CHATTANOOGA, Tennessee— Situated on a 1400-acre site that was once a military dynamite storage facility, Volkswagen's new $1 billion manufacturing plant officially opened its doors May 24th. Built primarily to produce the brand-new, North-American 2012 Passat, the 414,000-square-foot plant will initially build 150,000 vehicles per year.
To say that the state of Tennessee welcomed Volkswagen with open arms is probably an understatement. Although Chattanooga offered over $500 million in incentives and even built the plant its own freeway exit, the operation is anticipated to generate an estimated $12 billion in income growth in Tennessee. Initially, the 1,500 available jobs attracted over 85,000 applicants, with more than 9,500 spin-off jobs expected through local support and supply industries. That number should increase as the plant works up to its 250,000-vehicle capacity—with more than 2,500 people directly employed on the production line. Volkswagen was equally happy with the arrangement, as Chattanooga was an attractive choice transportation-wise, with its three highways, two airports and even a waterway. But more importantly, building locally allowed the company to avoid the fluctuating US–European exchange rates and the tariffs placed on imported goods. The US market plays a big part in VW's plan to become the world's largest automaker. By building domestically, the company can keep a close eye on emerging trends, while at the same time, demonstrate its commitment to the North-American market. Volkswagen hopes to triple its US sales, from 360,000 in 2010 to one million vehicles by 2018. The Passat is a key part of that strategy. Although VW had unprecedented success with the compact Jetta, it has been unable to really crack the mid-size market, lagging far behind such core players as the Toyota Camry, Honda Accord and Ford Fusion. But it has been re-engineered in every way to fit the North-American market—it's bigger, more fuel-efficient, less expensive and ergonomically friendlier to domestic tastes. The Chattanooga facility is the first North American-based VW plant since the ill-fated Pennsylvania venture of 1978-1988 that produced the execrable Americanized Rabbit—memorable only for its dismal build quality. The new plant has over $40 million invested in quality check systems alone.
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