CHATTANOOGA – As state and local officials celebrated Volkswagen's decision to expand the company's Chattanooga plant to assemble a new SUV, officials of the German automaker suggested that there's more news ahead.
During a homespun ceremony at the Hunter Museum downtown Tuesday afternoon, where VW officials originally announced exactly six years ago plans to build its U.S. plant here, Volkswagen's top U.S. executive said the facility is under consideration to get even more vehicles. The plant, which opened in 2011, now makes only the Passat sedan.
"More derivative models potentially could be built here," Volkswagen Group of America President and CEO Michael Horn told a group of about 400 gathered for the ceremony.
"This is in the thinking stage," he said. "But I think there is more to come."
Minutes before, Thomas Ulbrich, a member of Volkswagen's U.S. Board of Management made a similar comment:
"Watch out for more good news," he said.
The automaker announced from its German headquarters in Wolfsburg on Monday that it would invest $600 million in the Chattanooga plant expansion to make a new seven-passenger crossover utility vehicle, adding 2,000 jobs to the 2,700 already employed at the plant.
That move had been expected for months, although there was some union and political drama in the meantime. But a surprise in Monday's announcement was the news that Volkswagen also will establish a U.S. research and development center in Chattanooga, employing 200 engineers.
Gov. Bill Haslam, on hand for the celebration, said the research center opens a new chapter in Tennessee's history with the auto industry.
"Nowhere in the South has an automaker established a research and development center," he said. "We're incredibly grateful to Volkswagen. There are cities and communities all over the country that would like to be sitting where Chattanooga is today."
He also credited U.S. Sen. Bob Corker, R-Tenn., who is a former Chattanooga mayor, for taking a lead role in bringing Volkswagen to Chattanooga in 2008, and for this week's expansion.
"We would not be standing here today without Bob Corker, and that's the truth," Haslam said.
Corker, also in attendance along with fellow Sen. Lamar Alexander, R-Tenn., thanked Volkswagen for "making this tremendous investment in my hometown."
It was a great victory for the city, which had "struggled to bring back the manufacturing it lost decades ago," Corker said.
Corker said the deal with Volkswagen to provide state and local incentives for the expansion was made June 13 at the governor's residence in Nashville.
He credited the "Chattanooga difference," including the city's beautiful setting on the Tennessee River, as the deciding factor in Volkswagen's original decision to build here, and the latest choice of the city for the plant expansion.
He also gave credit to Alexander for creating the business environment that began attracting automakers to Tennessee. Alexander was governor when Nissan and General Motors chose to build auto assembly plants in the state.
Haslam said after the ceremony that state and local incentives promised to Volkswagen for the plant expansion totaled nearly $230 million, including $165 million in state tax breaks, $12 million for training of personnel, and $52.5 from the Chattanooga and Hamilton County governments, including land.
The total was about $70 million less than the $300 million package that had earlier been discussed with Volkswagen. But Haslam said that number was never put into an actual offer.
Although the incentives deal was approved by "handshakes" at the June event in Nashville, it wasn't until last Friday that Volkswagen's U.S. Board of Management made the final decision to give Chattanooga the expansion project, the automaker said.
Hamilton County schools will get an additional $1.5 million annually in taxes from Volkswagen under the deal, adding to the $2.8 million VW is already paying, officials said.
Chattanooga Mayor Andy Berke said the city and county's part of the incentives package still must be approved by the city council and county commission "by July 29."
"We will be considering these proposals very quickly," he said.
Volkswagen said production of the new SUV, which will be based on the automaker's CrossBlue concept, will begin in late 2016.