Chattanooga still in VW plant hunt, observers say

Chattanooga remained in the running for a new Volkswagen assembly plant, observers say, with the German automaker’s top management expected to meet today to discuss the facility that could employ 2,000 workers.

An industry analyst said Volkswagen likely is pitting Tennessee and Alabama against each other to strike the best incentive deal from the states.

“They’re looking for sweeteners,” said Erich Merkle, vice president of forecasting for IRN Inc. of Grand Rapids, Mich. “Nothing is in ink yet.”

Volkswagen’s management board, consisting of five top executives, meets in Germany today and is expected to come up with a recommendation about the plant site. A week later, the company’s supervisory board, a panel of 20 members similar to a board of directors, will convene and an official announcement is expected after July 15.

Automotive News’ sister European newsletter says a site near Huntsville, Ala., is the lead candidate, though Tennessee is a close second and Michigan no longer is under consideration.

The newsletter said VW may use the new factory to build a Jetta sedan and an all-new sedan that will be about the same size as the VW Passat. A long-wheelbase version of the Tiquan SUV and Audi’s forthcoming Q5 sports utility vehicle also are being considered for production at the plant, the newsletter said.

Tom Edd Wilson, the Chattanooga Area Chamber of Commerce’s chief executive, said the city has not eased up in its efforts to land the plant at the Enterprise South Industrial Park.

“I have no reason to think it’s over,” he said Monday. “We’ve not let up.”

Chattanooga officials are “still doing everything we can do to position Chattanooga to win,” Mr. Wilson said. “We’re doing everything that has been asked of us to remain competitive.”

Hamilton County Mayor Claude Ramsey said Chattanooga remains “in the hunt” until the company makes an announcement. He declined further comment.

The decision may be close to being wrapped up, Mr. Merkle said. At this point, he said, company officials may be playing the states against each other as VW seeks the best deal.

“Everyone wants the jobs,” he said.

Even after a decision by the company, the states may not know about the location until it is made public, Mr. Merkle said.

“The company is trying to get that bit of incentive,” he said. “It can go up to the last minute.”

Jill Bratina, a Volkswagen spokeswoman, would not comment on the board’s activities. But, she said, the company wants to be closer to VW’s customers and focus on cars specifically with the U.S. market in mind.

Chattanooga’s Enterprise South, the 1,600-acre industrial megasite in Tyner, has undergone lots of work since May. Acting last week on a request by Tennessee Economic and Community Development Commissioner Matt Kisber, the State Funding Board approved $1.25 million from Tennessee’s FastTrack Infrastructure Development funds for site development at Enterprise South.

“In response to suggestions from site selection consultants whom we have taken to visit the site in our efforts to market it with the Chattanooga Chamber and the local community, we received feedback that suggested the site needed to have some site work done to make it more marketable,” Commissioner Kisber said last week.

In the past, the fund has not been used for “speculative” development projects. According to Mark Drury, the economic and community development department’s assistant commissioner for communications and creative services, a decision was made in 2006 to extend use of the funds for more speculative projects.

“According to our general counsel, the decision to do the speculative FastTrack projects was a policy change. A change in the state law was not needed,” he said.

Mr. Drury declined comment on news media reports out of Germany about the plant location decision.

Staff writer Andy Sher contributed to this story.