A u-turn for VW; Tennessee picked for new U.S. plant

German automaker picks Chattanooga for site of new facility to open in 2011


Volkswagen picked Chattanooga over rival sites in two other states for a new U.S. assembly plant expected to create about 2,000 jobs, the Associated Press reported Tuesday.
The annoucnement comes on the same day General Motors announced major cuts in its workforce and a elimination of its 2008 dividend as a way to be more competitive in the global auto business.
Volkswagen Group of America Inc. said it will produce a new midsize sedan designed specifically for the North American consumer and invest $1 billion in the economy.
A site in Alabama had been rumored as the final choice for the VW facility. A site in Michigan was also considered. Volkswagen closed its last U.S. production facility in 1988.
Christian Wulff, the governor of Lower Saxony and a member of VW's supervisory board, told The Associated Press that the company picked Chattanooga after the board debated the merits of the location and its benefits.
The company statement said the plant near the Georgia and Alabama borders would create 2,000 direct jobs and "add a significant number of jobs in related sectors."
A statement from parent Volkswagen AG said the company approved up to $991.4 million to build the facility, with the plant aiming for a capacity of 150,000 cars a year. It plans to start production in 2011.
Tennessee officials have not released details of what it is giving Volkswagen but the company's statement said the "incentives are tied to job creation and capital investment. Additional support includes assistance for public infrastructure and job training."
VW picked Tennessee 25 years after Nissan Motor Co. became the first foreign automaker in the South at Smyrna.
" Chattanooga is an excellent fit for the Volkswagen culture, having an exceptional quality of life and a long manufacturing tradition," said Stefan Jacoby, President and CEO of Volkswagen Group of America.
The 1,350-acre site at Enterprise South Industrial Park near interstates 75 and 24 between Nashville and Atlanta has long been seeking an auto assembly plant.
Chattanooga previously lost out on the $1.3 billion Toyota Motor Corp. plant that is being built near Tupelo, MS, and the $1.2 billion Kia Motors Corp. plant that went to West Point, GA.
Volkswagen holds only a 2% share of the U.S. market. VW officials have said the company intends to more than triple its U.S. sales to one million by 2018.

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