[MSinger]

From tennessean.com


CHATTANOOGA — Volkswagen announced Tuesday that it will build a $1 billion U.S. assembly plant in Chattanooga, ending an eight-month search for a site that finally came down to a competition between Tennessee and Alabama.

Even though several auto industry publications, quoting unidentified sources purportedly inside Volkswagen's headquarters, said in recent days that the plant would go to a site near Huntsville, Ala., the big celebration Tuesday morning took place 100 miles away, on a bluff overlooking the Tennessee River in downtown Chattanooga.


There, Volkswagen's U.S. president and chief executive, Stefan Jacoby, told a crowd of several hundred people gathered at the Hunter Museum for American Art that "Tennessee is just the best fit for us."

Volkswagen, the world's third-largest automaker, will build a plant to assemble a new midsize sedan for the U.S. market, with production planned to begin in early 2011.

The Chattanooga plant will employ up to 2,000 people, Volkswagen said, and production is expected to be about 150,000 cars a year initially.

But with suppliers locating nearby to support the plant, new employment as a direct result of the facility will go well beyond the number Volkswagen will hire, said Tennessee Gov. Phil Bredesen, who shared the stage with Jacoby.

The decision was a major victory for Bredesen's economic-development efforts, led by Matt Kisber, the state's commissioner of economic and community development, and the work of Chattanooga and Hamilton County officials, who began preparing the Enterprise South Industrial Park 12 miles northeast of downtown for such a facility about 15 years ago.

The city and county came close last year to landing the Japanese automaker Toyota, which was looking for a site for a new assembly plant. Chattanooga came in second for that facility, however, which ended up going to a tract near Tupelo, Miss.

Incentives played down
Jacoby said the city's amenities were a deciding factor, more important than any financial guarantees the state made to entice the company to move to Tennessee.

"The incentives were not the key," he said. "We looked at 25 states, and we decided on Tennessee."

There are incentives, though, but Kisber said after the announcement that he wasn't prepared to discuss specifics yet because details had not been worked out with Volkswagen.

Among them, though, are guarantees that the state will support training efforts at the nearby Chattanooga State Technical College for the Volkswagen workers in a way similar to how the state funded $35 million in retraining for General Motors Corp. workers at the Spring Hill plant this year as GM geared up to build a new Chevrolet crossover utility vehicle.

Other incentives include tax rebates and site-preparation work, as well as "making sure the infrastructure is in place at the plant site," Kisber said.

The incentives are "tied to job creation and capital investment," Volkswagen said in its announcement of the plant decision.

Victory for Corker
U.S. Sen. Bob Corker, R-Tenn., who was mayor of Chattanooga when the Enterprise South site was first developed at the location of the former Volunteer Army Ammunition Plant, was on hand for Tuesday's announcement, and played a key role in wooing Volkswagen officials.

"I first heard from them in Washington in November, and we've been working with them ever since to try to persuade them to build their plant in Chattanooga," he said in an interview after the announcement.

Volkswagen officials called him Friday morning to inform him that Chattanooga was going to be recommended to the automaker's supervisory board on Tuesday as the preferred location for the plant, he said.

"I was so overwhelmed that I just choked up," he said. "I represent the entire state, but this is something really close to home for me. It's more than manufacturing; the ripple effect of this will be significant for Chattanooga and all of Tennessee. This is just a huge, huge thing."

Corker's personal efforts to snag Volkswagen included hosting company officials in his Chattanooga home on June 20, which the senator said seemed to be the defining point in the efforts to lure the facility.

"I knew in my heart after the meeting in my home that we had them emotionally," Corker said. "We learned a lot from our dealings with Toyota, and the key to a winning effort is personal relationships."

Also on hand for the Tuesday event was U.S. Sen. Lamar Alexander (R-Tenn.), who also worked with Corker and other state and local officials to lure Volkswagen.

"This puts Tennessee on the road to becoming the nation's dominant auto-manufacturing state," said Alexander, who helped bring General Motors' Saturn division to Spring Hill when he was governor. "This state has gone from nowhere 30 years ago to becoming a major player in the auto industry."

Corker said Chattanooga and Hamilton County's decision in late May to spend $1.8 million to grade the Enterprise South site was instrumental in giving Volkswagen a good look at how a plant would fit into the rolling, wooded topography.

"The topography is one thing that has held us back here," he said. "Middle Tennessee doesn't have those issues. Clearing was the key. They saw they could build a plant at that site, and the intangible became the tangible."

[davekc]

Sounds good to me. Corker said when he got elected he was bringing a lot of jobs with him. So far he seems to be delivering on what he said. Kinda rare in politics these days.

[MSinger]

True!! Alot like Mitch Daniels, Governor of Indiana. Maybe they could team up and run on a presidential ticket someday.

