Chattanooga Times Free Press

A DECADE LATER

VOLKSWAGEN SAID ‘IT’S CHATTANOOG­A’ 10 YEARS AGO

- By MIKE PARE / STAFF WRITER

Ron Pankratz joined Volkswagen in Chattanoog­a nearly 10 years ago and recalls that on his second or third day, people stood in line up to five hours at a job fair in hopes of working for the company.

“Volkswagen was coming back to the U.S.,” said Pankratz, the plant’s senior manager of employee services. He said the automaker took in 30,000 applicatio­ns for 2,000 planned jobs in a matter of weeks.

Today, the German car company marks a decade since it revealed plans to locate its only U.S. production plant in Chattanoog­a. The $1 billion plant announceme­nt sent Chattanoog­a’s stock up as the city became one of fewer than two dozen in the South where cars are assembled.

While the ride hasn’t always been smooth, traversing the deepest recession since the Depression, a pair of rough-and-tumble union elections and a costly global diesel emissions scandal, VW’s investment in the plant was steady.

Now with 3,500 workers producing two vehicles, the company is spending another $340 million to make a five-seat SUV starting next year.

“I want this plant to produce 300,000 cars [annually],” said Antonio Pinto, president and chief executive of VW’s Chattanoog­a operations. “That’s more than double what we are now.”

Volkswagen’s first U.S. assembly plant in 1978 was housed in a former Chrysler factory in Pennsylvan­ia. It provided jobs to more than 5,000 workers but shut down within a decade after VW suffered heavy financial losses.

VW has yet to turn a profit on its U.S. operations since the Chattanoog­a plant opened. But the company last year added the seven-seat Atlas SUV line alongside the Passat sedan it was already producing, sharply boosting its employee head count.

Dean Parker, who started with the Chattanoog­a plant in March 2009 and is now senior director of new products, said he came from Toyota’s San Antonio truck production plant to head the paint shop here.

“VW was always an iconic-type brand,” he said about why he came to the city.

Parker said the early days were stressful, seeing the plant rise out of the ground and aiming to start production in 2011.

“There were a lot of blood, sweat and tears,” he said.

He recalled the excitement when the first Passat was driven off the assembly line in a ceremony before all the plant employees.

“Team members were jumping,” Parker said. “When you see what has been accomplish­ed. …”

WOOING VOLKSWAGEN

However, Volkswagen almost bypassed Chattanoog­a in 2008.

Chattanoog­a and Hamilton County had experience­d defeat just a year or so earlier when they sought a Toyota assembly plant for Enterprise South industrial park, the 6,000-acre former U.S. Army munitions factory that officials bought, cleaned up and pitched to major companies.

Then-Chattanoog­a mayor Ron Littlefiel­d said local officials were stung by losing Toyota to a site near Tupelo, Mississipi. A few months later, some local officials were at the Detroit auto show when they heard about another car company, likely Volkswagen, looking to open a U.S. assembly plant, he said.

“We found the key VW executives and gave them a package of material on Chattanoog­a before we left the show,” Littlefiel­d said. “We started before anyone really was thinking about VW.”

VW officials later narrowed its list of prospects to three: Chattanoog­a, Huntsville, Alabama, and a site in Michigan.

The Michigan site was eliminated first, and Alabama and Tennessee furiously pursued the German automaker. To deflect worries about the Enterprise South tract, local officials set up a camera so VW site selectors could see land being cleared even before there was any agreement to bring the plant to the city.

“You could go to a website and see all the clearing and constructi­on going on,” Littlefiel­d said. “They were impressed by that.”

Former Chattanoog­a mayor Bob Corker and the late Hamilton County mayor Claude Ramsey had worked to ready Enterprise South for developmen­t and helped woo the automaker. Corker, then serving his first term in the U.S. Senate, brokered discussion­s with the German company and others around the dinner table of his Riverview home.

Littlefiel­d said Volkswagen officials kept the final decision under wraps until the end.

“They kept us guessing right to the last,” he said. “We were never totally confident.”

The former mayor said he and Ramsey talked several times daily during the selection process.

“We both pushed all our chips into the center of the table and bet everything we had,” Littlefiel­d said.

VW had made preparatio­ns to hold the plant announceme­nt July 15, 2008, in both Huntsville and Chattanoog­a. The former mayor said he sent a staff member to Huntsville the day before to check on what was going on there. They knew the hotel where VW executives were staying, he said.

“We relaxed when we knew we had the top-ranked people staying in Chattanoog­a,” Littlefiel­d said. “We had spies on the ground over there [in Huntsville].”

