VW chooses Tennessee

There are mixed emotions in the automotive industry today as German automaker Volkswagen announces a new factory in Tennessee, and General Motors launches a cost cutting plan involving the loss of thousands of jobs.  ┬á VW has opted for a site in Chattanooga, Tennessee in preference to possible locations in Alabama and Michigan. The plant is expected to be worth $1 billion to the local economy. "This project will have a significant impact on the economy of Tennessee and the region for decades to come," said Tennessee Governor Phil Bredesen. ┬á┬á Currency fluctuations, with the euro at an all time high against the dollar, have made it less attractive to make vehicles in Europe for export to North America. VW closed its last US plant, in Pennsylvania, in 1988. ┬á┬á "This is a significant step forward in achieving our goals in the US market and a clear sign of VW's commitment to the North American consumer," said Stefan Jacoby, president of Volkswagen's North American business. ┬á┬á The new facility will eventually have an annual capacity of 150,000 vehicles and will be used to build a new midsized vehicle for the US market. Expected to begin production in 2011, the new plant will employ 2,000 people directly as well as offering business to hundreds of suppliers. ┬á┬á VW said its decision was based on a range of factors including financial incentives offered by the state linked to job creation, investment and training. ┬á┬á VW's decision, however, is bitterly disappointing for Michigan, which is suffering from drastic job cuts at GM and Ford.   ┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *