Staff and wire reports
Germany got the big win Sunday, taking home the World Cup in soccer, but Chattanooga was celebrating Monday morning.
German car maker Volkswagen announced it will add a $900 million production line in Chattanooga and hire 2,000 workers to produce a new SUV designed for the American market. And it will build a new North American engineering center there staffed by 200 engineers.
“This will be a true American car, big attractive and with lots of tech on board,” said Martin Winterkorn, CEO of Volkswagen AG.
The SUV will be a seven-passenger car that gives VW an entry into an important segment of the U.S. market — the family people hauler, and possibly boost sales.
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.
VW sales fell almost 7 percent last year and are down more than 13 percent so far this year, largely because the company doesn’t have competitive products in key market segments. VW had a big year in 2012, with sales rising 35 percent to more than 438,000. But sales fell to about 408,000 last year, and the brand sold only 179,000 through June this year.
The company has a goal of selling 800,000 Volkswagen brand vehicles in the U.S. by 2018.
The first SUVs are expected to roll off the line in 2016.
Volkswagen already has about 1,500 workers on the production line in Chattanooga, where the Passat sedan is built. The plant is about ten miles from the Georgia state line, and has been the scene of a unionization drive.
The United Auto Workers lost a vote to unionize workers at the Volkswagen plant in February. It was a major blow to the UAW because Volkswagen, unlike most American companies faced with unionization drives, did not oppose the drive. Some believed a successful drive would have led to unions also organizing in the Daimler-Benz plant in Alabama and the BMW plant outside Spartanburg, S.C.
The drive is not over in Chattanooga. UAW leaders announced last week that they had reached a “consensus” in discussions with Volkswagen and expect the German automaker to recognize the union if they sign up enough workers at the plant.
UAW Secretary-Treasurer Gary Casteel said last week he is confident VW will recognize the union if it signs up a “meaningful portion” of Volkswagen’s workforce in Chattanooga, though he did not elaborate on what the threshold would be. The union vote was 712 against the union and 626 for it.
VW wants to create a German-style works council representing both salaried and hourly employees, but can’t do so without the involvement of an independent union.
David Smith, spokesman for Gov. Bill Haslam, said there’s no need for a special legislative session to approve financial incentives for the plant expansion. 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.
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