Tennessee Megasites Continue To Stumble And Fall

In the wake of the fallout from two of Tennessee’s Megasite investments, the decision of Jefferson County officials to pull out of the local Megasite project is enjoying some level of vindication. Clarksville’s Hemlock Semiconductor was named this week in the Beacon Center’s Pork Report as earning the Pork of the Year distinction for costing taxpayers more than $100 million dollars, which does not include local investments and incentives or Tennessee Valley Authority contributions. According to the Beacon’s Pork Report, the State had no clawback in place to recoup any of its investment, which left taxpayers at a distinct disadvantage when Hemlock Semiconductor announced that it would not only be laying off 300 employees but that the situation was permanent, leaving Clarksville devastated. Recently, the State’s only successful Megasite – Chattanooga’s Volkswagen-announced that they would be laying off several hundred workers from their middle Tennessee location. Clawbacks that could have helped the State protect the taxpayer investment in the Megasite project, which were just signed into law, are not applicable in the case of Volkswagen because it precedes the legislation. There has been some question on the legislative level as to the effectiveness of the clawback legislation, with some questioning if it is too watered down to make a significant impact. In addition, the State is experiencing some difference of opinion with a high ranking labor leader that sits on Volkswagen’s supervisory board. According to reports, unless the Chattanooga plant decides to unionize, there will be little chance that they will get an additional assembly line or a new product, which they need due to the lack luster showing of the Passat, which is a mainstay for the Chattanooga location. The Tennessee political hierarchy has little appetite for unions and the war between the need to support the taxpayer’s investment in the Volkswagen Megasite and the desire to continue to promote Tennessee as a right to work State, points to the flaw in buying in to one manufacturer with a large taxpayer investment. With the Memphis site still struggling to come on line, the defunct Hemlock site and the disappointing layoffs from the Chattanooga site, as well as the potential for that location to seriously impact the mantra of the State, the Megasite economic development model is proving to be one of the State’s most costly speculative ventures.