NASHVILLE — Tennessee officials this week approved a $611,652 job-training grant for a Volkswagen supplier as the firm hires nearly 200 new workers in advance of the German auto manufacturer's planned production of SUVs at its Chattanooga assembly plant.
State Funding Board members on Wednesday approved the FastTrack Job Training Assistance Program funds for Chattanooga Seating Systems LLC, a joint venture between Magna Seating and Hollingsworth International which already supplies complete seating systems for VW's local Passat production.
The company, which already employs 128 people at its 58,000-square-foot facility, is being awarded a contract by VW to do seating for its new seven-passanger, three-row sport utility vehicle.
According to state Economic and Community Commissioner Randy Boyd's office, Chattanooga Seating Systems has committed to create 190 new jobs and make a $5.39 million capital investment at the Enterprise site location.
Chattanooga Seating's average wage rate will be $16.10 per hour for the new positions. The $611,652 job-training subsidy is intended to ensure the new workers are properly trained.
"We're very excited about it," David Higgs, Chattanooga Seating's general manager, said last month. "We're excited for VW."
The company is investing its own $5.39 million in new equipment for making and assembling vehicle seats. Scott Worden of Magna Seating said at the time the facility will expand its existing footprint by utilizing an unoccupied building near its current facility.
Chattanooga Mayor Andy Berke has noted the company was one of the first "Tier One" suppliers to locate in the city after VW's original 2008 announcement that it would build a production plant in Tennessee.
"With this expansion, they will more than double their workforce over the next five years and create good, middle-class jobs for more Chattanoogans," he said.
Hiring begins this month.
The VW plant at Enterprise South industrial park is ramping up its employment as well.
Aerotek, a staffing contractor for Volkswagen in Chattanooga, plans to hire about 25 people weekly over the next couple of months and 700 employees by year's end.
VW plans to start production of the new midsize SUV by the end of 2016 with the seven-seater hitting dealerships early next year. VW has been expanding the plant, spending $900 million overall and $600 million in Tennessee, to ready the Chattanooga facility to produce the vehicle in addition to the Passat sedan.
Chattanooga Seating is 51 percent held by Michigan-based Hollingsworth, which is a Native American-certified minority business. Magna Seating is part of Magna International, a global auto supplier headquartered in Ontario, Canada.
Hollingsworth CEO Stephen Barr and his family purchased E.L. Hollingsworth in 1987.
Hamilton County Mayor Jim Coppinger termed Chattanooga Seating "an important supplier for VW."
More than 120,000 Tennesseans work at 930 plants across Tennessee — the highest number for any state in the South. Last year, Volkswagen, Nissan and General Motors manufactured 735,511 cars, light trucks and SUVs in Tennessee.
State Department of Economic and Community Development had previously declined to release information about the Chattanooga Seating incentives in advance of official state action. The information became public on Tuesday when approval of using the public tax dollars for the subsidies became official through State Funding Board action.
The board approved a total of seven FastTrack grants for infrastructure, training or economic development across the state, including the Chattanooga project at a cost of more than $8 million.
Mike Pare contributed to this report. Contact Andy Sher at firstname.lastname@example.org or 615-255-0550. Follow on twitter at AndySher1.