VW to build SUV at Tennessee factory

Facility at center of UAW’s efforts to bolster union

Chief executive Martin Winterkorn said of the new SUV CrossBlue: “This vehicle will be a true American car.’’
Chief executive Martin Winterkorn said of the new SUV CrossBlue: “This vehicle will be a true American car.’’

NEW YORK — Volkswagen revealed Monday it would build a sport utility vehicle at its Chattanooga, Tenn., plant, the site of a contentious unionization effort that led the United Automobile Workers last week to take the unusual step of forming a local that is not recognized by the automaker.

The factory, where Volkswagen produces only its Passat, had been competing for the new crossover SUV against a VW plant in Mexico, and that fight became a crucial point in the bitter, public battle over a unionization vote in February.

The production line, to be ready by 2016, will be accompanied by the creation of a research and development center.


The company said it was investing roughly $600 million in Tennessee through 2016 as part of its plans and expected to add about 2,000 jobs.

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At a news conference in Wolfsburg, Germany, on Monday, VW’s chairman, Martin Winterkorn, called the increased production “a strong signal of the long-term commitment of Volkswagen to the region.”

“This vehicle will be a true American car,” he said, “big, attractive and with lots of high tech on board.”

The company hopes the new midsize SUV can help its goal of selling 800,000 vehicles a year in the United States by 2018.

“This vehicle will play a big role in our success here in America,” said Christian Koch, head of VW’s Chattanooga operations.


The stakes are also high for the UAW, which targeted the Chattanooga plant in its latest effort to organize a foreign automaker and which came close to winning in February.

While VW did not contest the union’s efforts and even publicly spoke of its desire to create a German-style works council made up of employees and management, the move provoked fierce criticism from Tennessee politicians who oppose organized labor.

With the competition between the Tennessee and Mexican factories fanning the flames, Tennessee politicians said that state incentives for the plant’s expansion could be at risk if workers voted to unionize, drawing accusations from the UAW of improper outside interference.

In February, workers at the Chattanooga plant narrowly voted, 712 to 626, against joining the UAW.

US Senator Bob Corker, Republican of Tennessee, was one of the most outspoken lawmakers against the unionization effort.


At the time, he said VW officials had told him that the company would add the SUV production line if the workers rejected the union — a statement that provoked an outcry from the UAW.

On Monday, Corker and Governor Bill Haslam of Tennessee, a Republican, were in Germany for the Volkswagen announcement. Both praised the factory workers in Chattanooga.

“I want to thank the wonderful workers,” Corker said, adding that he believed “lives are being changed” as a result of VW’s announcement.

Haslam also praised the factory employees, saying VW would not have made its decision if it “didn’t have confidence in the quality of the workmanship” at the plant.

“It means a lot to us that Volkswagen would double down on their bet on Chattanooga,” he said.

As part of Monday’s agreement, Volkswagen will receive incentives of $166 million toward the plant’s development and $12 million more for worker training.

The UAW, however, is not giving up in Chattanooga: Last week, in a surprise move, it announced it was forming a union local to represent workers that would have voluntary membership and no dues and would not be formally recognized by the automaker.