No blue Monday for local job market with VW's CrossBlue

No blue Monday for local job market with VW's CrossBlue

July 15th, 2014 in Opinion Free Press

This Volkswagen image shows the midsize SUV VW plans to build for the American market.

Photo by Contributed Photo /Times Free Press.

Good news came to Chattanooga on Monday tied in a bright CrossBlue package.

Volkswagen's long-awaited announcement that it will invest $600 million in its Enterprise South assembly plant to produce a new sports utility vehicle means around 2,000 jobs in Hamilton County.

Unexpected but also welcome was the news from a news conference in Germany that the company will build a new research and development center here that will employ 200 people.

The seven-seat SUV, which has been dubbed the CrossBlue and originally was unveiled at the 2013 Detroit auto show, can be expected to start rolling off the line in late 2016, officials said.

State and local incentives to VW are expected to top $250 million and could reach $300 million.

The new jobs will boost employment at the plant to about 4,700 people.

Two thousand jobs at the plant will be a significant boost to the economy in Chattanooga, but they're only a drop in the bucket to the impact they'll make in the area.

A 2013 University of Tennessee at Knoxville study, for instance, showed that Volkswagen Chattanooga -- in employing around 2,700 people -- actually had created 12,400 full-time jobs, is responsible for $643.1 million in annual income and has attracted 17 supplier companies to the area.

That type of return makes the pricey incentives worth the expense.

With the new line, supplier companies will increase, construction companies will add work in retrofitting the plant for a second car line, real estate firms will sell houses to employees from outside the area, Chattanooga State Community College's mechatronic programs will enroll more students interested in the automotive industry and new employees coming into the market or moving up from lower paying jobs will have more money to spend across the area.

Volkswagen executives indicated the new SUV, which is bigger than VW's Tiguan, has more seats than its Touareg (the sales for neither of which are flourishing) and is expected to be equipped with "lots of high tech," should be better positioned for the United States market.

And the new research and development center, which will employ highly paid professionals with design expertise, should be able to get a more solid handle on the United States car-buying market.

Overall VW sales increased for three years and finished 2012 with the company's best year since 1973. Included in that was a 413.7 percent sales increase for the Chattanooga-made Passat.

Since then, sales for the automaker -- though the biggest in Europe and fastest-growing in China -- haven't been as robust. And its sales in the United States are down 13 percent from a year ago.

Chattanooga had been competing with the VW plant in Mexico for the new SUV.

The only dark cloud hanging over the good news is the United Auto Workers' announcement last week that it won't take no for an answer in terms of attempting to form a union to represent workers at the plant.

Voted down 712-626 in February, the union said it would form a local union -- not recognized by the automaker -- that would allow for voluntary membership and no dues.

The UAW signed a neutrality agreement with VW ahead of February's election that does not allow it to seek another election for union recognition for a year. It doesn't, that is, unless another union makes an effort to organize the employees. It would be up to VW to call the UAW on the new activity that is violating the agreement, but the company has not chosen to do so.

VW for several years has said it would like to create a German-style works council of employees and management in Chattanooga, but labor laws prohibit such a body unless a union is involved. However, Sen. Bob Corker, R-Tenn., suggested last week he is looking at legislation that could permit companies such as VW to create works council-type labor board for employees without a union. He said he couldn't commit to it but was examining it for possible introduction.

Heritage Foundation senior policy analyst Rachel Greszler, who testified on such a possibility before a congressional panel last month, said workers who do not want union representation but want a formal voice are basically shut out.

And polls, she said, show that 60 percent of workers would prefer employee-involved programs over labor unions or government regulations to improve working conditions.

The dark cloud aside, a $600 million investment by VW and the expectation 2,000 more jobs have cast a bright ray of sunshine over the area.