- The Washington Times - Wednesday, July 16, 2008

Volkswagen announced Tuesday it will build a $1 billion production plant in Chattanooga, Tenn., where it plans to manufacture cars designed for North American consumers.

The new facility will be the German company’s first plant in the U.S. since 1988, when it pulled out of Westmoreland, Pa., after years of sluggish sales. Tennessee was one of three states VW was evaluating for the plant. The others were Michigan and Alabama.

VW said it received an “attractive, comprehensive” package of economic incentives from Gov. Phil Bredesen, a Democrat, and the Tennessee Department of Economic and Community Development.

Matt Kisber, commissioner of the department, said the state offered VW roads, railroad access, utilities and other site preparation services. The incentives hinge on job creation and capital investment, he said.

VW, which was drawn to Tennessee because of its large pool of skilled labor, said its plant will bring about 2,000 jobs to Chattanooga. Some of those jobs will go to workers from neighboring Georgia and Alabama.

VW plans to build its assembly plant 12 miles northeast of downtown Chattanooga on a 1,350-acre site adjacent to Interstate 75. It is owned by Hamilton County and the city of Chattanooga.

The factory is expected to produce up to 150,000 vehicles a year, including a new midsize sedan geared toward the North American market. Production is scheduled to begin in early 2011.

The move to manufacture in the U.S. represents a new approach to North America, where VW has not been profitable since 2002.

“The U.S. market is an important part of our volume strategy and we are now very resolutely accessing that market,” said Martin Winterkorn, chief executive officer of VW AG. “Volkswagen will be extremely active there. This plant represents a milestone in Volkswagen´s growth strategy.”

Mr. Winterkorn hopes to triple U.S. sales to 1 million vehicles by 2018.

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