Volkswagen investment paying off with more jobs, officials say

Volkswagen investment paying off with more jobs, officials say

March 23rd, 2012 by Mike Pare in Business Around the Region

From left, Jonathan Browning, president and CEO of Volkswagen Group of America; Hans-Herbert Jagla, executive vice president of human resources in Chattanooga; Frank Fischer, CEO of Volkswagen Chattanooga; and Gov. Bill Haslam speak at a news conference Thursday at the company's Chattanooga manufacturing plant. Volkswagen of Chattanooga announced it plans to hire 1,000 more workers throughout 2012.

Photo by Doug Strickland/Times Free Press.

Volkswagen officials Thursday called it "the magic number."

To the hoorays of hundreds of VW workers at the automaker's Chattanooga plant, the company unveiled plans to add to their number by 1,000 by year's end.

"It's amazing we have come such a long way in such a short time," said Jonathan Browning, Volkswagen Group of America's chief executive.

Browning said VW's $4 billion investment in the U.S. to bring the plant and new Passat online is starting to pay off. One of every four VWs sold in the U.S. today is a Passat, Browning said.

"Chattanooga has been all we hoped for," he said. "VW is definitely on a roll. We don't intend to stop."

Tennessee Gov. Bill Haslam lauded the German carmaker's hiring decision, saying the state is helping by offering incentives and standing ready to do more should VW add another production line or if Audi decides to build a local plant.

"We'd love to have that in Chattanooga," the governor said.

With sales of the VW plant's Passat sedan in high gear, officials said they will add 800 jobs to the 200 it announced earlier this year. That will push VW's workforce in Chattanooga to 3,500.

According to the state, Tennessee is extending its memorandum of understanding with VW to provide grants for training of employees and infrastructure investment in the plant.

BY THE NUMBERS


• 40,000 - cars that VW's Chattanooga plant made in 2011

• 550 - vehicles VW wants to produce a day

• $7 million - VW investment in speeding its production line

The state will reimburse VW for training of new production workers up to $12,000 per position, said Clint Brewer, an assistant commissioner for the state Department of Economic and Community Development. For the 700 production jobs to be created from the 800 announced Thursday, that could amount to $8.4 million.

Also, Brewer said the state will provide an infrastructure grant of from $1.8 million to $3.2 million to design and pave a parking lot for the new workers.

In addition, the state will offer 18 recruiting specialists to help the company find the workers it will need, he said.

Additionally, the new VW workers may qualify for Tennessee's $5,000-a-year credit for each employee up to 20 years because of its original $1 billion investment. A state Department of Revenue spokesman said he couldn't comment on tax credits for individual companies.

PRODUCTION UP

Frank Fischer, chief executive of VW's Chattanooga operations, said the factory produced 40,000 cars last year, about 1,400 more than planned.

He said VW is making about $7 million in changes inside the plant to bolster the speed of its assembly line so it can make 170,000 vehicles annually, up from 150,000.

Currently, all production at the plant is aimed at the Passat, he said.

"There's no decision on a future vehicle," Fischer said, though he's hopeful of a second product in the future. Financial Times Deutschland has reported that top managers in Germany are weighing production of a sport utility vehicle in Chattanooga.

Fischer said a second line could be added to the paint shop and plant production could be expanded to 250,000 vehicles a year.

State Rep. Gerald McCormick, R-Chattanooga, the state House majority leader, said the Legislature would go along with a reasonable incentive package should a new VW project come along.

"The state could afford it," he said.

In addition to the added VW employees, the plant's suppliers also are expected to create jobs to meet the automaker's demands.

Hans-Herbert Jagla, VW's executive vice president of human resources in Chattanooga, said the supplier job additions could reach several hundred.

"We're pleased to be part of the renaissance [of the industrial legacy] of Chattanooga," he said.

Jagla said the plant's production workers, 95 percent of which come from Hamilton County, have been working overtime daily. He said OT will be cut with the new hires.

Hamilton County Mayor Jim Coppinger said VW is far exceeding original expectations of 2,000 jobs.

"VW said it would build a car, but we didn't know it would be the Motor Trend Car of the Year," he said.

Chattanooga Mayor Ron Littlefield said growth in the part of the county where the plant is located is both a blessing and a challenge.

"It's a challenge we're prepared to meet," he said.

Tom Edd Wilson, the Chattanooga Area Chamber of Commerce's CEO, said no one expected for VW to have created so many jobs at this point in time. He said the VW jobs will spur more local spending to create even more jobs in the area.

Claude Ramsey, Tennessee's deputy governor and former county mayor, said there needs to be an emphasis on making sure there's an educated workforce to meet VW's hiring demands.

"We need to prepare," he said.

Browning said that two years ago, the company was selling about 10,000 Passats a year in the United States. Now, he said, that figure is approaching about 10,000 a month.

"You've proven the skeptics wrong," Browning told local VW workers.

But he added the company still has a long way to go to reach its goal of nearly tripling sales to 1 million VWs and Audis a year by 2018.

"We have to be really responsive to the market," the CEO said.

Follow the latest Chattanooga news on Facebook.