Haslam: Administration 're-engaged' in talks with Volkswagen on Chattanooga expansion

Haslam: Administration 're-engaged' in talks with Volkswagen on Chattanooga expansion

May 30th, 2014 by Andy Sher in Business Around the Region

Volkswagen Chattanooga

Photo by

Tennessee Gov. Bill Haslam

Photo by Associated Press/Times Free Press.

NASHVILLE - Gov. Bill Haslam said Thursday his administration is back in discussions with Volkswagen officials over state incentives and other assistance programs needed to persuade the German auto manufacturer to build a new line of vehicles at its Chattanooga plant.

"We've re-engaged in discussions with them," Haslam told reporters. "I don't really have any update beyond that except we are talking with them."

Asked if his administration is pegging incentives to whether the VW plant is eventually unionized, Haslam said no.

"There's no discussion about unions," Haslam said.

Volkswagen of America chief Michael Horn told Automotive News in a report published Thursday that new midsize and small sport utility vehicles are needed by the automaker to spur U.S. growth.

Horn said that the company has reached a key plateau of 400,000 annual vehicle sales in the United States and that when new SUVs come on line "we plan to build up from there."

VW is close to making a decision on where to assemble a new midsize SUV, which is slated to be in dealer showrooms in 2016. The automaker has said that Chattanooga is the front-runner to make the vehicle ahead of VW operations in Mexico.

Horn also said that its existing compact SUV, the Tiguan, is too small and that it has a higher price point because it's imported to the U.S.

Tennessee had offered VW officials a $300 million incentive package to put the vehicle in Chattanooga. But Haslam, a Republican, withdrew the offer as workers prepared to vote in February on unionization at the plant.

Plant workers rejected joining the United Auto Workers, sparking an appeal by the UAW, who accused Haslam, U.S. Sen. Bob Corker, R-Tenn., and fellow Republicans of poisoning the waters.

The UAW later dropped its appeal.

An Aug. 23 summary of the state's nearly $300 million offer, obtained by Nashville television WTVF, carried a disclaimer toward the top of the page: "The incentives described below are subject to works council discussions between the State of Tennessee and VW being concluded to the satisfaction of the State of Tennessee."

Administration officials insisted that was not aimed at the UAW.

Last month, VW officials told Chattanooga air regulators in a letter that they were moving ahead with an initial factory expansion to support "existing and future product lines" and to start "Phase 2" construction. The company is building a $17.7 million warehouse connected to its assembly shop.

Contact Andy Sher at asher@timesfreepress.com or 615-255-0550.