Volkswagen announced late last month that it has narrowed down its possible U.S. plant locations to Michigan, Tennessee and Alabama, but it looks as though one state might have the upper hand. If VW’s decision comes down to incentives, Alabama will likely win the U.S. assembly plant.
With Michigan the long shot of the trio, VW’s decision will likely be between Tennessee and Alabama. Both states have a history of luring automakers, but Alabama has the advantage when it comes to offering companies incentives.
Alabama landed its first auto plant in 1993 — a Mercedes-Benz facility in Tuscaloosa — and has since acquired a Honda and Hyundai plant, along with a Toyota engine plant. However, those automakers didn’t just pick Alabama out of a hat — the state offered Mercedes, Honda and Hyundai a combined $664.5 million in public funds, according to the Tennessean.
Just north of Alabama, Nissan and General Motors call Tennessee home. Nissan opened its Smyrna plant in 1980 followed by GM’s Saturn plant in Spring Hill in 1985. To lure those two projects, Tennessee only offered a combined $95.6 million.
However, Tennessee most recently gave Nissan $197 million in incentives to move its U.S. headquarters from Los Angeles to Nashville and also pledged $35 million to retrain workers at GM’s former Saturn plant. The Spring Hill facility closed in March 2007, but will soon reopen to build the Chevrolet Traverse crossover.
But Alabama isn’t one to shy down from a major investment to lure large companies. In 2007, the state gave German steel maker Thyssen-Krupp $811 million to setup shop just outside of Mobile.
“Volkswagen has not yet told us what they need” in the way of incentives, Development Office Director Neal Wade said. “But when they do, we’re ready to give them what they ask for.”
So while Alabama has a clear advantage in incentives, Tennessee might be able to fight back with other factors. “Incentives are usually not the driving factor,” University of Tennessee economist Bill Fox told the Tennessean. “Companies usually focus more on such issues as the available labor force, transportation access and other factors related to the specific site.”
VW’s proposed site in Chattanooga was once home to the Volunteer Army Ammunition Plant, so Tennessee might actually have the advantage in available work force. In addition, Tennessee also offers lower taxes than Alabama.
It is expected that VW will announce a location for its U.S. plant by July.
05/19, 7:20 PM
posted by:
LaCaLover
AS long as they are not building Chinese VWs for the American market it will be cool.
05/19, 7:31 PM
posted by:
olds307
I wonder if they’ll get Comcast cable.
05/19, 8:46 PM
posted by:
TOZO
Alabama? Not so fast, LLN. Michlinton is still in the race.
05/19, 9:11 PM
posted by:
El Aleman
If they would move to Michigan that could send a good signal to the American public, something VW probably needs right now.. After all, they would be investing in a place where everybody else is backing out.. And there should be enough workforce available, like the billions of layed-off workers..
On the other hand.. There are a few reasons the Big Three are leaving the Rust Belt to rot..
Anyway low taxes and workforce sound good, I think it’s gonna be Tennessee..
05/19, 9:21 PM
posted by:
autonut
Didn’t Toyota stated that they could not find sign of intelligent life in Alabama and building RAV-4 factory in Canada? I recall Alabama was pretty pissed off, but could express itself due to lack of communications skills. Well, VW does not intent to compete with Toyota on quality or anybody else for that matter, so be it Alabama.
05/19, 9:41 PM
posted by:
Impulsive
Just send it all to Ontario … we are the best at assembly. Sure, with the US dollar dropping like 1115 to my sausage, assembly costs are cheaper down south, but really … quality trumps cost nowadays.
05/19, 9:47 PM
posted by:
howsmydriving
As between a car built in Alabama versus a car built in Mexico, I think I’d prefer.– never mind.
05/19, 10:05 PM
posted by:
hateful83
Incentives? Wow, I must admit I didn’t realize it worked like this. What a win win situation for these companies, taking bribes (tax money) just to put their plant in a certain state. I should’ve known better.
05/19, 10:15 PM
posted by:
autonut
Incentives are usually tax breaks. Auto companies don’t pay state taxes for 20-30 years. State realizes taxes on salaried employees so it works to their advantage. I think most large manufacturing or resource intensive operations get some tax breaks: why companies moving out of NYC to NJ and even more west and south? There is reason economists hate taxes.
05/19, 11:00 PM
posted by:
olds307
Eagle Electric, aka Cooper Wiring Devices, was a major manufacturer in my part of town, they ran several factories within a 20 block radius, and the City gave them numerous tax breaks over the years… guess where they make their stuff now….China!
05/19, 11:01 PM
posted by:
doctrsnoop
Zero percent chance of coming to Michigan. These foreign companies don’t want to be anywhere near UAW folks.
05/20, 12:21 AM
posted by:
Carwatcher
Great. Now the auto workers will have a place to go when the big three goes out of buisness.
05/20, 9:56 AM
posted by:
TMSBrad
The Mercedes-Benz plant is in Vance, just outside of Tuscaloosa. It’s 150 miles from Huntsville.
05/20, 10:16 AM
posted by:
moto-racer13
If VW wants to build cars in Northamerica, then it would be much better for them to build it in Canada, atleast the quality will be higher. I wouldn’t want to buy a car built by hicks in Alabama! However, VW has been building cars in Mexico for a long time now, so maybe VW just feels more comfortable if they built another plant in a country they are already familiar with.
05/20, 11:40 AM
posted by:
xyunya
You don’t PhD to screw nuts together
05/20, 1:39 PM
posted by:
DialM4Speed
Why not go to Kentucky I’m sure if you go off in the mountains you can find some hicks that will work cheap. So pathetic.