Volkswagen to build plant in Chattanooga

Wednesday, July 16, 2008 at 1:02am
Volkswagen Group of America expects to employ about 2,000 people at a plant to be built in Chattanooga. Courtesy of

Volkswagen has chosen Chattanooga's Enterprise South Industrial Park as the site of its first U.S. manufacturing plant.

The German automaker picked Tennessee over Alabama and Michigan and will invest close to $1 billion in the plant. It is expected to employ about 2,000 people and go live in early 2011.

"Today’s decision is a fundamental part of our new strategic direction in the U.S.,” said Stefan Jacoby, president and CEO of Volkswagen Group of America, on Tuesday. “Chattanooga is an excellent fit for the Volkswagen culture, having an exceptional quality of life and a long manufacturing tradition.”

The Chattanooga plant will initially produce 150,000 mid-sized sedans per year. Volkswagen aims to sell 800,000 vehicles annually in the United States by 2018, up from about 300,000 last year.

“I’m enormously pleased by the announcement from Volkswagen Group of America and grateful for the company’s investment in Chattanooga and in the people of Tennessee,” said Gov. Phil Bredesen. “This project will have a significant impact on the economy of Tennessee and the region for decades to come.”

Other state elected officials also have responded to Tuesday morning's news:

"Through twists and turns, our community has maintained focus, invested wisely and exercised tremendous effort and energy in recruiting a major employer to Enterprise South. The breaking of this final barrier and the realization of the vision to which we have held true will take us to levels we can only begin to imagine," said U.S Sen. Bob Corker, who was mayor of Chattanooga when the infrastructure that established Enterprise South was built.

U.S. Sen. Lamar Alexander praised Volkswagen's decision to locate at Enterprise South saying, "Volkswagen and Chattanooga, the ideal marriage: one of the world's most admired companies and one of America's most livable cities. This decision keeps Tennessee on the road to becoming the No. 1 state in auto jobs. Congratulations especially to Governor Bredesen, Senator Corker and Mayors Ramsey and Littlefield for their leadership."

"It was just a matter of time before a major auto manufacturer decided to locate at Enterprise South – and our time has arrived," said Congressman Zach Wamp. "This new partnership with Volkswagen showcases Chattanooga's position as a manufacturing giant in the Tennessee Valley Technology Corridor. Our city is home to the National Center for Computational Engineering and is surrounded by major research centers like the Oak Ridge National Laboratory. As a result, Volkswagen will benefit from Chattanooga's high-skilled, educated workforce, the region's research capabilities and technical innovations and our incredible quality of life."

(City Paper Reporter John Rodgers contributed to this story.)

Filed under: City Business
By: nashbeck on 12/31/69 at 6:00

Wish it was in the May Town Center, but good for Tennessee

By: Blanketnazi2 on 12/31/69 at 6:00

Isn't that the truth!

By: RTungsten on 12/31/69 at 6:00

Wow, from what I have been seeing it looked like Alabama has this one wrapped up. Glad to see that TN got the jobs (even though most workers will probably commute from GA).

By: evilj on 12/31/69 at 6:00

Oh yeah...can you imagine how beautiful an auto plant would be in the Bell's Bend area. Wow...just gorgeous. Stunning really.

By: dnewton on 12/31/69 at 6:00

No one is saying how big the pork chop was that was tied around Chattanooga's neck so the VW dog would finally play at the old ammunition plant. If they offered the same thing to VW as they did Toyota, that would be over $200,000 per job. That does not count the interchange to nowhere that was built too. To get the $16 million back for the interchange would only be about $45 per person in metro Chattanooga. To get the $200,000 per job back with a local option sales tax at 2.5 cents would take a net income of about $8 million per employee to get that "investment" back. If you figure half of the income in property taxes, each job would only have to net $4 million. This is making the convention center look like a good deal. Hamilton County has a surprisingly low per capita debt. Maybe the Germans like that. Hamilton County was $459 in 2006 while Davidson County was $3164.55 in 2007. Memphis was $1952.5 and Knox County was $1398.

By: idgaf on 12/31/69 at 6:00

If Bunker Phil had anything to do with this we/they know they got shafted.

By: frank brown on 12/31/69 at 6:00

If you are going to subsidize something,I certainly think it is better to subsidize a German auto plant than an ice hockey team in Nashville.

By: Kosh III on 12/31/69 at 6:00

You're right Frank. At least the plant will benefit everyone.

By: David Miller on 12/31/69 at 6:00

>>>Volkswagen has chosen Chattanooga's Enterprise South Industrial Park as the site of its first U.S. manufacturing plant.What about the Harrisburg, Pa. plant that produced the Rabbit back in the 1980's?

By: producer2 on 12/31/69 at 6:00

Do you people like anything? dnewton, you have numbers for everything, but do you have any real ideas on how better to grow economies? IF you were king what would you do?

By: dnewton on 12/31/69 at 6:00

Mostly they are not my numbers, they come from government statistics. I don't think you can control anything unless you can measure it first. The economy is hard to measure so most people resort to rules of thumb or plain myth to form their ideas about public policy. Buying jobs or convention centers are really no different than buying a coke. There should be a feeling after the exchange that both the seller and the buyer are better off. Feelings are not always reliable, especially when the coke refers to cocaine so as a double check, I think that there should be an objective check on transactions to make sure the transaction makes sense. When making exchanges with other people's money, the moral imperative to do better than with your own money is implied since the result of a negative exchange is multiplied. There is no proof whatsoever that giving subsidies has a positive overall and general benefit. Most of the positive feelings can be felt only after counting the hits and ignoring those misses. I think that subsidies are, however, a proof that there is both and an upper limit and an optimum limit of taxation that can be achieved. The economy only grows when consumptive activities are suppressed in favor of productive activities. The government is a mix of consumptive and productive activities. To the point that the government supports productive activities, that is a good thing. Once the government deteriorates into supporting consumptive activities, it is a bad thing. I used to be related to a fellow who, if king, would end unemployment by hiring people to hand-write social security checks. This is a consumptive use of resources. Most zoning and codes enforcement are consumptive since there are better ways of getting that done. I don't think the government can grow the economy if taxation is ineffectively used. Government can cause distortions and produce winners and losers but operating on the economy should have the same ethical limits as operating on a patient and the first rule should be: First do no harm. I would submit to minimal subsidies for a war time event and especially to prevent dependence on foreign factories for self defense needs. VW plants and convention centers don't exactly fit in that area. Manufacturer's need help with people costs more than they need help with capital costs. One of the biggest people cost items is in the area of retirement, schools and the local cost of living. Only about 4% of the cost of manufacturing is capital cost, so offering subsidized land cost or tax breaks on equipment does not help as much as having good schools and good local government. A highly effective local government giving maximum benefit for the tax dollar is a better attractor than the standard economic development package.

By: producer2 on 12/31/69 at 6:00

Very well written, but still no mention of how to grow the tax revenue needed to do the things you would like to accomplish. Who actually determines what is consumptive and what is productive? As you know both sides of the equation can show you figures to support their causes. You can't really rule out either side. So who is right and who is wrong?

By: idgaf on 12/31/69 at 6:00

You don't grow tax revenue by giving it away.

By: courier37027 on 12/31/69 at 6:00

Hold on everyone. The greenies have not yet chimed in. The same home state as Al Gore also lured a fossil fuel burning entity to his state? I thought melting ice caps meant this project is a no go.

By: producer2 on 12/31/69 at 6:00

idgaf,you do if what you give it to grows more tax money than you gave them. That is the concept, albeit hard to swallow for some...