of the manufacturing bust that crippled so many other Rust Belt cities.