Haslam: State incentives in VW Chattanooga 'a solid investment'

Haslam: State incentives in VW Chattanooga 'a solid investment'

October 7th, 2015 by Mike Pare in Business Around the Region

Tennessee Gov. Bill Haslam and Michael Horn, VW Group of America CEO, with the Cross Coupe GTE concept for Edge magazine.

Photo by Contributed Photo /Times Free Press.

Clamps hold probes in the tailpipes of a 2010 Volkswagen Jetta TDI on the campus of North Carolina State University in Raleigh, N.C., on Monday, Sept. 28, 2015.

Clamps hold probes in the tailpipes of a...

Photo by Associated Press /Times Free Press.

Tennessee Gov. Bill Haslam said today that the state's huge incentives in Chattanooga's Volkswagen plant are "a solid investment."

After spending about an hour inside the plant and talking with VW officials, Haslam said no one could have foreseen the emission-rigging scandal that has stricken the German automaker.

"We're married to them," he told reporters about VW. "We want this plant to be a success."

Haslam said VW officials met with most of its workforce in an all-team meeting this afternoon, with plant CEO Christian Koch telling the employees to focus on doing their jobs.

The governor also said he saw both the new, refreshed 2016 VW Passat the factory is assembling as well as the planned sport utility vehicle that the plant is slated to start producing in late 2016.

Tennessee government provided an estimated $358.2 million of the original $577.4 million in incentives that persuaded Volkswagen in 2008 to locate its plant in Chattanooga to make the Passat sedan. Local governments provided the remaining $219.2 million.

And this year, Tennessee, Chattanooga and Hamilton County governments committed to more than $260 million in incentives for a new line of SUV production. About $165 million of that is from the state.

On Sept. 18, the Environmental Protection Agency issued a notice of violation based on a determination "that VW manufactured and installed defeat devices" in certain model year Volkswagen and Audi diesel passenger cars.

VW later admitted it installed engine software that sensed when the vehicles were undergoing emissions testing and ensured systems were operating to pass the tests.

The company has set aside more than $7 billion to address this alleged violation, and VW's new CEO in Germany said it is reviewing all investment worldwide to see what could be postponed or cut.

VW is investing $600 million in Chattanooga to expand the plant to produce the SUV.

See more in Thursday's Time Free Press.