Tennessee’s top politicians usually wield their power in Washington, D.C., and Nashville and aren’t above throwing a sharp elbow at the opposition.
But while courting Volkswagen to build an auto assembly plant in Chattanooga, Republican Sens. Bob Corker and Lamar Alexander and Democratic Gov. Phil Bredesen worked together in bipartisan fashion to help win over VW executives during cocktails and dinner at Mr. Corker’s Riverview home.
After a venison dinner during one of three gatherings at Mr. Corker’s Annehaven home last month, Sen. Alexander closed the evening at the piano, banging out the world-famous 1940s Glenn Miller tune, “Chattanooga Choo Choo.”
Soon, both VW executives and Chattanooga boosters were singing together in harmony.
“I told them, ‘When you go back to Germany, you’re going to have to explain where Volkswagen is going to go in the United States, and if you say Chattanooga, they’re going to know what you’re talking about,’” recalled Sen. Alexander, a former governor who helped woo Nissan officials to Middle Tennessee 30 years earlier with another performance involving the “Tennessee Waltz.”
Chattanooga Mayor Ron Littlefield later gave his German guests a framed copy of the 1940s song with lyrics in English and German.
Three weeks, considerable effort and some occasional frustration later, local and state officials succeeded: VW officials returned to Chattanooga and announced they will build a $1 billion plant, the largest manufacturing investment in Scenic City history.
"Dreams come true"
Last week’s announcement capped a seven-month courtship of VW following unsuccessful pitches in previous years to Toyota, Kia and other major manufacturers.
It was music to the ears of Claude Ramsey, who has spent the past decade and a half as Hamilton County mayor trying to land a major automobile plant.
“You made my dreams come true,” Mr. Ramsey told VW officials during a celebration last week at the Hunter Museum of American Art.
Chattanooga officials said they learned from earlier setbacks and made sure they did whatever they could to bring Volkswagen to town.
To beat offers from 25 other states, Tennessee put up its biggest incentive package ever; local government crews quickly cleared more than 500 acres of land; and Chamber of Commerce officials prepared more than 2,750 pages of documentation and numerous video and slide presentations about the area in German and English.
Chattanooga hosted VW delegations more than a half dozen times over the past three months, visits that helped convince Volkswagen to come to Chattanooga, VW of America CEO Stefan Jacoby said.
When a Volkswagen airplane was held up last month in Bonn, Germany, over confusion about U.S. visas for German passengers, Sen. Corker’s staff immediately called upon top officials with the U.S. Federal Aviation Administration and the Transportation Security Administration to clear up the problem and ensure the Chattanooga visit could proceed.
The next day, Sen. Corker said he thought Chattanooga won over one of VW’s top officials, Dr. Jochem Heizmann, when the two stood on a balcony of the Hunter Museum, overlooking Chattanooga’s revitalized downtown waterfront.
“He told me, “Bob, I had no idea that this is the way that Chattanooga was,’” Sen. Corker said. “I knew then we had emotionally won them over.”
Fighting a new battle
The German automaker will build its assembly plant on a former munitions plant originally developed by the U.S. Army to fight the Germans in World War II. TNT used in American bombs was made at the plant.
More than $75 million has been spent to clean up the former Army plant and turn it into an industrial park over the past decade.
But when VW officials visited the site in early May, some expressed concern about whether they could get the land cleared and ready to build according to the company’s ambitious schedule.
“They took us aside and said, ‘That is a very difficult site. We were out there today and there’s trees out there and brush,’” Gov. Bredesen recalled. “I’m being told by Jacoby it’s a real problem.”
Within hours, Mr. Ramsey and Chattanooga Mayor Ron Littlefield mobilized a small army of city and county construction crews to work up to 18 hours a day to clear more than 500 acres. The move was potentially risky because there was no guarantee Volkswagen would locate in Chattanooga.
“I guess we would have had to plant a lot of strawberries” Mr. Corker quipped, referring to Mr. Ramsey’s previous career as a strawberry farmer.
Mr. Jacoby said he and others were impressed when they returned to Chattanooga a few weeks after their initial visit to find the site already cleared and bulldozers leveling the area.
“That showed how dedicated that team is,” he said.
To make sure VW officials and consultants could monitor the daily progress on the site, crews also installed video cameras atop three poles to provide streaming video Web views of the bulldozers and graders at work.
The chattanooga story
Volkswagen officials said their ultimate decision to build an assembly plant in Chattanooga was about far more than just getting the right piece of land.
Like Volkswagen’s hometown in Wolfsburg, Germany, Chattanooga is a midsized industrial city built along a river with an interest in manufacturing and the environment.
“This decision was about more than just a site,” Mr. Jacoby said. “I have always said that ultimately, it would be based on something intangible, something in our gut or, maybe better, in our hearts.”
Chattanooga officials acted as frequent tour guides to VW officials and their consultants, the Dallas-based Staubach Co., showing off a revitalized downtown and flying them on a TVA helicopter through the Tennessee River Gorge just a mile west of the city’s downtown.
City leaders didn’t hide Chattanooga’s past blemishes. Volkswagen officials saw images of polluted air from 1969 when a federal agency called Chattanooga the smoggiest city in America. But Chattanooga boosters also played up the cleanup over the past generation and the public and private partnerships that helped revitalize the city’s downtown and waterfront.
Volkswagen officials, eager to turn around their company’s U.S. performance, were impressed by Chattanooga’s story.
“To see the green spaces and to see the recreation and to see the diversity in the economy and what Chattanooga did under the local leadership, I will tell you impressed them on every visit,” Tennessee’s chief economic recruiter, Matt Kisber, said.
Mr. Littlefield said Volkswagen shares Chattanooga’s industrial heritage and environmental interest.