[arkjarhead]

What has Mitch followed through on? Selling you alls infrastructe up their? Anyway. I'm starting to think TN is going to take Michigan's spot as being the "automotive state" so to speak. There have been a few plants open in the last couple of years in the TN,MS,AR areas.

[OntarioVanMan]

Whirlpool has also announced that it's plant in Oxford MS is closing and production moving to it's Cleveland TN plant just north of Chattanooga so lots of jobs coming to that area...other good news is Whirlpool is closing one of 2 plants in Mexico!!

[greg334]

I am glad to see Tennessee get the plant but.. just because a company has it's headquarters here, does not make my state an automotive state.

We, the state of Michigan have been less and less the Motor Capital of the country more and more. Sure we have some stuff going on but I think the south has been progressively moving forward with taking more work away from us and this has been going on since the 50's.

The sad thing is, we are celebrating 5000 new jobs while laying off 10,000 people. Many of the Granholm supporters point out the great job creation we have seen in the last few years but ignore the facts that the layoff and closures are causing the 3 to 1 imbalance between the unemployed and the employed and can't be covered up. AND with the absolute mess in the city of Detroit the state is ignoring, no one wants to take a chance to come here to the state to setup business, not to mention the increase in taxes in some industries to 500%.

OH and one other thing, I hope the suppliers of VW also build close by, if the fuel prices continue their slight upward trend, a centralized manufacturing system will be needed not a decentralized one. I think that is one reason why GM and Ford is really having problems, their suppliers are scattered.

[OntarioVanMan]

Greg...suppliers on site like as in the Toyota plant in San Antonio? If they model every new plant on this idea...this biz in the future will change dramatically.

[greg334]

Originally Posted by OntarioVanMan

Greg...suppliers on site like as in the Toyota plant in San Antonio? If they model every new plant on this idea...this biz in the future will change dramatically.

Well DUH!

That's progress and business has to conform to the economy it is in or die. If businesses don't get their supply chain in order and move them closer, than they will suffer a lot.

No one should expect to see this decentralized model to continue under the economy that is evolving as we type our posts today, should they?

I mean the idea to have a ten year plan in this business is asinine without considering that the changes to the business environment on a conservative end of things may be so dramatic that the life cycle of the truck will never be reached.

I expect to see a hard push from both candidates and greenies over the need to be green in this industry in the near future with the result will be that rail companies will be lobbying for more money to build up their infrastructure, and companies like GE and EMF will lobby for more deregulation in rail all the time the trucking industry will move back towards a hybrid solution of rail/truck on a regional basis for regular freight like vehicle manufacturing and distribution as they were doing in the 30's through the 50's.

Why rail? Because the cost per ton per mile is ten times less than truck, that's why.

We are already seeing this with Wal-Mart here, they are trying to reduce their 'Food Miles' by using local sources to centralize their distribution near a mass of stores. If we watch Wal-Mart closely you can see the trends others will follow in the future.

You really have to understand the history of these things to get a grip in where we may head in the near term. See History is important.

But with all that said, we are already seeing our work being used outside of the automotive industry, I haven't hauled much in a while and don't expect to in the future. I know that my company is diversified enough to hold it's own, while FedEx is not primarily concern with this market and others companies will move to LTL for a while and may go somewhere else.

[OntarioVanMan]

I am picturing a dedicated rail line maybe 500-1000 miles long leading to auto plants running on electricity....with most parts suppliers on the rail line...they could run up and down all day at a fraction of the cost

[greg334]

Originally Posted by OntarioVanMan

I am picturing a dedicated rail line maybe 500-1000 miles long leading to auto plants running on electricity....with most parts suppliers on the rail line...they could run up and down all day at a fraction of the cost

Yep you are getting the idea.

Ford actually started to build a rail infrastructure in the 20's, starting with his purchase of one rail road but the government imposed so many regulations that he said forget it and contracted with the rail companies to do the work.

His idea wasn't new, actually came from one of his main investors who had a huge coal company here in Detroit which in fact was one of the sources for his Just In Time methods he used and is still used today as the model for beer distribution in some parts of the country because of the effectiveness in controlling cost.

It is all about costs and controlling it. Be it a Owner Operator or Toyota/VW.

[late4dinner]

Just in Time Beer Delivery. Gosh, thats the reason I couldn't get to the end of the supply.

[MSinger]

Originally Posted by arkjarhead

What has Mitch followed through on? Selling you alls infrastructe up their? Anyway. I'm starting to think TN is going to take Michigan's spot as being the "automotive state" so to speak. There have been a few plants open in the last couple of years in the TN,MS,AR areas.

