Volkswagen expansion in Chattanooga just a matter of time, Bob Corker says

Volkswagen expansion in Chattanooga just a matter of time, Bob Corker says

August 29th, 2013 by Dave Flessner in Business Around the Region

U.S. Sen. Bob Corker, R-Tenn., speaks to reporters during an editorial board meeting in the Chattanooga Times Free Press newsroom in this file photo.

Photo by Dan Henry/Times Free Press.

As a mayor, finance commissioner and U.S. senator, Bob Corker has played golf with the president, led the building of Chattanooga's's 21st century waterfront and helped write the state budget.

But the 61-year-old businessman-turned-politician said Wednesday his greatest thrill in public office came in 2008 when he got a call from Germany interrupting a Senate committee hearing telling him Volkswagen would build a plant in Chattanooga.

"I still get choked up thinking about it," Corker told a gathering of Chattanooga business leaders organized by the Tennessee Small Business Development Center and the Company Lab.

Corker, who helped lure the German-based auto maker to his hometown during discussions around the dinner table of his Riverview home, is still wooing VW officials five years later.

Chattanooga is competing against sites in Mexico to land production of a new American-made cross over vehicle VW has dubbed the Cross Blue.

"We have stayed very, very close to Volkswagen leadership and I continue to talk with [Volkwagen CEO Martin] Winterkorn and others," Corker said. "All things being equal, I do know they'd rather be in Chattanooga. The question is whether all things will be equal."

The $1 billion Chattanooga assembly plant makes the U.S. version of the Passat and currently uses less than 70 percent of its maximum production capacity. The plant is designed to be expanded to add other vehicle lines and, following cuts in some contract staff this spring, has local workers in the market who are trained for more vehicle assembly jobs.

Chattanooga has set aside additional land for Volkswagen and the state has additional training and hiring tax incentives available for a VW expansion.

But Mexico has more nearby suppliers and fewer trade barriers to trade parts and vehicles with other countries than does the United States.

The Detroit Bureau, an online newsletter that boasts it is the voice of the automotive world, reported last week that a decision to build the new midsized crossover vehicle at the VW plant in Chattanooga may not come until early 2014. Frank Fischer, president and chief executive for VW in Chattanooga, said he is hoping a decision on the long-delayed plans for the new SUV will be made soon. But he said it could be late this year or early next year before any decision is made.

VW unveiled a prototype of the new Cross Blue vehicle at the Detroit auto show in January. Sluggish auto sales in VW's home turf in Europe appears to have slowed any decision on production of the new vehicle in America, although Volkswagen has announced plans for production of a Cross Blue model for China.

"I can't say how it's going to turn out because no one can," Corker said about the chances of the Cross Blue being made in Chattanooga. "A decision hasn't been made yet. I know that the state is putting forth a very good effort. And whether we are successful in this round of competition or not -- and I think we very well might be -- that plant site is going to be used. At some point, Volkswagen is going to build there."

Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340