VW Chattanooga hits 10 years [photos]

VW Chattanooga hits 10 years [photos]

German automaker said 'It's Chattanooga' a decade ago

July 15th, 2018 by Mike Pare in Local Regional News

Ron Pankratz, senior manager of employee services at Volkswagen, talks about the first Passat that came off the line at the Volkswagen Plant during an interview Wednesday, July 11, 2018 in Chattanooga, Tennessee. Volkswagen is marking its 10th year since announcing it was coming to Chattanooga.

Photo by Erin O. Smith

Gallery: VW Chattanooga hits 10 years

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TIMELINE

* April 2008: Volkswagen narrows list of states competing for U.S. production facility to Tennessee, Alabama and Michigan

* May 2008: Workers begin clearing part of Enterprise South industrial park in Chattanooga so VW can better see site

* July 15, 2008: Chattanooga wins $1 billion VW plant investment with planned 2,000 jobs

* May 2009: VW holds ceremonial wall-raising

* February 2010: Automaker hires first production workers; adjacent supplier park to employ about 500 initially

* November 2011: Chattanooga-made Passat chosen as Motor Trend Car of the Year

* December 2011: Plant named world’s only Platinum LEED-certified auto factory

* January 2013: VW unveils largest solar farm in Tennessee next to plant

* February 2014: Plant workers vote 53 percent to 47 percent against aligning with United Auto Workers

* July 15, 2014: VW announces $900 million expansion to build a seven-seat SUV in Chattanooga; plans to hire 2,000 more workers

* December 2015: VW skilled trades employees at plant vote 108 to 44 to designate UAW Local 42 as bargaining representative; VW refuses to come to bargaining table

* December 2016: Atlas SUV production starts

* May 2017: Atlas sales begin

* March 2018: VW to produce new five-seat offshoot of Atlas; invest $340 million in plant

 

BY THE NUMBERS

* $2.24 billion: VW’s investment in Chattanooga over the decade

* $818.8 million: Federal, state and local incentives awarded to company since 2008

* 22,000: Projected number of jobs generated by VW, suppliers and ripple effects in economy

Source: VW, University of Tennessee, Good Jobs First

 

Ron Pankratz joined Volkswagen in Chattanooga nearly 10 years ago and recalls that on his second or third day, people stood in line up to five hours at a job fair in hopes of working for the company.

"Volkswagen was coming back to the U.S.," said Pankratz, the plant's senior manager of employee services. He said the automaker took in 30,000 applications for 2,000 planned jobs in a matter of weeks.

Today, the German car company marks a decade since it revealed plans to locate its only U.S. production plant in Chattanooga. The $1 billion plant announcement sent Chattanooga's stock up as the city became one of fewer than two dozen in the South where cars are assembled.

While the ride hasn't always been smooth, traversing the deepest recession since the Depression, a pair of rough-and-tumble union elections and a costly global diesel emissions scandal, VW's investment in the plant was steady, rising to $1.9 billion.

Now with 3,500 workers producing two vehicles, the company is spending another $340 million to make a five-seat SUV starting next year.

"I want this plant to produce 300,000 cars [annually]," said Antonio Pinto, president and chief executive of VW's Chattanooga operations. "That's more than double what we are now."

Volkswagen's first U.S. assembly plant in 1978 was housed in a former Chrysler factory in Pennsylvania. It provided jobs to more than 5,000 workers but shut down within a decade after VW suffered heavy financial losses.

VW has yet to turn a profit on its U.S. operations since the Chattanooga plant opened. But the company last year added the seven-seat Atlas SUV line alongside the Passat sedan it was already producing, sharply boosting its employee head count.

Dean Parker, who started with the Chattanooga plant in March 2009 and is now senior director of new products, said he came from Toyota's San Antonio truck production plant to head the paint shop here.

"VW was always an iconic-type brand," he said about why he came to the city.

Parker said the early days were stressful, seeing the plant rise out of the ground and aiming to start production in 2011.

"There were a lot of blood, sweat and tears," he said.

He recalled the excitement when the first Passat was driven off the assembly line in a ceremony before all the plant employees.

"Team members were jumping," Parker said. "When you see what has been accomplished. "

Wooing Volkswagen

However, Volkswagen almost bypassed Chattanooga in 2008.

Chattanooga and Hamilton County had experienced defeat just a year or so earlier when it sought a Toyota assembly plant for Enterprise South industrial park, the 6,000-acre former U.S. Army munitions factory that officials bought, cleaned up and pitched to major companies.

Then-Chattanooga mayor Ron Littlefield said local officials were stung by losing Toyota to a site near Tupelo, Miss. A few months later, some local officials were at the Detroit auto show when they heard about another car company, likely Volkswagen, looking to open a U.S. assembly plant, he said.