“Manufacturing is the soul of this city, but we have also worked to clean up our town as much as any city in America,” Mr. Littlefield said.
In the final competition against a site in Limestone County just outside Huntsville, Ala., Chattanooga officials also stressed to VW that it should build its U.S. manufacturing headquarters in a better-known location. Local officials pledged to pay for worker training, upgrade roads and rail lines, give VW a developed site to build upon and provide up to 30 years of tax breaks.
Brokering the deal
Despite a budget shortfall for the 2008-09 fiscal year, Tennessee Gov. Phil Bredesen aggressively bid for the VW facility. A former Nashville mayor, Gov. Bredesen was backed at nearly every Volkswagen meeting by Sen. Corker, a Republican and former Chattanooga mayor and state commissioner of finance.
The two millionaire former businessmen had worked well together, despite their partisan affiliations, to bring the Tennessee Titans to Nashville a decade ago. Both men acknowledge they enjoy putting together deals involving large projects.
The fact that top Tennessee politicians can bridge partisan and ideological differences to work together “makes an impression” on executives from Europe and Asia, Gov. Bredesen said, citing his own experience with Nissan.
A key meeting over what Tennessee could offer Volkswagen was put together by Sen. Corker at the final dinner at his home. Mr. Bredesen and Mr. Jacoby talked one-on-one in a study of Sen. Corker’s home, but only after Sen. Corker whispered to the governor, “Don’t mess this up.”
Gov. Bredesen said he likes Mr. Jacoby, noting that the CEO and other Volkswagen executives tend to be direct just like the governor.
“I always get in trouble politically,” the governor said, laughing, later noting, “if I want X, I tend to ask for X. But I found them to be very straightforward in that way. It was a good match of personalities.”
To remain competitive with rival Alabama, which had landed three major auto plants in the past 15 years — Mercedes, Honda and Hyundai — Mr. Bredesen offered a full range of state incentives.
However, major problems arose over the shape of some incentives, particularly those dealing with infrastructure. The Tennessee Constitution bans giving money directly to companies. But states such as Alabama have no such limitations and simply cut a check for companies to handle such issues.
“What we have to do is say we can’t do that, but we can do the improvements, so we need to be talking about the design of the site,” Gov. Bredesen said.
“If there were any sort of touchy steps along the way, I think it was when we got through putting together all the incentive packages,” Gov. Bredesen said. “I think it looked to them weak and difficult to understand compared to what the other states were doing. We had to do a lot of education.”
The governor said he thinks the state’s incentive package exceeded that offered in 2005 to convince Nissan to relocate its North American headquarters to Franklin, Tenn. That came to about $197 million. But the governor said costs for dealing with items such as infrastructure won’t be known fully until later because they depend on the plant’s design.
A long-distance call
Gov. Bredesen was fishing with his son in a remote part of Alaska when he got the news from Mr. Jacoby that VW management was recommending Chattanooga to the company’s board, which had final say on the site.
“The only way I had to get out was a satellite phone,” the governor said, noting the final victory call came shortly before the official announcement Tuesday.
Mr. Kisber also was on what was supposed to be a family vacation in Destin, Fla., during the final days of negotiations. He ended up spending most of his time on the telephone or computer, addressing last-minute questions from VW.
“At least I had a great view of the ocean while I worked,” he said.
Trevor Hamilton, vice president of economic development for the Chamber of Commerce, likened the Volkswagen announcement to “winning the Super Bowl of economic development.”
“We stayed focused on what we needed to do and tried to remain positive, even when reports (from Automobilwoche Newsletter, Southern Business and Development magazine and others) said VW was going to Huntsville,” Mr. Hamilton said.
Sen. Corker said he plans to frame a Reuters news story released Tuesday morning proclaiming that Chattanooga landed Volkswagen, “defying widespread speculation.”
Mr. Jacoby said, in the end, he found Chattanooga “compatible with the heritage and the values of Volkswagen.”
“As we look out across those spectacular mountains and that river and enjoy the warm welcome of the people of Tennessee, the intangibles are suddenly very tangible,” he said. “This is America at its best.”
Mr. Jacoby is eager to follow Chattanooga’s turnaround success at Volkswagen. He was appointed last November to head VW’s U.S. operations and since has streamlined Volkswagen’s American staff and relocated VW’s U.S. headquarters from suburban Detroit to Herndon, Va., just outside Washington.
He has set a goal of tripling U.S. vehicle sales for Volkswagen in the next decade. The Chattanooga production plant will play a key part in his strategy.
Sen. Alexander said he believes VW and Chattanooga “are a perfect marriage” between one of the world’s most-admired companies and one of the most-revitalized U.S. cities.
He recalled how, as Tennessee governor three decades ago, he urged Chattanoogans to dream bigger about an initial hope for a $20 million aquarium. The success of what ultimately became the $45 million Tennessee Aquarium and more than $200 million in other waterfront improvements have helped turn the image and economy of Chattanooga around, Sen. Alexander said.
“I think the Volkswagen decision was made 30 years ago when Chattanooga decided it was a city of exceptional attributes and decided to celebrate them and emphasize them,” he said. “Now when you come to Chattanooga, it’s a totally different looking place. It’s a city with a lot of confidence. The Volkswagen decision is a tremendous validation of all the work Chattanooga has done in the last 30 years.”
Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...
Andy Sher is a Nashville-based staff writer covering Tennessee state government and politics for the Times Free Press. A Washington correspondent from 1999-2005 for the Times Free Press, Andy previously headed up state Capitol coverage for The Chattanooga Times, worked as a state Capitol reporter for The Nashville Banner and was a contributor to The Tennessee Journal, among other publications. Andy worked for 17 years at The Chattanooga Times covering police, health care, county government, ...