Volkswagen Group America said its Passat plant in Chattanooga will add production of a seven-seat SUV at a cost of US$900m (EUR643m), adding 2,000 additional jobs. About US$600m (EUR432m) will be spent in Tennessee. A local R&D centre is also planned.
Frankfurter Allgemeine Zeitung last month reported the Chattanooga factory would be chosen ahead of a site in Mexico because the Tennessee state government is providing free land, staff training, tax breaks and infrastructure upgrades worth about US$300m to the company.
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“The Volkswagen brand is going on the attack again in America,” said VW chairman Martin Winterkorn.
“The Chattanooga-built midsize SUV will allow us to fulfill the wishes of our dealer network, bringing new customers to our showrooms and additional growth for the brand,” said US chief Michael Horn.
A new, research & development and planning centre will also be built at Chattanooga for project coordination in North America.
VW wants to collate customers’ feedback and speed up modifications to existing and planned vehicle models. This will create about 200 engineer jobs.
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By GlobalDataFrom 2014 to 2018, the group is spending more than US$7bn in the US and Mexico. Volkswagen wants to deliver 800,000 vehicles in the US by 2018.
In the first half of 2014, its deliveries were down 5.2% to 287,719, according to just-auto data. 2013 sales were 407,704, down 6.9%.
The new SUV will be integrated into existing plant structures with floor space of 50,000 m² (approx. 538,000 sq ft) added to the existing production facility. The midsize SUV, which is based on the 2013 Detroit show CrossBlue concept, was developed especially for North America.
Volkswagen said group works council chairman Bernd Osterloh would join the VW America board.
“We are pleased that Osterloh has declared his willingness to play a concentrated role in shaping our US strategy in the future. He will represent the views of the workforce. This is in line with the co-determination culture of Volkswagen, which is one of our key success factors,” Winterkorn said.
The plant was recently a battleground for the United Auto Workers which wanted to ‘unionise’ the facility, something which has long been resisted by workers at southern state ‘transplants’. Workers who voted against unionisation were not against the idea of a workers council.
Osterloh said: “It is important for us that our colleagues in the US know that we also care about the production site and the employment in Chattanooga. I am determined to uphold the interests of Volkswagen employees in Chattanooga. The North American market offers considerable opportunities; in my opinion, these have not been pursued with sufficient consistency in the past. With today’s decision to produce the midsize SUV in the USA, we are taking a key step.”
