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Volkswagen employees walk around the outside of cars on an assembly line checking items as they go at the Volkswagen Plant Thursday, Aug. 31, 2017, in Chattanooga, Tenn. Each car is meticulously tested and inspected by the time it makes it to the end of the assembly line.

This story was updated at 7:32 p.m. on Tuesday, Feb. 25, 2020, with more information.

As Volkswagen's Chattanooga plant plans for a surge of SUV assembly this year, production and maintenance workers will see a pay hike and a new bonus system.

The base production wage rate at the plant will rise by $1.50 per hour, from $16 to $17.50, up about 9.4%, according to the automaker.

For maintenance workers, the employees who maintain and fix the plant equipment, the base rate also will go up $1.50 per hour from $23.70 to $25.20, or about 6.3%, the company said on Tuesday.

VW has expanded the staff at its Chattanooga assembly plant in the past year to 3,800 workers as it produces more Atlas SUVs and prepares to begin making electric-powered vehicles in the future.

"We have an exciting product portfolio now," said Tom du Plessis, president and CEO of Volkswagen Chattanooga. "Our Atlas SUV has been a tremendous success, and we are looking forward to launching the Atlas Cross Sport SUV this spring."

The VW Chattanooga CEO said the plant is increasing volume in the SUV market and "building for the U.S. in the U.S. Our team should see the benefits of our success because they are the ones who help make it possible."

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Volkswagen employees work around a car on the assembly line at the Volkswagen Plant Thursday, Aug. 31, 2017, in Chattanooga, Tenn. Volkswagen employs more than 3,200 people at the plant. / Staff file photo

The company official said plans are to boost the volume of vehicles produced at the plant by 74% this year over 2019. That would put production at about 183,000 units, he said.

Demand is increasing for the seven-seat Atlas SUV, and the plant is simultaneously launching both the 2020 Passat sedan and the five-seat Atlas Cross Sport SUV, according to VW. The Cross Sport is undergoing delivery to dealerships and plans are for the all-new vehicle to hit the market next month, du Plessis said.

Late last year, VW broke ground on an $800 million expansion to produce a new electric SUV by 2022.

Burkhard Ulrich, VW Chattanooga's senior vice president of human resources, said the company is working on improving the wages of employees of VW contractor Aerotek.

Ulrich added that VW is converting over more Aerotek workers to become full employees of the German automaker. To work at the auto plant, workers first join Aerotek and then are converted to VW after a period of time.

In January, when Aerotek announced it was looking for about 380 more workers at Volkswagen, the contractor said hourly pay would range from $14 per hour to $16 per hour with another $1.50 per hour for night shift.

Also on Tuesday, VW Chattanooga officials said the factory has implemented a new self-driven bonus system in which employees will see the first payout later this week.

The company said the new system was developed in response to employee feedback with bonuses now based on attendance and workplace conduct, two elements controlled by the worker.

In total, a 16% bonus is achievable, according to VW. Bonuses are calculated on top of paid hours, including shift premiums and overtime rates. Portions of the bonus are paid monthly and quarterly.

The plant's previous bonus structure was based on a mix of individual, shop-specific and company-wide targets of attendance, productivity, safety and quality.

"Simplifying our bonus system and putting employees in the driver's seat has been a top priority for us," said du Plessis. "We looked at targets they could own independently, which also impact our overall safety, quality and productivity. The bonus system is much easier to understand now, and the response we've received from the team has been overwhelmingly positive."

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Volkswagen employees work around vehicles as they move down the assembly line at the Volkswagen Assembly Plant Thursday, Aug. 31, 2017, in Chattanooga, Tenn. / Staff file photo

According to VW, with overtime, bonus and shift differential, production employees have the potential to earn up to $46 an hour, and maintenance workers can earn up to $58 per hour on off-shift overtime.

In addition, to manage increasing production, the company polled employees on preferred shift models and work schedules.

Assembly and paint shop employees will return to a five-day work week with two nine-hour shifts beginning the first week of March, the company said.

Other shops returned to a five-day work week in January, with three eight-hour shifts in body shop and two 10-hour shifts with an alternating day off for finish and quality assurance workers. Employees also voted on preferred shift start times as well as dates for summer shutdown, the company said.

The higher pay for Volkswagen workers comes as other auto makers are also boosting worker pay. According to a United Auto Workers contract with General Motors workers approved last fall, the union said that deal included a package of an $11,000-per-member signing bonus, performance bonuses, two 3% annual raises and two 4% lump-sum payments.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.

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