Daily News Journal: Volkswagen announcement solidifies Tennessee's status as auto making destination, Alexander says
Chattanooga plant to expand, include research center
Posted on July 15, 2014
By Michelle Willard
Tennessee is an industry leader for auto manufacturing jobs, U.S. Sen. Lamar Alexander, R-Tenn., said after Volkswagen announced plans to add about 2,000 factory jobs to build a new seven-passenger SUV at its factory in Chattanooga.
“Volkswagen’s decision confirms Tennessee’s status as the most attractive state for new auto jobs. Congratulations to Volkswagen workers, Gov. Haslam and Sen. Corker,” Alexander said.
The German automaker announced Monday that it will invest $600 million to expand the factory and set up a new research center that will employ about 200 engineers. The research facility will coordinate products for North America to quickly include customer feedback into planned and existing models, the company said.
The announcement comes a week after a GMC supplier announced an expansion to support plans to build two new crossover utility vehicles for Cadillac and GMC in Spring Hill and a few weeks after Nissan started production at the Infiniti Decherd Powertrain Plant, a collaboration between the Renault-Nissan Alliance and Daimler AG.
Around 200 new jobs have been added to date in Dechard, with that number expected to increase to 400 once the plant ramps up to its full 250,000 engine annual capacity. Construction of the ground-up $319 million, 310,000-square foot facility began in May 2012 Dechard plant.
This plant adds to Nissan’s Middle Tennessee fleet of factories, the first of which was built in Smyrna with the first vehicle produced in 1983.
“When Nissan made the decision to begin operations in Tennessee over thirty years ago, the company chose Tennessee because of its world class workforce, strong investment in its education system, and commitment to seeing businesses thrive in the state,” explained Justin Saia, spokesman for Nissan North America.
Since then the Smyrna plant has grown to a workforce of more than 7,000 in a 5.9 million-square-foot plant that produces more than 550,000 vehicles annually.
“Nissan has seen tremendous growth in the last 30 years due in large part to its ability to retain and recruit a quality workforce in Tennessee,” Saia said.
“The success of the company is directly tied to the people it hires,” he continued, “and Nissan is proud of the nearly 12,000 skilled and trained professionals working in its four major facilities in Tennessee: Smyrna - Vehicle Assembly Plant, Decherd – Nissan Powertrain Plant, Decherd – Infiniti Powertrain Plant, and Franklin – Nissan North America Corporate Headquarters.”
The new Volkswagen, GMC and Nissan jobs add to a growing automotive manufacturing sector in Tennessee. Volkswagen’s Chattanooga plant currently employs about 1,500 workers and makes only one model, the Passat midsize car.
Production of the new SUV, based on the CrossBlue concept vehicle unveiled in Detroit last year, is scheduled to start at the end of 2016. It gives VW an entry into an important segment of the U.S. market — the family people hauler.
Michael Horn, VW’s CEO in America, said seven-passenger, three-row SUV sales in the U.S. have almost doubled since 2009 to 1.4 million per year. He also said the new engineering center will broaden VW’s portfolio with more new products.
The company plans to add about 538,000 square feet to the existing factory to build the new SUV.
Negotiations over state incentives for the expansion of the plant hit a snag over a union vote at the plant in February that was narrowly lost by the United Auto Workers. Republican politicians had warned that a vote for the union could have hurt the chances of the Legislature approving more than $300 million in incentives.
The new incentive package wasn’t announced Monday, and it’s unclear whether ongoing attempts by the UAW to be recognized at the plant will affect legislative approval of the deal.
David Smith, spokesman for Gov. Bill Haslam, said there’s no need for a special legislative session to approve the incentives. The state, he said, is providing a $165.8 million grant to help with site development, infrastructure, production equipment acquisition and installation, and building construction. It also is offering a $12 million grant for training new employees, he said.
VW, Smith said, is waiving its right to claim tax credits directly related to the expansion.
Lawmakers aren’t scheduled to return to session until January, and the matter likely will be taken up at that time.