VW CEO: Volkswagen delivered on new Chattanooga plant

VW CEO: Volkswagen delivered on new Chattanooga plant

May 25th, 2011 by Mike Pare in News

Promises delivered.

That's the message Volkswagen Chief Executive Martin Winterkorn brought from Germany to Chattanooga on Tuesday at the dedication of the automaker's newest assembly plant.

"Volkswagen has delivered on every single promise," said Winterkorn, citing the building of the $1 billion plant in the city despite the worst recession in 80 years and the hiring of more than 1,700 people on its way to 2,000 or more workers.

Winterkorn, speaking on his 64th birthday to about 1,000 people who joined in singing "Happy Birthday," said the state-of-the-art factory is a springboard to a bigger share of the U.S. market that VW once enjoyed.

"Das Auto is finally back in the States," he said. "VW has everything it takes to win the hearts and minds of Americans. Let's go for it."

VW's goals hinge in large part on the all-new midsize Passat that the plant's work force started making about a month ago and which will go on sale in early fall.

Jonathan Browning, VW of America's CEO, said the company is "on the move" with Tuesday marking a new beginning for the automaker, which has sold products in the U.S. for more than 50 years.

He said VW has committed more than $4 billion in all to the U.S. initiative to nearly triple sales of VW and sister brand Audi. The goal is to hit 1 million vehicles a year by 2018.

"That's how confident we are about VW's future in the U.S.," Browning said, adding that VW has sold up to 80,000 Passats a year at its peak. The plant's production capacity is 150,000 vehicles a year.

Michael Macht, VW's board member in charge of production, said VW foresees new vehicle sales for all car companies in the U.S. rising to about 15 million in 2018.

Based on sales so far this year, the mark could come in at about 13 million by the end of 2011. Still, that's off from a peak of 17 million sales in 2005.

"The U.S. has a crucial role to play," Macht said about VW's sales target.

Future models

While the Passat is a linchpin of its American strategy, VW left the door open for future production at the Chattanooga plant, though officials wouldn't be specific.

Some analysts have mentioned variants of the Passat while others have cited a sport utility vehicle and potential Audi production. Winterkorn, speaking to reporters, said a decision could come within 12 months.

Ray LaHood, U.S. transportation secretary, said President Barack Obama wanted to be at the ceremony, but is in Europe meeting with its leaders.

LaHood lauded the clean-diesel engine model of the Passat that VW will sell, noting it can achieve between 40 and 50 miles a gallon on the highway and go from 700 to 800 miles on full tank.

He said the U.S. could conserve 1.4 million barrels of oil a day if one-third of all vehicles used the clean-diesel technology.

"We can build a 21st century transportation system," LaHood said.

Marriage

U.S. Sen. Lamar Alexander, R-Tenn., said VW's plant put the "Good Housekeeping seal of approval" on Chattanooga as a favorable place for companies.

He said VW and Chattanooga is a perfect marriage between an admired company and city.

U.S. Sen. Bob Corker, R-Tenn., a former Chattanooga mayor, went one step further, saying the engagement began three years ago when construction started.

"Today, this marriage is consummated," he said.

VW continues to look at growing its presence in Chattanooga, officials said.

Frank Fischer, CEO of the plant, said VW is looking at expanding its adjacent supplier park which now holds eight companies.

"There's plenty of room for more suppliers," he said.

Gov. Bill Haslam said that "combining the DNA of Volkswagen with Tennessee's work force ... I'm convinced it will sell more than 150,000 cars."

"I'm looking for more great things in Tennessee," he said.

Enterprise South

Local government bought the Enterprise South industrial park property, a former ammunition plant, on which the VW factory sits. Tennessee and local officials first wooed Toyota, but lost it to a Mississippi site. Following that loss, they went after VW.

Local, state and federal governments agreed to put up an estimated $577 million in incentives - a record for a car company project - to land the German automaker.

County Mayor Jim Coppinger said it took a lot of vision among city and county officials to pull the project together, and that it puts the area on the radar of other businesses.

"It's one where people recognize it has great amenities and the cooperative work of local and state government," he said.

Claude Ramsey, Tennessee's deputy governor and former longtime Hamilton County mayor, said the area's future is bright so long as VW produces a quality product.

"You did it right," he said about the plant. "Thank you for the faith in us."

Mayor Ron Littlefield told the group that he remembers seeing a VW for the first time about 50 years ago in LaFayette, Ga.

"If someone had said we'd be standing here," he said about the 2 million-square-foot plant, "I'd have said it was unbelievable, but here we are."