Actually no infrastructure has been sold. The Indiana Toll Road is on a 75 year lease for $3.8 billion. The State of Indiana is currently collecting $543,243 PER DAY on the interest alone. This money is being funneled back into the highways all across the state. The toll road has been improved and for the first time tolls can be collected electronically through the EZ Pass system. The company that leases the toll road is also giving the state $5 million to build a new state police post along the road as well as an additional $6 million for additional troopers to patrol the highway.
This arrangement is not unique just to Indiana. The City of Chicago formed the first lease of an existing tollway with a private company who also has foreign ties. The Chicago Skyway was leased out for $1.83 dollars for a 99 year lease in January 2005. Florida, New Jersey and Pennsylvania are also interested in forming such leases on their toll roads.

As for other accomplishments, Indiana has landed several new large scale businesses in the past few years including Honda (Greensburg), WellPoint (Boone Co), Getrag (Tipton), Nestle (Anderson), and Advance Auto distribution center (Remington).

I don't agree with everything the guy has done but one thing's for sure, he did what he said he was going to do in the campaign. That holds alot of water these days.

[Tennesseahawk]

I see the reason Honda, Toyota, and now VW are winning over the other big three is because they don't contend with UNIONS. No wonder the big three are exporting all their operations while the new three are making a profit building and supplying here. Honda is more of an American car now than Ford. Thanx UAW! You showed how bullying a business for the greed of the Union, and not the members you represent, can tear down an industry that was traditionally American. The new guys have shown everyone that they can be successful, AND keep the workers happy, WITHOUT YOU! You were once a needed commodity. Now, you're just a floater in the commode.

[arkjarhead]

Originally Posted by MSinger

Actually no infrastructure has been sold. The Indiana Toll Road is on a 75 year lease for $3.8 billion. The State of Indiana is currently collecting $543,243 PER DAY on the interest alone. This money is being funneled back into the highways all across the state. The toll road has been improved and for the first time tolls can be collected electronically through the EZ Pass system. The company that leases the toll road is also giving the state $5 million to build a new state police post along the road as well as an additional $6 million for additional troopers to patrol the highway.
This arrangement is not unique just to Indiana. The City of Chicago formed the first lease of an existing tollway with a private company who also has foreign ties. The Chicago Skyway was leased out for $1.83 dollars for a 99 year lease in January 2005. Florida, New Jersey and Pennsylvania are also interested in forming such leases on their toll roads.

As for other accomplishments, Indiana has landed several new large scale businesses in the past few years including Honda (Greensburg), WellPoint (Boone Co), Getrag (Tipton), Nestle (Anderson), and Advance Auto distribution center (Remington).

I don't agree with everything the guy has done but one thing's for sure, he did what he said he was going to do in the campaign. That holds alot of water these days.

Do you think you will be alive 75 years from now? I doubt I will. No man on either side of my family has ever made it to 75. So what happens in case of an emergency and our military needs that road and the foreign entity that is "leasing" it doesn't want to let them use it? Do our troops then have to fight to use a road in the US? Plus doesn't Mitch want to build a toll road from Indy to Evansville then lease it out as soon as it is finished? Seems there are better ways to attract business. When I was last on the Toll Road before it was privatized all the people who worked in the plazas and things didn't seem to happy. Seems like they were worried about losing their jobs.

[cheri1122]

Hawk: while I would in no way defend the bloated monster the UAW has become, I think the blame for the decline of the Big 3 rests squarely on the shoulders of the very same reason that unions were created to begin with: the arrogance, bullying, and greed of management. Historically, it was the tendency of management to cheat, exploit, and endanger their workers that inspired the creation of the unions.
The reason that Honda & Toyota have been able to take over the market, is that their management was smart enough to admit they didn't know it all, when Edward Deming proposed to turn around their reputation for building throwaway junk, after the Big 3 (to whom he took his ideas first) laughed him out of town - THEY didn't need his ideas.
One of Deming's most important points is that the trouble with management is management: an autocratic "because we say so" style is totally counterproductive to the goal of quality - management needs to recognize that the workers may actually have some valuable insight into the work, materials, methods, etc - no one in American management wanted to hear that! He also maintained that quality is an ever improving process, not a goal one can reach, and then relax.
Deming promised to turn the meaning of "Made in Japan" from junk to quality, in three years, and accomplished it in two. So who's laughing now?
That the American managers have made the progress they have in the past couple decades, is a direct result of paying attention, finally, to Edward Deming's principles and practices - but too little, and too late, it seems.
Blaming the union for the incompetence of management is a popular stance, but it doesn't hold up - management created the mess they have to deal with today. (And while you're bemoaning the wages of the assembly workers, give a thought to the 'compensation packages' awarded to the management, who weren't even reasonably competent, much less successful at their jobs, eh?)