CHATTANOOGA — Car sales are at rock bottom, the Big Three U.S. automakers are flirting with bankruptcy, and even Japan's Toyota will post an operating loss for 2008.
But as dismal as the economic news is for the auto industry, Germany's Volkswagen called Chattanooga and Hamilton County officials together Monday to reaffirm its commitment to open a new $1 billion assembly plant here in 2011, with no delays or second thoughts.
Unlike many automakers, Volkswagen remained profitable last year.
"We have a clear commitment to Chattanooga," Volkswagen Chattanooga Operations Chief Executive Frank Fischer said at a press conference at a downtown hotel. He reiterated the automaker's position later as the group visited the plant site, the Enterprise South Industrial Park about 12 miles northeast of downtown.
There, grading and site preparation have been under way for several months, and construction of the first of the plant's buildings, the $30 million paint shop, will begin with foundation work later this month, and pouring of concrete by the middle of February, Fischer said.
Hamilton County Mayor Claude Ramsey said he's counting his blessings now because Toyota passed over Chattanooga, leaving the Enterprise South site still available when Volkswagen came looking for a location for its new U.S. plant in November 2007.
"Needless to say, I was devastated when I heard that Toyota wasn't coming," he said. "But it has worked out for the best for us."
'We're all excited'Volkswagen has projected that the plant here will have about 2,000 employees, with another 9,500 related jobs coming eventually, including those at auto supply manufacturing plants that may sprout nearby.
VW plans to have 30 percent of its Chattanooga-manufactured vehicles powered by diesel, and Fischer said he expects gas prices "will go up again."
Production at the VW plant is projected to have an annual capacity of 150,000 vehicles. VW has kept the design of the car to be built at the plant under wraps, describing it by a code name — NMS — for new midsize sedan. This will be Volkswagen's first U.S. manufacturing facility since it closed an assembly operation in Pennsylvania in 1988.
Volkswagen has about 100 full-time employees at its Chattanooga offices already, and it has been inundated with job applications from other potential workers.
Among those hoping for an opportunity to build the new midsize sedan the plant will produce is Aaron Pickett, 44, a shift manager at a Krystal fast-food restaurant near the plant site.
"We're all excited about Volkswagen coming here, and I've been out to the site already to look it over," Pickett said Monday. "Besides all of the good jobs, I think Volkswagen is going to bring a lot to Chattanooga and will put us on the map."
And while Pickett said he enjoys working at Krystal, he also thinks that a job offer from Volkswagen would be hard to turn down.
"I don't see many people retiring from Krystal," he said. "So it's worth a try to get a job at that plant."
Building done this yearDuring a news conference Sunday at the Detroit auto show, Volkswagen Group Chairman Martin Winterkorn sought to reassure the automotive media that the Chattanooga plant would continue as scheduled. He said that people continue to ask him, "Why invest $1 billion in a U.S. plant at this time?"
"The automobile will always be an essential part of the American way of life," he said. "We believe in a promising future for Volkswagen in the great car nation that is America."
Also on Monday, Volkswagen unveiled the first three-dimensional artist's rendering of the Chattanooga plant, which includes a separate training center, the paint shop, a body shop and the assembly facility.
Fischer said construction of the buildings should be finished this year so the manufacturing equipment can be installed during 2010. "Procurement of the equipment has already begun," he said.
Combined with its Audi luxury brand, VW expects total U.S. sales to surpass 1 million cars a year by 2018. On Monday, Fischer said Volkswagen's managers have "had some discussions" with Audi's managers about assembling an Audi vehicle at the Chattanooga plant but no decision will be made until after the plant is up and running.
He also said any other new vehicle that Volkswagen might introduce in the U.S. market would be built in Chattanooga, as well. The company earlier suggested that a new midsize crossover utility vehicle, based on the chassis of the new sedan, might be the second product for the plant.
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