The official nod to Chattanoog­a occurred at the Hunter Museum of American Art to a room packed full of boisterous and buoyant celebrants. Littlefiel­d remembered then-Gov. Phil Bredesen commenting that “for the first time in his life he felt like a rock star.”

INCENTIVES PACKAGE

To lure Volkswagen to Chattanoog­a, the incentives were rich.

It’s estimated the plant received pledges of $577.4 million in federal, state and local incentives, still tops in Tennessee and one of the biggest incentive packages ever among U.S. automakers. Early this year, Alabama’s total incentive package to Toyota and Mazda for a planned $1.6 billion assembly plant in Huntsville reportedly topped $800 million.

Charles Wood, the Chattanoog­a Area Chamber of Commerce’s vice president of economic developmen­t, said communitie­s don’t like incentives, but they’re a reality in trying to attract companies such as VW and Toyota.

“We compete every day,” he said. “The communitie­s around us are using incentives.”

Wood said drawing Volkswagen has helped change Chattanoog­a over the decade. Early on, the city and country were in the depths of a recession. Families were going bankrupt and losing their homes, Wood said.

“We had very good timing with VW,” he said.

Also, Wood said, the jobs at VW and its suppliers have “a huge impact at a very personal level” for families who work for those businesses.

“That can’t be lost on us,” he said.

As VW has grown, it has started to mature in the market and its supply chain has grown as well, Wood said. And VW has helped make Chattanoog­a a more internatio­nal city.

IN THE FUTURE

Looking ahead, VW and Chattanoog­a officials see more growth at the plant.

Production will begin within eight months or so on a fiveseat version of the Atlas SUV, according to Pinto. Assembly of a fully redesigned Passat sedan is scheduled to start early next year, he said.

Pinto said the plant still has room for more production.

“We prefer to optimize,” he said, noting that some equipment to produce electric vehicles in the future could be installed if the decision is made to assemble them.

After bringing on about 1,000 employees last year, Pinto said hiring is now flat and the company is filling only the spots of workers who leave.

Nicole Koesling, senior vice president of human resources, said finding qualified employees in today’s low-unemployme­nt environmen­t is challengin­g for VW as well as other manufactur­ers in the region.

“We all have the same problem. I don’t get the skilled workforce I need. We have to invest a lot in training,” said Koesling. The company operates Volkswagen Academy, where employees can learn about making vehicles in a four- to six-week process.

She said that when new workers are needed, the plant may consider direct hiring rather than contract workers because of VW’s better starting wages and benefits.

She urged city leaders to make the area attractive to people thinking of moving here.

Pankratz said he moved to Chattanoog­a from Kentucky almost a decade ago, about three months after the plant announceme­nt, to join the fledgling human resources staff.

When hiring began, Pankratz said, the staff started by looking in ZIP Codes around the plant, then in Hamilton County, before branching out to Georgia or Alabama.

Wood said VW is “still in its infancy” despite hitting the 10-year mark. He said the automaker has been in Puebla, Mexico, for four decades.

The Chamber official said it’s key that Hamilton County continues to focus on filling the jobs pipeline with an educated, trained workforce.

“How do we make sure that the 3,000 kids graduating every year have the skill sets to go to college or into a career?” Wood asked.

He said the Future Ready Institutes, a partnershi­p within the county to prepare students for post-secondary options, will play a major role.

Also, Wood said, Chattanoog­a is attracting people in the 18-to35-year-old age group who are coming here for college or to get a job. In addition, they like Chattanoog­a’s renewed downtown, he said.

“Now we’re grabbing kids from all over the country,” Wood said. “That’s a powerful statement.”

Contact Mike Pare at mpare@timesfreep­ress.com or 423-757-6318. Follow him on Twitter @MikePareTF­P.

 ?? STAFF FILE PHOTOS ?? From plant site planning and constructi­on to product unveiling and manufactur­ing, the collage above includes moments from Volkswagen Chattanoog­a’s 10-year history in the Scenic City as captured by Times Free Press photograph­ers.
STAFF FILE PHOTOS From plant site planning and constructi­on to product unveiling and manufactur­ing, the collage above includes moments from Volkswagen Chattanoog­a’s 10-year history in the Scenic City as captured by Times Free Press photograph­ers.
 ?? STAFF FILE PHOTO BY ERIN O. SMITH ?? Volkswagen employees work on vehicles in August 2017 at the Volkswagen plant.
STAFF FILE PHOTO BY ERIN O. SMITH Volkswagen employees work on vehicles in August 2017 at the Volkswagen plant.

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