Record half-billion dollar bid may have swayed Volkswagen to Chattanooga
Tom Baxter
Editor, Southern Political Report
July 18, 2008 —
There were a lot of surprised experts this week when Volkwagen announced it would locate its coveted new 2,000-job automobile assembly plant in Chattanooga. For weeks before the announcement, auto industry observers were reading the tea leaves as favoring a TVA supersite in Alabama. Last week, the German automaker suddenly seemed to shift its focus to another Alabama site in Huntsville according to Mike Randle, editor and publisher of Southern Business and Development magazine and the www.southernautocorridor.com website.And then, confounding all the conventional wisdom, Volkswagen of America President Stefan Jacoby announced Tuesday that the plant, which will open in 2011, will be built in Chattanooga. This has led to a lot of speculation about what might have turned things in Chattanooga’s favor. In a story released before the announcement, the Mobile Press-Register quoted unnamed state development sources as saying the state was “unsettled” by rumors Volkswagen had struck a deal with the United Auto Workers to allow the future plant to be organized, something that would be counter to the state’s reputation as a cheap-labor, right-to-work state. Randle dismissed the idea that this led Alabama to back off in the negotiations. “They wanted this bad. They really did. I think they got outbid right at the tail end,” he said. When all the details of Tennessee’s offer are made public, he said, it’s likely to be around $500 million, the largest ante any state has ever put up to attract an auto maker. Alabama Gov. Bob Riley, questioned while attending an air show in London Thursday, seemed to confirm that version of the deal. “There comes a point in an auction where you don’t want to be the one with your hand in the air. We hit that point,” Riley told the Press-Register. While he doesn’t think the UAW caused the state to back off, Randle does entertain the possibility that Mercedes, which operates a plant outside Birmingham, may have been cool to the idea of another German manufacturer in the state. If that were the case, Randle said, the state might have backed off. Randle said Chattanooga’s image as a city which has cleaned up its decaying industrial sites and gone green made a good “cultural fit” with Volkswagen, and that’s what Jacoby emphasized this week, noting the enthusiasm of city officials who had city and county crews working 18-hour days to clean up the proposed site. There may still be a piece of the action for Alabama, Randle said, noting Volkswagen officials didn’t say anything this week about a required new engine assembly plant, which according to earlier reports they wanted to build in a different location from the central plant. The Huntsville site which came into play in the final days of negotiations is crossed by a rail line which goes straight to the site where the Chattanooga plant will be built. The plant and its spinoffs are expected to generate about 10,000 jobs in Tennessee, Alabama and Georgia. One question, which we haven’t seen raised elsewhere: How’s this going to affect the already turgid traffic flow on I-75 south of Chattanooga?
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