"We found the key VW executives and gave them a package of material on Chattanooga before we left the show," Littlefield said. "We started before anyone really was thinking about VW."

VW officials later narrowed its list of prospects to three: Chattanooga, Huntsville, Ala., and a site in Michigan.

The Michigan site was eliminated first, and Alabama and Tennessee furiously pursued the German automaker. To deflect worries about the Enterprise South tract, local officials set up a camera so VW site selectors could see land being cleared even before there was any agreement to bring the plant to the city.

"You could go to a website and see all the clearing and construction going on," Littlefield said. "They were impressed by that."

Former Chattanooga mayor Bob Corker and the late Hamilton County mayor Claude Ramsey had worked to ready Enterprise South for development and helped woo the automaker. Corker, then serving his first term in the U.S. Senate, brokered discussions with the German company and others around the dinner table of his Riverview home.

Littlefield said Volkswagen officials kept the final decision under wraps until the end.

"They kept us guessing right to the last," he said. "We were never totally confident."

The former mayor said he and Ramsey talked several times daily during the selection process.

"We both pushed all our chips into the center of the table and bet everything we had," Littlefield said.

VW had made preparations to hold the plant announcement on July 15, 2008, in both Huntsville and Chattanooga. The former mayor said he sent a staff member to Huntsville the day before to check on what was going on there. They knew the hotel where VW executives were staying, he said.

"We relaxed when we knew we had the top-ranked people staying in Chattanooga," Littlefield said. "We had spies on the ground over there [in Huntsville]."

The official nod to Chattanooga occurred at the Hunter Museum of American Art to a room packed full of boisterous and buoyant celebrants. Littlefield remembered then-Gov. Phil Bredesen commenting that "for the first time in his life he felt like a rock star."

Incentives package

To lure Volkswagen to Chattanooga, the incentives were rich.

It's estimated the plant received pledges of $577.4 million in federal, state and local incentives, still tops in Tennessee and one of the biggest incentive packages ever among U.S. automakers. Early this year, Alabama's total incentive package to Toyota and Mazda for a planned $1.6 billion assembly plant in Huntsville reportedly topped $800 million.

Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, said communities don't like incentives, but they're a reality in trying to attract companies such as VW and Toyota.

"We compete every day," he said. "The communities around us are using incentives."

Wood said drawing Volkswagen has helped change Chattanooga over the decade. Early on, the city and country were in the depths of a recession. Families were going bankrupt and losing their homes, Wood said.

"We had very good timing with VW," he said.

Also, Wood said, the jobs at VW and its suppliers have "a huge impact at a very personal level" for families who work for those businesses.

"That can't be lost on us," he said.

As VW has grown, it has started to mature in the market and its supply chain has grown as well, Wood said. And VW has helped make Chattanooga a more international city.

In the future

Looking ahead, VW and Chattanooga officials see more growth at the plant.

Production will begin within eight months or so on a five-seat version of the Atlas SUV, according to Pinto. Assembly of a fully redesigned Passat sedan is scheduled to start early next year, he said.

Pinto said the plant still has room for more production.

"We prefer to optimize," he said, noting that some equipment to produce electric vehicles in the future could be installed if the decision is made to assemble them.

After bringing on about 1,000 employees last year, Pinto said hiring is now flat and the company is filling only the spots of workers who leave.

Nicole Koesling, senior vice president of human resources, said finding qualified employees in today's low-unemployment environment is challenging for VW as well as other manufacturers in the region.

"We all have the same problem. I don't get the skilled workforce I need. We have to invest a lot in training," said Koesling. The company operates Volkswagen Academy, where employees can learn about making vehicles in a four- to six-week process.

She said that when new workers are needed, the plant may consider direct hiring rather than contract workers because of VW's better starting wages and benefits.

She urged city leaders to make the area attractive to people who are thinking of moving here.

Pankratz said he moved to Chattanooga from Kentucky almost a decade ago, about three months after the plant announcement, to join the fledgling human resources staff.

When hiring began, Pankratz said, the staff started by looking in ZIP Codes around the plant, then in Hamilton County, before branching out to Georgia or Alabama.

Wood said VW is "still in its infancy" despite hitting the 10-year mark. He said the automaker has been in Puebla, Mexico, for four decades.

The Chamber official said it's key that Hamilton County continues to focus on filling the jobs pipeline with an educated, trained workforce.

"How do we make sure that the 3,000 kids graduating every year have the skill sets to go to college or into a career?" Wood asked.

He said the Future Ready Institutes, a partnership within the county to prepare students for post-secondary options, will play a major role.

Also, Wood said, Chattanooga is attracting people in the 18-to-35-year-old age group who are coming here for college or to get a job. In addition, they like Chattanooga's renewed downtown, he said.

"Now we're grabbing kids from all over the country," Wood said. "That's a powerful statement."

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