Volkswagen moves ahead on expansion at Chattanooga plant

The outside of the Volkswagen plant's paint and assembly shops are shown in this file photo.

Volkswagen's proposed Chattanooga engineering and planning center has found a temporary home as officials finalize a permanent site and prepare to start hiring more than 200 engineers.

The center, a first for the German carmaker in the United States, is designed to bring VW closer to the tastes of American motorists and is part of the plant's $900 million expansion project. The center will be located temporarily in the former Eastside Utility District building off Discovery Drive near the VW plant.

On Tuesday, VW officials showed off the beginnings of the expansion to Mayor Andy Berke and Hamilton County Mayor Jim Coppinger.

Work officially kicked off in January on the addition that will expand the Chattanooga factory by 512,886 square feet in order to build a new sport utility vehicle by the end of 2016. The plant currently produces the Passat midsize sedan.

photo Volkswagen Chattanooga CEO Christian Koch, center, shows off plans for the plant's expansion to Mayor Andy Berke, left, and Hamilton County Mayor Jim Coppinger. Work on the expansion started in January.

VW plant expansion

* Warehouse space - 297,675 square feet * Body shop - 149,415 square feet * Assembly shop - 40,701 square feet * Pilot hall - 25,095 square feet * Paint shop adds second line * Total - 512,886 square feet Source: Volkswagen

photo VW plans to add a second line with robots, tanks and pumps to the paint shop and will expand the assembly shop as part of the factory's $900 million expansion project.

"A lot of hard work is going into adding this second vehicle line to the plant, but it is crucial to our efforts to move forward in America," Christian Koch, Volkswagen Chattanooga's chief executive, said in a statement.

VW plant spokesman Scott Wilson said the engineering and planning center's permanent site also will be at Enterprise South industrial park, although the location hasn't been decided. Construction of the engineering center will be part of the $600 million VW is spending in Chattanooga.

The center will help develop current and future vehicle models. It will house product-related functions such as technical scouting and innovation and product management, said VW officials. The center will be headed by Dr. Matthias Erb, executive vice president of engineering and planning for Volkswagen Group of America.

Erb is finalizing the hiring schedule for the engineers and is planning on starting the hiring process in the next few weeks, according to VW.

The automotive engineering and planning center will be a first for Tennessee. The facility is expected to help the Chattanooga area woo more parts suppliers -- and jobs -- as companies try to integrate their products to VW's new parts designs.

"Tennessee is known for manufacturing automobiles but it hasn't established the research and development process," Gov. Bill Haslam said last year when the facility was first announced. "It's a new day in Tennessee in terms of innovation."

Karl Brauer, senior director of insights and senior editor for Kelley Blue Book, said the expansion and new SUV are key for VW in America, which saw sales slide for most of 2014.

"The primary reason VW is suffering is lack of SUV offerings," he said. "That market is hot."

VW's current SUVs aren't competitively priced, Brauer said, adding that VW needs all-new vehicles and awareness campaigns to take advantage of the blistering market.

But, he said, assembly of the new midsize SUV isn't expected to start until late 2016.

"We all know how the market can drift," the KBB official said.

Coppinger said construction on the addition means jobs.

"Ultimately this brings us closer to the day when Volkswagen will be hiring 2,000 workers to produce their new SUV," he said. VW plans to boost its workforce to 4,400 people in Chattanooga.

Berke said the expansion will strengthen VW's roots in the city.

"From the construction at the plant to the development of a visitors center, there is no doubt that Volkswagen is invested in Chattanooga," he said. VW also is weighing a site in downtown Chattanooga to place a welcome center.

Michael Horn, Volkswagen Group of America's chief executive, said the SUV is a vital component in its growth strategy for the U.S. market.

"We're thrilled that work has begun on the expansion of our U.S. manufacturing home," he said.

The work will add space to the body shop on the north and south sides of the plant. The assembly shop will expand to the west, and the paint shop will add a complete second automated production line. A new warehouse will also be built at the east side of the plant.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.