Volkswagen is announcing this morning that it will add production of a new crossover utility vehicle to its Chattanooga plant, a move that will bring millions in new investment and hundreds of new jobs.
CEO Martin Winterkorn made announcement at 7 a.m. Central in a broadcast that will air live from the company's headquarters in Wolfsburg, Germany and from the automaker's Chattanooga plant.
"As we set the stage for the next phase of growth, we plan to commit more than $7 billion to the region by 2018," VW said in a statement. "These investments will enable Volkswagen to bring attractive products and advanced production systems to market, including a future vehicle that is central to our U.S. strategy."
The new vehicle, based on the CrossBlue concept midsize crossover that Volkswagen displayed at last year's Detroit auto show, would bring an estimated 1,350 new jobs to the plant, which opened in 2011. Volkswagen already directly employs about 1,500 there, and about 2,700 are employed altogether by VW and its associated suppliers.
Now, the plant makes only the Passat midsize sedan, whose sales have been off this year.
The sprawling plant, built in north Chattanooga on the site of the former Volunteer Army Ammunition Plant, has a current capacity of 150,000 vehicles a year. The expansion would increase that to allow for production of the new utility vehicle, which would have seating capacity of up to seven people.
Today's announcement follows months of speculation about whether the new line would be built in Chattanooga or at one of the automaker's plants in Mexico.
The decision also comes after a tense labor vote in February in which the UAW lost a narrow vote to represent workers at the plant. The union expressed frustration about outside influence, especially from Republican officials such as Gov. Bill Haslam and U.S. Sen. Bob Corker.
VW wants to establish a German-style works council at the plant, but cannot do so under U.S. labor law until the workers are represented by a union.
Last winter, the state of Tennessee had offered up to $300 million in incentives, but that offer expired during the labor debate.
Following that vote, the state and company officials reopened discussions about incentives.
Then last week, the UAW announced that it was creating a local union in Chattanooga and inviting workers to join. Union officials said they were confident that VW would recognize the union once it had more than 50 percent of workers join the group.
For its part, VW said it had no formal agreement with the union.