Phil Bredesen

Chattanooga was “the best fit” for Volkswagen as the German automaker seeks to turbocharge its U.S. sales with the city’s largest single manufacturing investment ever, VW of America’s CEO said Tuesday.

“What we found here was ideal,” said CEO Stefan Jacoby, who announced the $1 billion plant during a news conference at the Hunter Museum of American Art.

Staff Photo by John Rawlston -- Tennessee Governor Phil Bredesen, left, and Stefan Jacoby, President and CEO of Volkswagen Group of America, Inc., talk with reporters during a news conference following the announcement that the German auto manufacturer chose Chattanooga as the site of a new vehicle assembly plant on Tuesday morning. Volkswagen chose the Enterprise South industrial park site over a site in Huntsville, Ala.

Amid whoops and hollers by a large group of well-wishers and officials, Mr. Jacoby said auto production at the Enterprise South industrial park is to begin in early 2011. VW initially will make 150,000 cars annually, according to the company.

VW will produce a mid-size sedan similar to its popular Passat targeted at American consumers “with all the goodies VW has to offer,” Mr. Jacoby said.

Tennessee beat out Alabama and Michigan for the new plant, which eventually will employ 2,000 people and support an array of suppliers and other jobs. VW’s supervisory board, similar to a board of directors, made the final choice Tuesday morning.

Tennessee Gov. Phil Bredesen said he first learned of the opportunity to land Europe’s biggest auto producer near the end of last year.

“We had our ups and downs,” he said about the negotiations.

The governor, who was vacationing last week in Alaska, said he learned Friday morning via satellite phone that Chattanooga was the recommended site.

U.S. Sen. Bob Corker, R-Tenn., said he was in a hearing in Washington, D.C., last Friday when he learned that VW officials planned to choose Chattanooga.

“I was emotionally overwhelmed. We’d been through this rodeo before,” said the former mayor, citing Toyota Motor Corp.’s spurning of Chattanooga in favor of Tupelo, Miss., last year.

WHY CHATTANOOGA?

Mr. Jacoby cited a variety of factors in picking Chattanooga, including “an excellent site” at Enterprise South, the 1,600-acre industrial park the city and Hamilton County bought from the U.S. Army.

He cited the clearing and grading at Enterprise South by the city and county that began in May.

“That showed us how dedicated they are and how much they want us here,” said Mr. Jacoby, a Hanover, Germany, native who became chief at VW of America last fall.

The CEO declined to discuss specifics about economic incentives offered by local and state governments, which are expected to be substantial, but he said they weren’t the deciding factor.

In the end, the decision came down to what he called intangibles, Mr. Jacoby said.

“It was based on ... something inside our guts and hearts” that Chattanooga’s values are compatible with those at Volkswagen, he said.

Speaking at the Hunter Museum on a stunning summer day with North Chattanooga in the background, he cited Chattanooga’s mountains and the Tennessee River, saying “the intangibles are suddenly tangible.”

“We agree this is America at its best,” he said.

Mr. Jacoby said environmental sustainability is a core value at Volkswagen, and Chattanooga has moved to make environmental awareness part of the city’s fabric.

“Your values complement our own,” he said.

Matt Kisber, state Department of Economic and Community Development commissioner, said Mr. Jacoby has set VW and himself apart by making sustainability a defining strategy.

“I believe those values are part of what brings him here today,” he said.

Chattanooga Mayor Ron Littlefield said the city’s sustainability awareness will be put on a world stage with VW’s selection.

“Today is about partnerships,” he said.

Chattanooga had some other advantages over other sites mentioned by VW, including Huntsville, Ala. Metro Chattanooga has nearly a third more people than does metro Huntsville.

Also, Chattanooga’s wages average 18 percent less than in Huntsville. In addition, Enterprise South is located near three interstates, compared with two in Huntsville, and the Chattanooga location already has an interstate highway entrance.

Lastly, the Chattanooga site is served by two railroads, while Huntsville has just one.

Hamilton County Mayor Claude Ramsey recalled how officials 15 years ago believed the former Volunteer Army Ammunition Plant in Tyner eventually could produce family-wage jobs.

“You made my dream come true,” Mr. Ramsey told Mr. Jacoby, citing the “hundreds of people who helped this day come.”

U.S. Sen. Lamar Alexander, R-Tenn., said VW and Chattanooga is “the ideal marriage ... of one of the most admired companies and one of Tennessee’s most livable cities.”

U.S. Rep. Zach Wamp, R-Hixson, said Chattanooga is a place where a premier global manufacturer chose to make its vehicles of the future.

“That’s our destiny,” he said.

Mr. Wamp said that for every manufacturing job, seven other support slots are created in a community.

“That’s 14,000 jobs,” he said.

Gov. Bredesen said the 2,000 direct jobs at VW are “the tip of the iceberg.”

Trevor Hamilton, the Chattanooga Area Chamber of Commerce’s vice president of economic development, said he felt “like we just won the Super Bowl of economic development.”

“Today, we write the next chapter of our story,” he said.

REGIONAL IMPACT

Volkswagen officials want to triple the company’s U.S. sales and sell 800,000 VWs by 2018. The new site is seen as playing a key role in that strategy.

Leaders in Cleveland, Tenn., and Bradley County said the effect of the Volkswagen announcement will ripple throughout the region.

“The decision of Volkswagen to locate their first U.S. assembly plant in Enterprise South will be an economic boom for our entire region,” Bradley Mayor D. Gary Davis said. “I feel Bradley County will reap many benefits from the Volkswagen plant including additional jobs for our citizens and new industries locating in Bradley County.”

He and Cleveland Mayor Tom Rowland noted the news comes just five days after Whirlpool announced it will move 500 jobs to Cleveland.

“What’s good for Chattanooga is good for Cleveland,” Mr. Rowland said. “Our local economies have a regional impact on each other.”

Jerry Bohannon, president and CEO of the Cleveland-Bradley County Chamber of Commerce, said Cleveland is just 10 miles from Enterprise South by Interstate 75. The VW announcement could bolster local governments’ case for a larger interchange at exit 20 on Interstate 75, he said.

“I think this will help justify our need for improvements at that interchange,” Mr. Bohannon said. “I just can’t help but think the proximity with Enterprise South will increase the traffic flow at that interchange.”

Raymond Walker, executive director for the Rhea Economic and Tourism Council, said there is no doubt jobs will spill over from Hamilton County into Southeast Tennessee.

“It’s one of the greatest things to ever happen to us,” he said. “We’re going to get some industry out of that.”

Staff writers Dave Flessner, Randall Higgins and Cliff Hightower contributed to this story.

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