If at first you don’t succeed… local reports said Tennessee state and Chattanooga city officials had earlier tried to lure both Toyota and Kia to its Enterprise South Industrial Park, located 12 miles northeast of downtown, before Volkswagen gave a new plant the green light on Tuesday.
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Toyota went instead to Mississippi, near Tupelo (and switched the plant from SUVs to hybrids just last week) while Kia chose West Point, Georgia.
Now the 1,350-acre site, 100% owned by the city of Chattanooga and Hamilton County and certified as an industrial megasite by the Tennessee Valley Authority, will, by 2011, be home to a plant churning out a new designed-for-the-US model targeting the likes of the Ohio-built Honda Accord and Kentucky’s Toyota Camry.
The new car will slot in between the German-built Passat and Mexican Jetta. The plant will press and weld bodies, paint, trim and assemble them using drivetrains imported from the Jetta plant.
Though financial details have not been revealed, officials confirmed Volkswagen of America had received incentives from the state governor’s office and the Tennessee Department of Economic and Community Development for job creation and capital investment. There will also be help with public infrastructure (the site’s web pages show a new interchange being built on Interstate 75, for example, and there are also rail links) plus job training.
“The US market is an important part of our volume strategy and we are now very resolutely accessing that market,” VW CEO Martin Winterkorn said.
“Volkswagen will be extremely active there. This plant represents a milestone in [our] growth strategy. We will be selling 800,000 [units] in the US by 2018, and this new site will play a key role. This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region. We look forward to establishing an important mainstay for ourselves when we become the biggest European car maker there.”
Initial production capacity is 150,000 vehicles starting early in 2011. Volkswagen expects to create about 2,000 direct jobs on the former Army site, attracting workers from the ‘tri-state area’ of Tennessee, Georgia and Alabama.
The site’s promotional website notes it is within two hours’ drive of 80% of the US population.
“This area has a deep base of well-trained labour, with excellent engineering and manufacturing programmes at the universities and technical colleges,” VW America chief Stefan Jacoby said.
The company also considered sites in Michigan, from which it recently moved its headquarters and Huntsville, Alabama, which last week was widely tipped as the winner.
“We reviewed three excellent sites, all of which had the specific qualities necessary to build a plant in the United States,” said Jacoby.
He told Automotive News that initial vehicles from the plant would be Volkswagens but the factory will be flexible enough to add a brand or brands.
“We are planning to start with Volkswagen here. We have right now no concrete plans to integrate other brands in this factory,” he said.
Jacoby told the trade paper that affiliate Audi also is eyeing North American production with a decision expected next spring.
“It works a little differently for Audi than for the Volkswagen brand. Volkswagen is in the volume segment, and we want to be in the volume segment. Audi is definitely a premium brand. It looks different,” Jacoby told Automotive News.
He said it was “too early” to comment on the possibility of VW producing a new SUV or crossover at the Chattanooga factory. This would slot in to the range between the compact Tiguan and the larger Touareg, sales of which have slowed in the US.
Jacoby also said the new Tennessee and existing Puebla, Mexico [Jetta] factories would become more and integrated and hinted that more powertrain production could be coming.
Jacoby told Automtive News: “We are planning in respect of environmental issues but also fuel consumption issues to introduce later modern engine and gearbox technology as well, but we have not yet decided where we will produce this.”
