By G. Chambers Williams III | The Tennessean
Volkswagen's Chattanooga plant is competing with an Audi plant being built in Mexico to become the production site for a new midsize crossover utility vehicle that the German automaker plans for the American market, the company's Tennessee CEO said Wednesday.
Audi, one of Volkswagen's premium brands, earlier this year chose Mexico over Chattanooga as the location of its first North American manufacturing facility, and now it could also be chosen over Tennessee to produce the VW crossover.
But first, Volkswagen has to make a decision as to whether it will even produce the new model, which would be based on the CrossBlue concept vehicle that the world's third-largest automaker introduced at the Detroit auto show in January, said Chattanooga VW CEO Frank Fischer, speaking at a breakfast meeting of the Nashville Area Chamber of Commerce.
Both decisions should come simultaneously sometime this year, Fischer said, but exactly when is not known.
"It could be the first half of the year or the second half," he said. "But I have been known to be wrong."
In the meantime, officials at the Chattanooga plant, which opened in 2011, "are really fighting hard to get this product," Fischer said.
Among the criteria the Wolfsburg, Germany-based Volkswagen's directors will use in choosing the production site are labor costs, the readiness of the facility itself, the presence of nearby parts suppliers, transportation costs, and, in the case of the Chattanooga plant, the effect the new model might have on production of the Passat sedan, which is the only vehicle made there now.
"One key will be getting more suppliers into our area," Fischer said, something that Volkswagen already is working on.
In Chattanooga's favor: Tennessee has a "good business environment except for the gun bill," Fischer said, referring to a measure passed by the General Assembly last week that would allow people to keep guns in their parked cars in most parking lots statewide, even those on private property such as VW's employee lots. Volkswagen opposed the bill.
Among Tennessee and Chattanooga's other strong points are its "great Southern hospitality," Fischer said. "We are living in an environment where we have been made welcome."
Adding the new crossover would mean the Chattanooga plant would have to expand and hire more workers. It began operations in 2011 with 2,000 direct employees working on two shifts, but hired 1,000 more last year when a third shift was added to built the fast-selling Passat.
Volkswagen has enjoyed its time in Chattanooga, except for a surprise hailstorm in March 2012 that damaged hundreds of new Passats sitting in uncovered parking lots outside the plant, Fischer said.
Chattanooga officials "had promised us there would be no hail," he quipped.
After that storm, the company put up awnings over all of the parking areas, Fischer said, adding that it was a "lesson learned from Nissan," which has similar covering over new vehicles at its Smyrna plant.
"Sometimes your competitors are extremely smart," Fischer said.
Volkswagen sold 152,546 of the Passat sedans made in Chattanooga in 2012, which exceeded its target of 145,000 for the year, Fischer said.
Of those, 20,000 were exported to the Canada, Mexico, the Mideast, and South Korea; that totaled $400 million in exports from the Chattanooga plant for the year, he said.
Contact Tennessean automotive writer G. Chambers Williams III at 615-259-8076 or email@example.com.