VW still have eye on Huntsville Auto plant
By: E. Thomas Wood, tom.wood@nashvillepost.com
Apparently, more than $500 million in state incentives is not enough to assure that Volkswagen AG will choose Tennessee sites for all of its new vehicle production in the United States.
One of the automaker’s chief decision-makers says it may still locate a component factory in Huntsville, Ala., which lost out when VW chose Chattanooga in July as the location for its U.S. manufacturing plant.
Automobilwoche, a Crain Communications trade publication in Germany, carried remarks yesterday by Jochem Heizmann, group production director at VW and a member of the company’s management board, who was speaking at a Moscow auto show.
“Huntsville will always be an option for the VW Group for future projects in the U.S.,” Heizmann said. “And so too for a new component factory.”
Stressing that no preliminary decision had yet been made in favor of Huntsville, Heizmann told the publication: “As always, we will thoroughly examine several options for the components plant.”
The German automaker picked Tennessee over Alabama and Michigan and will invest close to $1 billion in the plant. It is expected to employ about 2,000 people and to begin operations in early 2011.
Last week, state economic development officials revealed that Tennessee promised VW $577 million in financial incentives as it bid for the investment. To justify the expense, officials cited an impact study by the Center for Business and Economic Research at the University of Tennessee.
The study said the VW project should boost state and local tax revenue by $1.4 billion and create more than 11,400 jobs over the next three decades. But that analysis included the economic impact of suppliers feeding the plant.
It did not explicitly assume that VW would locate any ancillary production facilities in Tennessee. And it conceded the possibility “that some of the supplier benefits will accrue to Georgia and Alabama because of the close geographic proximity of the plant to these states.”
However, the analysis did state: “We expect a significant majority of the suppliers to locate in Tennessee because of Volkswagen’s specified intent to have suppliers at the site, the specific tax benefits that accrue to suppliers in Tennessee, good transportation linkages within Tennessee, and the state’s lack of an income tax.”
When asked about Heizmann’s comments, Department of Economic and Community Development spokesman Mark Drury noted that Automobilwoche was the publication that put out a confidentially sourced report in early July saying Volkswagen’s management favored Huntsville as the site.
A few days later, the automaker announced the choice of Chattanooga.
Matt Kisber, Tennessee’s commissioner of Department of Economic and Community Development, released the following statement this afternoon in response to the reported comments of a senior Volkswagen official:
“Our contacts with have been and remain very positive about the potential for growth related to this project. Tennessee has demonstrated its ability to successfully compete for investment, and the idea that we will continue to do so shouldn’t come as a shock to anyone. The state of Tennessee continues to believe the upside potential of the Volkswagen project remains very, very strong.”
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