Staff Photo by Tim Barber/Chattanooga Times Free Press The roof of the north end of the Chattanooga Volkswagen plant’s body shop is shown under construction in this file photo. The work is part of the $600 million plant expansion.Despite Volkswagen’s emissions scandal, the expansion of its Chattanooga assembly plant is marching on as the company, and its suppliers, invest to produce a new sport utility vehicle by the end of this year.
Construction activity at several locations at or near VW’s plant at Enterprise South industrial park is ongoing as the company spends more than $600 million to expand its factory to make the new vehicle that’s seen as key to its future in America.
Christian Koch, chief executive of Volkswagen in Chattanooga, says the plant expansion to assemble the midsize SUV is on track.
“Our plan to keep the momentum going has not changed,” Koch says, citing the emission issue that has embroiled the automaker. In September, VW admitted it installed defeat devices in nearly 500,000 U.S. diesel vehicles, including the Chattanooga-made Passat, to fool environmental regulators.
The CEO says the plant expansion is “a vital pillar” to VW’s future in the United States. VW plans to add 2,000 jobs to the nearly 2,600 people the German company already employs in Chattanooga.
“We look forward to creating even more high-quality jobs in Tennessee,” Koch says.
Meanwhile, suppliers to the area are plowing money into projects to move forward with their plans for the SUV.
Spanish chassis and stamped parts maker Gestamp is working at three locations to ready production to support the VW SUV and other automakers in the South, says company attorney Louann Smith of Baker Donelson in Chattanooga. She reiterated the supplier’s plans while securing a payment-in-lieu-of-tax agreement for the company with Hamilton County.
Smith says that Gestamp is expanding its existing plant on Hickory Valley Road, building a new factory next to the VW supplier park, and renovating the former Farley’s & Sathers candy production site it purchsed on Jersey Pike. She notes the company plans to invest $180 million in Hamilton County and create 510 additional jobs.
“None of that has changed,” she says.
Steve Hiatt, the Chattanooga Area Chamber of Commerce’s director of existing business development, adds that 90 percent of the production at its new chassis plant will go toward products undergoing assembly at BMW’s plant in Greer, S.C.
Regionally, the automotive cluster also saw additions last year.
Denso Manufacturing in Athens, Tenn., unveiled plans to hire 400 more workers and invest $85 million into its plant. The supplier will add 224,000 square feet to its facility to produce a high-pressure pump in connection with its newest expansion.
In Northwest Georgia, a manufacturer of aluminum products and solutions for a broad scope of markets, including the automotive industry, will establish a facility in Bartow County. The project by Constellium represents the creation of 150 new jobs and an investment of $32 million.
Meanwhile, Yanfeng Automotive Interiors is spending $55 million at a Chattanooga facility to supply parts for the VW plant with plans to hire 325 people. Chinese-owned Yanfeng, the world’s largest automotive interiors supplier, has leased a site off Bonnyshire Drive near Enterprise South for its operations.
“We are pleased to establish a facility in Chattanooga to support Volkswagen,” says David Wang, Yanfeng Automotive Interiors vice president and deputy general manager of North America. “We appreciate the partnership with our customer, as well as local and state officials, who are working closely with us to launch this new manufacturing location.”
The VW expansion is adding 1,800 more assembly workers while another 200 engineering-type jobs will come to the new North American engineering and planning center VW has located near its Chattanooga plant.
A study by the University of Tennessee’s Center for Business and Economic Research said the expansion will create nearly 10,000 total new jobs including spinoff positions in the Chattanooga area.
The study also found that VW adds $372 million in annual income to Tennessee’s economy.
Dr. William Fox, whose center conducted the study for VW, said that in addition to the 2,000 additional VW workers, nearly 8,000 other jobs will come from a combination of new suppliers and businesses in other sectors
Fox said the expansion “impacts every part of the state’s economy.”
VW is targeting the SUV’s production to start in late 2016 to help revive flagging sales, which were hit by the emissions scandal.
The SUV, dubbed the CrossBlue when it was unveiled at the Detroit auto show in January 2013, is expected to have a different name when it hits dealer showrooms.