State VW money
State infrastructure grant money for VW expansion and use› $140.6 million: Body, paint and assembly shop equipment› $22.2 million: Site and utilities work and building modifications› $2.3 million: VW rail yard, roads, storage yard and other uses› $479,000: New engineering and planning centerSource: state of Tennessee
Volkswagen, a key supplier and local governments are scheduled today to move ahead on the Chattanooga plant expansion, even as the carmaker faces headwinds because of the emissions scandal.
The buying of new plant equipment, finalizing land transactions and signing off on the state's $165.7 million grant for the automaker's $600 million project are among several deals the city's Industrial Development Board will consider.
Tennessee state Sen. Bo Watson, who on Thursday will be chairman of a legislative hearing in Chattanooga on the sustainability of the state's investment in the VW plant, said Monday his expectation is that the expansion to produce a new SUV is moving forward.
"I haven't heard anything different," the Hixson Republican said.
Watson said he thinks introducing a new midsize SUV to the North American market "has the potential to be the great salvation for Volkswagen" in the wake of the emissions-rigging issue.
VW, which officially started the expansion in January, plans to begin assembly of the SUV in late 2016, the company has said.
The city's Industrial Development Board, which oversees the spending of city, Hamilton County and state grant money on the VW project, is expected to approve the expenditure of $2.5 million with Hirotech America for the plant expansion.
The company's scope of work involves new equipment, fixtures and work station modification to the plant body shop's closure line. The line is where the SUV's hood, doors and fenders are to be secured to the vehicle's body.
Also today, the board is to sign off on the $165.7 million state grant related to infrastructure for the VW project. This includes $140.6 million for body, paint and assembly shop equipment.
Additionally, the Industrial Development Board will weigh approval of several property-related resolutions involving Spanish supplier Gestamp, which has announced plans to invest $180 million more in Hamilton County related to the SUV. The amount, a record for an automotive supplier in the county, will fuel creation of 510 more jobs, according to the company that already employs about 300 people here.
The board will finalize a deal related to a tract on which the supplier is to build a new plant next to the automaker's factory. The property next to VW's supplier park will revert to Volkswagen instead of the city and county if Gestamp doesn't move ahead, said Paul Parker, the county's real property manager.
Gestamp, which started operating at Enterprise South industrial park in 2009, makes stamped parts and welded assemblies for the Passat sedan. The new plant will press body sheetmetal and chassis components for the SUV.
In addition, Gestamp has bought the former Farley's & Sathers plant on Jersey Pike.
The Chattanooga Area Chamber of Commerce has said the new Gestamp plant will introduce a process for the first time in the South called hot-stamping technology. The technique allows metal to become lighter, but harder.
"Nothing's changed that we're aware of," said Sybil Topel, the chamber's vice president of communications, about the VW expansion.
In addition to infrastructure money, the state is providing $12 million for training related to the VW project.
Also, the city and county are granting $52.5 million to the VW project. Moveover, the city and county are providing $33 million in estimated property tax breaks for the expansion over the next decade.
However, The Wall Street Journal reported Monday that analysts have slashed their outlook on Volkswagen's global earnings and expect the company to report a loss in the third quarter in the wake of the emissions cheating.
VW, which presents earnings for the three months to September on Wednesday, has taken a $7.18 billion charge against earnings to pay for a global recall of up to 11 million vehicles.
That will push the company into the red, according to a consensus of analysts polled by The Wall Street Journal.
Volkswagen AG lost the lead in global auto sales to Toyota Motor Corp. after claiming the No. 1 spot three months ago, as the German carmaker braces for consumer blowback from an emissions-cheating scandal, according to Bloomberg.
Toyota said it sold 7.49 million vehicles this year through September, topping the 7.43 million that Volkswagen reported earlier this month. Deliveries declined 1.5 percent for both Toyota and Volkswagen.
Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318.