Chattanooga: VW pushes to start plant work; ready supplier sites needed

Volkswagen suppliers will need ready-to-build sites in the Chattanooga area as the automaker aggressively pushes to start construction for its new $1 billion plant, an official said Thursday.

“Suppliers need to be up and running as quick as Volkswagen,” said Trevor Hamilton, the Chattanooga Area Chamber of Commerce’s vice president for economic development. “VW’s intent is to build a supply chain here.”

Also, Volkswagen wants to lease more office space in Hamilton County, possibly downtown, officials said.

David Bruce, Volkswagen Group of America’s general manager for human resources, said the company will need about 20,000 square feet of space for “back office” workers until they can move to the plant.

The company already has decided to lease about 20,000 square feet of vacant office space at Enterprise South industrial park. Mr. Bruce said that space will be used for construction managers who need to be close to the assembly plant site.

J.Ed. Marston, the Chamber’s vice president for marketing, said the business group is helping scout more office space for VW.

“Downtown is an option if the space meets their requirements,” he said.

Mr. Bruce said that by the end of September, the company will need to look at hiring people in “job families” such as construction, manufacturing, maintenance and body-shop work.

Meanwhile, Mr. Hamilton said site preparation work by the city and Hamilton County is ongoing at Enterprise South, including a supplier park state officials have said could hold six to 10 companies.

In addition, within the next week or so, a state permit to replace wetlands at the industrial park is expected to be approved, he said.

County Mayor Claude Ramsey said plans are for VW to pour concrete by early November, and the 1,350 acres owned by the city and county are expected to be turned over to the company by then.

“You don’t pour concrete on something you don’t own,” he said.

VW, with only 2 percent of the auto market in the United States, is driving a construction schedule that even its chief executive in America, Stefan Jacoby, has called “typically German — ambitious and tight.”

Cars are to come off the production line in late 2010 or early 2011, officials have said.

Mr. Hamilton told the Downtown Council of the Chamber that producing cars in the U.S. is the only way VW profitably can expand its market share with the strength of the euro against the dollar. The strong euro makes building cars in Europe and importing them to the U.S. a hindrance to profits. That is helping drive the urgency of the company to begin local production, officials have said.

Mr. Hamilton said that in addition to assembling cars here, VW wants to source as much of its content as possible domestically for the same currency reasons.

The Chamber official said that tier one, or top-line, suppliers likely will need about 100,000 square feet of space each. Tier two suppliers will need about 25,000 square feet each, he said.

Mr. Hamilton said the Chamber has had interest from supplier companies and is fielding calls.

“It’s not just suppliers but others that just want to do business with Volkswagen,” he said.

He said it is uncertain how many suppliers will go at Enterprise South because VW still is in negotiations with them.

Mr. Hamilton recalled that a top Volkswagen official said during the site selection process in May that Enterprise South was in third place among potential locations for the plant. At that time, VW had narrowed its search to sites in Tennessee, Alabama and Michigan.

Mr. Hamilton said VW officials were worried the location was “too rolling, too many hills for quick construction.”

He said that was a low point in the effort to land the company.

“It was a big weakness,” Mr. Hamilton said. But, he added, that problem was one the city and county could address.

It was then that city and Hamilton County officials decided to mobilize to clear, level and prepare the site, Mr. Hamilton said.