USA TODAY US Edition
Second time’s the charm
Maker put lessons learned to work at new Passat plant
Volkswagen’s second U.S. plant was built with lessons from its first,
CHATTANOOGA, Tenn. – Volkswagen was the first foreign automaker to open an assembly plant in the U.S., but that one flopped. Now the German automaker is trying again — more than 30 years later — insisting it learned its painful, but necessary, lessons.
The new VW factory here is rolling out 600 Passat midsize sedans each day, hiring more workers to boost output. It could be the roaring success VW missed by a mile when it took over an unfinished Chrysler plant in Westmoreland County, Pa., in 1978. VW closed it in 1988, giving up its toehold and slipping into oblivion like the lost Roanoke outpost in colonial Virginia.
What’s different this time? Everything.
The first time, VW says in hindsight, it was the wrong car, wrong time, wrong people. Now, the car company says, it has exactly the right car in the enlarged, Americanized Passat, hitting at a time when the auto market is rebounding.
“We looked at our own experience and we looked at others’ experiences, and then . . . we found our own way,” says Frank Fischer, CEO of VW’S Chattanooga operations.
At Westmoreland, VW was dipping its toe into the American waters, thinking of it merely as a place to assemble parts from elsewhere, rather than as a fullfledged manufacturer.
But here, it has done a $1 billion dive, committing to the whole manufacturing chain, not just putting together a kit.
Fischer says VW looked at its “four pillars” for success: product, plant design, parts and people. “For each of these pillars, we developed our own approach, taking from what we have experienced at West- moreland, what other companies have done, and what we felt from our perspective we should do.”
The German automaker is unlikely to catch up to the production footprint of the big Japanese makers that followed VW’S efforts, starting with Honda in Marysville, Ohio, in 1982. But by building high-volume, mainstream cars in the U.S. for the American market, it has escaped the profit-squeezing effects of dealing in two currencies: incurring engineering, development and manufacturing costs in strong euros, and generating sales revenue in weak dollars.
While what happened at the Roanoke colony remains a mystery, what happened at Westmoreland is not: All four VW pillars collapsed:
-Prod-ct. The Rabbit — called Golf nowadays — had quality issues, and “we Americanized the vehicle in a way that our customers didn’t like,” Fischer says.
-Plant. Instead of being built from scratch to VW’S needs, it was an unused Chrysler plant with a structure in place.
-People. VW hired an ex-gm official, and “VW leadership’s perception at that time was, ‘They know how to build cars, so they’ll be able to launch a factory and build cars here,’ ” Fischer says. “There was some antagonism between the production guys, maybe even the R&D guys, at headquarters and in the plant here. They didn’t work very well together.”
-Parts. “The final burden came when the dollar got pretty weak,” Fischer says, “and the level of parts that had to be imported was much, much higher than in (Chattanooga). This was why our project had a very strong focus in localizing parts.”
VW parts suppliers on the factory grounds employ 600. A high percentage of parts come from the U.S., making VW less susceptible to currency swings. The right city for the job
When VW announced in 2008 that it was returning to the U.S., it was determined not to make the same mistakes. Chattanooga and Hamilton County, Tenn., officials were eager to find an automaker to help spur the rebound of this industrial “Rust Belt city of the South.”
“Walter Cronkite told the world that we were the dirtiest city in America 40 years ago,” says Mayor Ron Littlefield. “From a quality-of-life sense, we feel like we’ve done a pretty good job of building the city back. The thing it was lacking was a manufacturing heart.”
In 2006, the last major foundries had closed, idling hundreds of workers. “People thought that was the end of heavy industry in Chattanooga,” Littlefield says.
Construction also had dried up. “Before VW showed up, I spent the last 25 years in the building industry in this area, and it got pretty bad,” said Dale Cross, a team leader at VW’S Chattanooga plant. “A lot of people were looking for work, and I was one of them.”
But the city and county had an ace up their sleeves: a prime site with lots of open land and significant transportation access. Railroad tracks are nearby; the airport is a short distance away, and Interstate 75 — “one of the Main Streets of America,” says Littlefield — runs by.
Toyota gave it a look, but picked a site in Mississippi instead.
City and county officials approached Volkswagen at the 2008 Detroit auto show, and that ignited a “fast and furious process,” Littlefield says. By the middle of 2008, the decision was made.
For Volkswagen, getting the pillars right this time was critical. When it came to product, plans for the new U.S. Passat already were underway. VW is pleased, and a little surprised, at the response it has drawn, in sales and in awards, such as Cars.com’s Best of 2012 award and Motor Trend’s Car of the Year.
“Frankly, the success we are having now, nobody really expected,” Fischer says.
The Westmoreland experience clearly sobered VW. “The worst thing you can do in your life is to be arrogant and ignore facts,” Fischer says.