Tennessee legislature will approve Volkswagen incentives

Tennessee legislature will approve Volkswagen incentives

January 15th, 2015 by Andy Sher in Business Around the Region

New cars await shipment at the Chattanooga Volkswagen plant in this file photograph.

Photo by John Rawlston /Times Free Press.

NASHVILLE -- House Republican Majority Leader Gerald McCormick predicted Wednesday that fellow lawmakers will approve the state's $177.8 million portion of the incentive package for Volkswagen's Chattanooga plant expansion despite some Chattanoogan's dismay over the company's dealings with the United Auto Workers union.

"I think Volkswagen's handled the United Auto Workers' issue horribly," McCormick said. "However, the state's made a promise and the state's got to keep its promises. I think the state will keep its promises and it will approve the incentives it's promised."

Several of McCormick's fellow Republicans in the Hamilton County delegation this month raised questions about their support of more than $230 million of grants the state and local governments have promised in the wake of the UAW situation. VW also will qualify for property tax breaks and assistance from the Tennessee Valley Authority.

The state assistance must still be approved by the General Assembly. The grants go toward site development, construction, machinery and job training.

"I think it's just showing the frustration that we have because Chattanooga is our community and we want what is best for our community," McCormick said of questions raised by Senate Speaker Pro Tempore Bo Watson, R-Hixson; Sen. Todd Gardenhire, R-Chattanooga; and Rep. Mike Carter, R-Ooltewah. "And I don't think people in Germany sometimes realize what is best for the Chattanooga community when it comes to the dealing with United Auto Workers. And they wanted to express their frustrations with that."

But McCormick said he believes "in the end we'll keep our commitments to Volkswagen and potentially any other company that comes in." If not, he noted, "it'll send a bad signal to other companies looking to invest in Tennessee."

With that support, Volkswagen plans a $900 million investment that will add one, possibly two SUV lines at the plant, which currently produces the German auto manufacturer's Passat passenger vehicle. Some 2,000 more workers will be added.

The latest grumbling from lawmakers is the latest chapter in the UAW saga. The union last February unsuccessfully sought to unionize the plant in an effort to win a toehold among "transplant" foreign auto firms in the South. Republican elected officials, led by U.S. Sen. Bob Corker, criticized the effort.

But while the unionization failed, VW later adopted a labor policy that gives regular meetings with management to labor groups that sign up at least 15 percent of employees. The UAW recently met that and landed in the top tier after showing it signed up least 45 percent of plant workers.

The policy doesn't give UAW exclusive bargaining rights.

Another workers' group calling itself the American Council of Employees, which includes opponents of the UAW, has questioned the company's dealings with the UAW and the percentage of workers the union has signed up.

But the ACE group has yet to put forward its own list showing it has signed up at least 15 percent of workers.

On Monday, Volkswagen Group of America's chief, Michael Horn, told the Times Free Press in Detroit he expects Tennessee lawmakers would approve the incentives.

"I'm very confident," he said.

Haslam told Tennessee reporters last week that having Hamilton County lawmakers' support is important to winning approval of the incentives.

He said "there's no question" that scuttling the incentive package could hurt Tennessee's future job recruitment efforts.

Contact Andy Sher at asher@timesfreepress.com.


Loading...