VW picks Chattanooga for U.S. plant
Tuesday, July 15th, 2008
Volkswagen has chosen Chattanooga, Tennessee, as the site of its new $1 billion North American production plant.
The decision, which comes after a lengthy review of more than 25 potential sites over the past 12 months, was announced on Tuesday by Volkswagen chairman Martin Winterkorn. There have been months of intense speculation as to where the German car maker planed to base its return to U.S. manufacturing.
The Tennessee site, settled upon during a management board meeting at Volkswagen’s Wolfsburg, Germany, headquarters on Monday, will go into operation in 2011, creating up to 2000 jobs in the medium term.
“The U.S. market is an important part of our volume strategy,” said Winterkorn. “Volkswagen will be extremely active there.”
Volkswagen has set out to quadruple its U.S. sales with a brand-building strategy aimed at netting it more than 800,000 sales by 2018–up from 329,000 in 2007.
The first model to roll out of Volkswagen’s new U.S. plant will be a new, low-cost mid-sized sedan being developed specifically for the North American market. It is also likely that Volkswagen could re-establish U.S. production of the Golf in a bid to bolster overall profitability and negate the negative effects of the strong European currency against the American dollar.
There is no indication as to whether Audi or Porsche will make use of the Chattanooga plant. Rumors have circulated that the Volkswagen Touareg, Audi Q7 and Porsche Cayenne models may be built in the United States.
The initial stage of construction for the Chattanooga plant will provide annual capacity for up to 150,000 cars, including body production, paint shop and assembly operations. Together with the 2000 jobs to be created by Volkswagen, a further 2000 additional positions are expected to be created in associated supplier and logistic partners.
Winterkorn pointed to the strength of the single European currency as being one of the driving forces behind Volkswagen’s decision to set up shop in Tennessee.
“This, along with our growth strategy, is a prerequisite for the economic success in the dollar region,” he said.
Volkswagen hopes U.S. car buyers will come to perceive it as a domestic manufacturer in the same mold as Toyota, Honda and Nissan.
VW says it short listed 25 potential sites for the new U.S. factory. The German car maker’s management board ultimately settled on Chattanooga because of what it describes as a “favorable existing infrastructure of components suppliers” as well as a “qualified workforce” and the “availability of around 136 acres of developed property with direct transport connections.”
Source:autoweek.com