A Chattanooga firm that was touted in December as having added 35 jobs due to landing a contract at the Volkswagen plant has filed for Chapter 7 bankruptcy.
Southern Fabrication Contractors listed over 200 creditors in the filing on Friday afternoon.
The firm said it has assets of between $1 million and $10 million and owes between $1 million and $10 million.
Mayor Ron Littlefield and County Mayor Claude Ramsey, along with Volkswagen Chattanooga President Frank Fischer, went to the firm's facility on Chestnut Street on Dec. 9 to highlight local jobs coming out of the huge VW plant.
The day before, a group called Volunteers for Local Hire was charging that Tennessee officials were not insisting that VW hire local.
Mike Potter, who heads Southern Fabrication, said the VW work on its paint shop was fueling two 12-hour shifts.
He said Southern had nearly doubled its workforce to 110.
Volkswagen officials said Monday they are evaluating the situation at the paint shop in light of the bankruptcy by the sub-contractor.
The paint shop project is still on schedule for completion this fall, it was stated.
Sources said Southern Fabrication ran into difficulties on the paint shop project and eventually had to move off the job.
Southern Fabrication reportedly over time became delinquent in payments to local suppliers, including Siskin Steel, and employees to the tune of $2 million. The local suppliers and subcontractors of the firm reportedly agreed to a $0.50 on each dollar settlement, then the bankruptcy was filed.
Attempts to reach Mr. Potter and another company official, Dick Ireland, were unsuccessful.
Eisenmann had won the contract to install Volkswagen’s paint shop last fall and awarded a portion of the work for the fabrication and installation of the equipment support steel to the local firm.
The company awarded sub-contracts to Southern Fabrication Contractors as well as to IMF Inc. of Greeneville, Tn.
Eisenmann awarded a third contract to Complete Automation of Lake Orion, Mich., which is licensed as a contractor in the state of Tennessee and plans to open a local office soon.
At the time, Tom Loafman, director of purchasing for Volkswagen Group of America, said Eisenmann’s announcement was "the culmination of an intense effort to deliver as much economic impact to Chattanooga and Tennessee as possible. Many of our construction packages require specific automotive expertise that is not represented locally, but through a partnership with the Tennessee Department of Economic and Community Development and the Chattanooga Area Chamber of Commerce we are working with Eisenmann and all of our other contractors to subcontract as much of the work as possible with state and local firms.
“As a result, the local content stands at $287 million. This substantially exceeds our target of 20% local and state participation in the construction project.”
“We thank Eisenmann for joining in Volkswagen’s commitment to working with local companies,” said Mayor Ron Littlefield.
“Our partnership with Volkswagen and with companies like Eisenmann is bringing increased economic benefit to the companies and residents of Hamilton County and Chattanooga,” said County Mayor Claude Ramsey.
Eisenmann’s announcement demonstrates the success of the Chattanooga Volkswagen Team, a community liaison group established in partnership with the Chattanooga Area Chamber of Commerce, Matt Kisber, commissioner, Tennessee Department of Economic and Community Development, said at the time.
“Volkswagen is living up to its commitment to the people of Tennessee,” Commissioner Kisber said. “We knew it would be important to help Volkswagen and its contractors identify Tennessee companies that could do the kind of work they need. I’m proud to say that the process we put in place is working.”
Mr. Potter said at the time, “This is a substantial contract that will last into the first part of 2010, and it comes at a good time as the winter season is typically slower for us.
"Most of our work has come from outside of Chattanooga for the last few years. We’re pleased to have this opportunity to work right here at home.”