Volkswagen Chattanooga Assembly Plant

The Volkswagen Chattanooga Assembly Plant is an automobile assembly plant in Chattanooga, Tennessee, that began production in April 2011, was formally inaugurated in May 2011, and employs approximately 2,000. The plant has a projected annual production of 150,000 cars beginning with a version of the 2012 Volkswagen Passat NMS, tailored to the US market. Production of the Volkswagen Atlas will commence in 2017.RationaleThe local plant, building a localized product, will allow the manufacturer to avoid exchange rate fluctuations and closely monitor US automotive market trends, while reducing vulnerability to extended supply chains. Chattanooga Assembly will manufacture 85% of the Passat's content, an unusually high percentage, and about 85% of the content of the North American Passat will come from North American Free Trade Agreement countries. The company has preliminary plans for a second phase that would increase capacity to 592,000 vehicles a year. Labor costs at the Tennessee plant, including wages and benefits, have been estimated to average $27 an hour, below those of Ford, GM, Chrysler, and other foreign automakers. As of late 2012, cars manufactured at Chattanooga Assembly Plant have been exported to Mexico, Canada, South Korea, and the Middle East.The Chattanooga plant opened 23 years after the closing of the Westmoreland Assembly Plant near New Stanton, Pennsylvania, in 1988. The plant, which operated from 1978–88, had been characterized by labor unrest and suffered from poor networking between Westmoreland and Volkswagen headquarters in Germany.