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Business & Technology

Bredesen: Chattanooga VW plant still on track

October 22nd, 2008 12:00 am by Hank Hayes



Volkswagen’s plans to build a $1 billion auto manufacturing plant in the Chattanooga area remain on track despite the much-publicized world financial industry crisis, Tennessee Gov. Phil Bredesen insisted Wednesday.


Volkswagen’s management, said Bredesen, asked state officials to reconfirm their business deal amid concerns about market conditions.


“They obviously wanted our reconfirmation that the things we were going to do in the way of infrastructure were solid, and I gave them that,” Bredesen said from Berlin in a conference call with reporters. “We in turn asked them if there were any questions. The answer was ‘No.’ They are fully committed. They are a very solid company financially, and as far as I can tell this project is on the same track today that it was a month ago.”


Bredesen is leading a Germany trade mission with about 40 other business leaders who are courting Volkswagen suppliers to also come to Tennessee.


NETWORKS – Sullivan Partnership Chief Executive Officer Richard Venable and Andy Burke, president and CEO of the Regional Alliance for Economic Development, Northeast Tennessee and Southwest Virginia, are part of the delegation trying to recruit companies and jobs to the region. So is Alicia Summers, director of the Northeast Tennessee Valley Regional Industrial Development Association.


VW’s Chattanooga facility is projected to cost about $1 billion and employ more than 2,000 people, but the auto parts suppliers could hire anywhere from 6,000 to 9,500 people, state officials said.


VW has no cold feet with the project because the manufacturing plant is scheduled to come online in 2011, said Tennessee Economic and Community Development (ECD) Commissioner Matt Kisber.


“They’ve got a product they are going to bring to market,” Kisber noted. “To make their market timeline, they’ve got to have the manufacturing capacity in place. ... They’ve got to meet or beat those timelines.”


Volkswagen is expected to build a new sedan targeted at the U.S. market, with initial production expected to be 150,000 vehicles when the plant starts up.


Bredesen said he anticipates VW’s auto parts supply chain to act quickly in making site selection decisions.


“I really believe there are some interesting opportunities for rural job development in small communities that will grow out of this,” Bredesen told reporters.


The governor also pointed out Tennessee communities that want those suppliers will have “to carry a lot of the water in making that happen” — including having available development sites and a ready work force.


“Many of the people attending our sessions are either companies who are in final discussions or companies that may likely get (auto parts) contracts from Volkswagen,” Kisber said. “We also had companies ... come to these sessions because they are interested in Tennessee. They want to know what Volkswagen saw in Tennessee.”


The delegation is expected to travel to Dusseldorf, Munich and Frankfurt to hold briefings about the project with suppliers.


ECD invited interested Tennessee communities to be part of the delegation, and their representatives paid their own way, Bredesen said.


“This whole thing is at no cost to the state of Tennessee,” the governor said of the Germany trade mission. “We charged all these people enough money to come on the trip that it paid for Matt and me to come over here.”


Bredesen pointed out the Volkswagen venture is not a short-term solution to Tennessee’s slumping employment picture.


“When times get tough people probably spend more time and energy trying to figure out how to create low-cost manufacturing operations,” he said. “One of Tennessee’s advantages is that it has a very reasonable tax structure and cost structure and good employment structure. ... This is a really good time to put our best foot forward. Volkswagen is the third-largest automaker in the world. The United States is their largest market, and they don’t have a plant in the United States until they open in Chattanooga. This is a big deal.”



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