Volkswagen’s New Facility Featured in the Chicago Tribune

Volkswagen, a Gray Construction customer, was featured in the Chicago Tribune regarding their new automotive facility which will manufacture the all-new 2012 Passat sedan.

Gray has worked with Volkswagen since 2009 with the design and construction of the Volkswagen Supplier Park, VW’s first design-build project, where VW suppliers are located in order to assemble and sequence parts for the new sedan. Other Gray projects on the Volkswagen campus include: a Recycle Center, Social Kitchens, Paint Kitchens, Arrival Building, Pedestrian Bridge, Bridge Guardhouse and MDO.

If you have automotive plant construction needs, please contact Chris Allen, Vice President, Automotive Market at callen@gray.com.

Please see below for the article that appeared in the Chicago Tribune on June 5, 2011.

 

Volkswagen has new plant and new focus; Automaker seeks to rebuild brand with Passat for U.S.

By JERRY HIRSCH, TRIBUNE NEWSPAPERS

Volkswagen, whose cars have been known to have nagging reliability problems, is hoping Passat sedans rolling out of its new $1 billion factory in Chattanooga, Tenn., won’t need a lift from the city’s historic hallmark — tow trucks.

About a century after claiming fame as the wrecker’s birthplace, Chattanooga is again in the automotive spotlight as VW looks to regain traction in the U.S.

“We know what we have to do here,” said Hans-Herbert Jagla, who heads human resources at the factory. “Everyone should know that the customer is expecting a perfect car.”

VW, the world’s third-largest automaker, is looking to triple U.S. sales the next seven years. But to reach that goal, it needs to overcome a troubled history. Its previous effort to manufacture cars in the U.S. was an admitted debacle. Quality problems and slumping sales prompted VW to close its first U.S. factory, in Westmoreland County in Pennsylvania, more than two decades ago.

It was a setback for the company that brought the iconic Beetle across the Atlantic Ocean, making VW America’s first import darling.

VW has recovered some ground in recent years. It sold 256,830 vehicles last year, a 20 percent gain from 2009, according to Autodata Corp., but that was about half what it sold during the boom years of the 1970s. Sales are up 17 percent through the first four months of this year.

VW continues to be plagued by quality problems, which is why Jagla said it has been stressing high production standards to the 1,700 workers at the factory. They are critical to the automaker’s growth plan, he said.

The VW nameplate ranked 29th of 34 brands in the J.D. Power and Associates 2011 reliability rankings of cars after three years of ownership and 31st of 33 on Power’s 2010 initial quality survey of 3-month-old vehicles.

“We have really tried to draw our lessons from the Westmoreland experience,” said Frank Fischer, chief executive of Volkswagen Group of America, Chattanooga Operations.

The plant, built on 1,400 acres at the site of a former explosives factory, opened the last week of May with a different management structure than at VW’s previous factory.

Managers of the failed Pennsylvania factory closeted themselves in Detroit and were rarely present at the plant. This time, VW pulled in more than 200 company experts from operations around the world, including its high-end Audi and Bentley divisions, to work at the factory.

The Passat built in Chattanooga was designed specifically for the U.S. market and won’t be sold in Europe. It has an additional 3 inches of rear-seat room. It also comes standard with options such as Bluetooth and dual-zone climate control. The base European engine produces 122 horsepower, contrasted with the U.S. model, which starts at 170, providing the type of merging and freeway acceleration American drivers often equate with a sense of safety and security.

The car, equipped with a manual transmission, will start about $20,000. Automatic transmission models and versions with larger engines, including a turbocharged diesel with expected highway fuel economy of 43 mpg and a driving range of 800 miles, will start about $26,000.

VW needs the vehicle to be a success. An earlier Passat was once the automaker’s star performer, with more than 96,000 sold in 2002 and accounting for more than 28 percent of the company’s sales volume, according to Edmunds.com. Sales dwindled to fewer than 12,500 last year.

Initial plans call for the factory to produce about 56,000 vehicles during its first year.

Growing volume will be key for VW to meet its target for U.S. sales — that includes its Audi division — of more than 1 million vehicles per year by 2018. It wants to reach a U.S. market share of 6 percent in that time frame. The company, including Audi, has annual sales of 360,179, accounting for 3 percent of U.S. auto sales.

“This is VW’s first run at making cars tailored to the American tastes and at parity in price and size with the Toyota Camry and Honda Accord, the cars that dominate that segment,” said Bill Visnic with Edmunds.com.

Early reviews of the Passat credit VW for increasing the size and reducing the price from previous versions. But Visnic said its conservative styling won’t draw much attention.

“The Passat is not a breakout car for VW, and somewhere along the line they are going to need some breakout products if they are going to reach those sales goals,” he said.

VW sees building cars in the U.S. as an important strategy. The new factory has the capacity to produce 150,000 vehicles a year, and there’s room to expand.

Reliance on parts imported from Europe and unfavorable currency exchange rates contributed to the previous factory’s demise, Fischer said. Now, about 85 percent of American Passat content will come from North American Free Trade Agreement countries, eliminating much of the currency risk, he said.

The plant may also benefit from its location along the southern tier of a corridor known as auto alley for its concentration of car factories. It has good highway connections to a Mercedes-Benz plant in Alabama and a BMW factory in South Carolina. Fischer said the German automakers tend to share suppliers, including a company that stamps sheet steel into car body panels.

“An auto plant is the holy grail of economic development,” Chattanooga Mayor Ron Littlefield said. “This is a wave that will carry us forward for a decade.”