Volkswagen's chief in Chattanooga said Friday he does not expect the city to win a new VW engine plant that the German automaker is planning for North America.
Frank Fischer, CEO of VW's operations here, said while local company officials pitched Chattanooga, the engine plant will go elsewhere as it now stands.
"We said, 'Please do it,'" Fischer said. "We were supporting it."
But VW officials are looking at such issues as capacity and demand for the engines when it comes to locating the plant, he said.
Mexico has been named by VW's top brass as a potential site for the engine plant. VW's production plant in Puebla, Mexico, has an annual capacity of 525,000 vehicles.
VW officials are expected to make a final decision on where to put the engine plant by the end of this year. VW hasn't announced the size or cost of the engine plant.
The Chattanooga assembly plant is expected to make 150,000 vehicles a year when fully operational. The factory at Enterprise South industrial park is expected to start production early next year.
But other carmakers in the Southeast have located engine plants near their assembly plants.
Last year, Hyundai opened a $300 million engine plant in Montgomery, Ala., to service its assembly plant there. The engine factory is slated to employ 522 workers at full capacity.
In Decherd, Tenn., about 40 miles northwest of Chattanooga, Nissan has an engine plant that employs more than 800 workers. Over a number of years, the Japanese automaker has invested about $680 million in the facility, which services Nissan's assembly plant in Smyrna, Tenn., about 75 miles away.
Top hourly wages for production workers at the Nissan plants in Decherd and Smyrna is more than $24 an hour.
J.Ed. Marston, the Chattanooga Area Chamber of Commerce's vice president of marketing, said local officials aren't surprised that it's unlikely the city will land the VW engine plant.
ENGINE PLANTVW officials have said a new North American engine factory is to supply assembly plants in Puebla, Mexico, and Chattanooga with the latest generation of engines starting around 2013.
But, he said, a successful launch of the new midsize sedan at VW's Chattanooga auto plant early next year could provide chances for the facility to grow.
"We'll have opportunities to grow as VW grows," Marston said.
Fischer said it's vital for VW officials locally to focus on gearing up production of the new midsize sedan in Chattanooga. Having "a quality-driven vehicle with the ramp up" is a key, he said.
If there is a successful launch and sales of the sedan go well, "we'll do next steps," Fischer said.
Online: Hear Frank Fischer talk about the Chattanooga assembly plant. Read previous stories.