VW pledges to expand Chattanooga plant, keep momentum on SUV

VW pledges to expand Chattanooga plant, keep momentum on SUV

October 30th, 2015 by Mike Pare in Local Regional News

State legislators lauded Volkswagen's pledge to its Chattanooga plant on Thursday as the carmaker calmed concerns the emissions-cheating scandal would derail its new production and hiring plans.

And Tennessee's top economic developer offered a vote of confidence in the automaker, forking out a $5,000 down payment at a Chattanooga dealership for the first sport utility vehicle that comes off the assembly line in late 2016.

VW Chattanooga plant chief Christian Koch told a state Senate panel that its $600 million plant expansion to assemble the midsize SUV is on track, echoing a statement from the automaker's German headquarters earlier in the day.

"Our plan to keep the momentum going has not changed," Koch told legislators at a rare hearing in Chattanooga.

Koch also said that current production at the plant "is not missing one car" since the emissions-rigging revelations broke more than a month ago. But, he said, no diesel vehicles are leaving the plant that employs almost 2,500 workers.

State Sen. Bo Watson, R-Chattanooga, said after the 90-minute hearing that he feels more confident Tennessee's investment in VW and the plant is secure.

"I was a little more concerned because we have a company that has misbehaved," he said. Watson said he believes the new SUV "has the potential to be a transformative factor in VW's overall long-term success."

State House Majority Leader Gerald McCormick, R-Chattanooga, said legislators have an obligation to taxpayers related to the more than $800 million in state and local incentives awarded to VW for the original plant and its expansion.

Gallery: VW pledges to Chattanooga expansion, SUV

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However, he said, the emissions issue in six months to a year is likely to be "a bump in the road for a company like Volkswagen and a minor issue from a historical perspective."

State Rep. Patsy Hazlewood, R-Chattanooga, said the expansion and the 2,000 added jobs VW is creating are important to the community.

"I encourage everyone at VW to do whatever it takes to get this behind us as quick as possible," she said.

Randy Boyd, the state commissioner for economic and community development, told legislators at the hearing that he knows there are questions about Tennessee's investment in VW. But, he said, the state has received assurances from VW and there are clawbacks to the state's incentives in case the automaker doesn't follow through.

"They've said the Chattanooga expansion is critical to North America," Boyd said.

After the hearing, Boyd traveled to Village Volkswagen, where he wrote a check to secure the first of the SUVs made at the plant. He said he wasn't "a martyr" in purchasing the vehicle.

"It's a great car," he said.

The commissioner said he hopes the vehicle will be "reef blue" in color and that it will be fully loaded. He expects to pick it up in early 2017.

Koch, meanwhile, told the legislative panel that the plant expansion will support a possible hybrid or electric version of the SUV, if the decision is made to go that direction.

He noted that the company has apologized to customers and the public for installing software defeat devices to fool U.S. environmental regulators.

"As a company, we take full responsibility," Koch said.

The CEO said the plant expansion is "a vital pillar" to VW's future in the U.S.

"We look forward to creating even more high-quality jobs in Tennessee," he said.

VW is committed to producing vehicles in Tennessee "that make us all proud," he said.

Earlier this week, VW reported a $1.83 billion third-quarter loss as it continued to deal with the disclosure that it inserted the cheating software on 11 million vehicles, including nearly 500,000 in the U.S.

The loss came as the company set aside $7.4 billion to pay for recalls and fixing cars, though officials have said more likely will be needed.

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


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