Three years ago, when Georgia learned it was out of the running for a billion-dollar Volkswagen car factory, state officials rallied behind neighboring Tennessee’s bid.
Then-Gov. Sonny Perdue, in a June 2008 letter to his Tennessee counterpart, pledged “the full resources of my office.” Georgia senators Saxby Chambliss and Johnny Isakson plugged Tennessee, too.
When the Germans chose a site outside Chattanooga, within 10 miles of the state line, Georgia officials were ecstatic. They anticipated hundreds of jobs for North Georgians. They expected auto-parts suppliers to set up shop as far south as Cherokee County. Frank Fischer, in charge of the VW factory, said, “There should be no doubt that Georgia will benefit.”
Earlier this month, Volkswagen unveiled the new Passat it will build in Chattanooga. Roughly 1,300 workers have been hired to manufacture the snazzy sedan. Not one, though, lives in Georgia. In addition, not a single, new VW parts supplier has opened south of the border.
Doubt that Georgia will ever benefit from the Chattanooga car colossus builds. So too does frustration and anger, fueled by north Georgia’s double-digit jobless rate.
“Me, myself, I think it’s a bunch of bull,” said Johnnie Strickland, an unemployed car detailer from Dalton who applied last year for a VW job. “I lost my business, my car, my house. I got four kids, two grand babies and my uncle living with me. I’m $600 behind on the rent right now.
“They should think about us that’s struggling. We’re right here at the corner of Alabama, Tennessee and Georgia. They should share the jobs with all of us.”
Volkswagen officials bluntly explain their parochial hiring patterns: Tennessee gave them $577 million in tax breaks and other financial inducements so, naturally, those from that state get the jobs. Fischer said a second shift will require another 700 or so production workers later this year. He expects some Georgians will be hired.
Not all of the dismay is focused north of the border. A dozen North Georgians interviewed recently wondered why Kia, the South Korean automaker in west Georgia, hired one-fourth of its workers in Alabama — after Georgia and other agencies gave the car company $469 million in incentives.
“With all those tax breaks, maybe they should’ve worked harder to keep the jobs in Georgia,” said Tim Stennett, an unemployed engine builder from Ranger.
On Jan. 10, at the Detroit Auto Show, Volkswagen rolled out its new Passat with a price tag starting at $20,000 and expectations that the car will help transform it into the world’s largest automaker. VW has the capacity to build 150,000 cars annually in Chattanooga, and the ability to add another 100,000 vehicles in the future.
Fischer said full-scale production will soon begin with 2012 Passats hitting showrooms this fall.
VW hires 40-50 “team members” weekly. New employees underwent training last week — practicing on skid and hanging lines, the paint and welding booths — at the under-construction factory surrounded by the low hills of southeastern Tennessee. Like all new car plants, the assembly plant is quiet, clean, massive and robotic. An interesting feature: executive offices run down the middle of the factory.
“With a company like this that’s just starting out, there’s so much potential, personally and professionally,” said Ben Edwards, an assembly line team leader who attaches tires, doors and center consoles. “And for Chattanooga, it’s incredible. I have friends all over having a rough time. It’s such a boost for this area for so many people here to have jobs.”
Tim Boss, a laid-off truck-bed builder from Flintstone, Ga., applied for a Volkswagen job in 2009. He was told that “he didn’t meet the qualifications” to work for VW. Boss, 40, surveyed the on-line job board at the state’s job center in LaFayette one recent, cold morning and rued the hiring outcome.
“When they first started taking applications everybody was pretty excited; you might stay with them, even retire with them,” he said. “But I don’t know nobody that got on with them. That don’t seem fair.”
Unemployment across northwest Georgia runs 11 percent, according to the labor department. The region’s carpet and flooring industries haven’t rebounded from the recession. Trenton lost Shaw Industries Plant No. 76, and 444 jobs, two years ago. The Blue Bird bus company shut down in LaFayette last August, costing 350 jobs.
Volkswagen offered an economic balm for the hard hit, tri-state region. A University of Tennessee study put the total number of VW, supplier and spin-off jobs at 11,477. Barton Harris, the mayor of Trenton, anticipated “two or three manufacturers and two or three warehouses” for his small town.
Economic developers across the region and in Atlanta went into overdrive to lure jobs and suppliers to Georgia. In 2008, the state’s economic development agency contacted 500 VW suppliers.
Ken Stewart, then the state’s top business recruiter, traveled to Europe to pitch Georgia to parts makers. Georgia offered sites to suppliers as far south as Cherokee County. North Georgia counties spent millions of dollars readying industrial parks. Economic developers have met three times with VW procurement officials.
All to little avail.
“We’re all disappointed; we thought it would be different,” said state Sen. Jeff Mullis, R-Chickamauga. Mullis, who also runs the Northwest Georgia Joint Development Authority and traveled to Germany in 2009 to entice suppliers. “Maybe we just had high hopes. We feel that, as they expand and when the economy improves, we’ll have an opportunity.”
Georgia wasn’t completely shut out of the VW supplier game. Decostar Industries in Carrollton, a subsidiary of a Canadian parts maker, will supply bumpers to VW. The plant, which opened in 2004, will hire an additional 50 employees as VW gears up for full production, spokesman Scott Warden said.
TI Group Automotive Systems in Hartwell will supply fuel tanks and other parts to VW, providing 30 new jobs, according to spokesman Frank Buscemi.
Most of VW’s major suppliers operate from the automaker’s industrial park in Chattanooga. CEO Fisher said VW’s Jetta plant in Mexico and long-standing suppliers in Michigan will also service the plant.
The jobless in North Georgia, though, set their sights on the VW assembly jobs. In October 2009, VW opened an on-line jobs bank. About 65,000 people applied, nearly half for the production jobs.
North Georgia job centers stayed open late and on successive Saturdays to handle the thousands of Georgians who applied.
So far, only four people who don’t live in Hamilton County, wherein Chattanooga sits, have been hired to build Passats, according to VW spokesman Scott Wilson.
“We’re here and we’re hiring local people because the incentive package comes from this area and from the state,” said Wilson, adding that some Georgians have been hired for salaried positions. “We try to honor those agreements.”
The state of Tennessee put up $336 million to lure VW. Hamilton County and other local entities chipped in $219 million. Laura Elkins, a spokeswoman for Tennessee’s economic development agency, said “there is no requirement in the agreement with VW that only Tennesseans be hired.”
But the state does tie tax credits to jobs. Nearly $80 million of the state’s investment in VW is dependent upon the creation of a certain number of jobs, tax breaks that can be rescinded if those jobs don’t materialize.
“Certainly, in a situation in which a state makes significant concessions, it does so with the expectation that it will get back significant economic benefits,” said Bill Fox, director of the Center for Business and Economic Research at the University of Tennessee. “That happens whether Tennessee, Alabama or Georgia does it.”
Georgia, with help from West Point development agencies and the federal government, gave Kia $469 million. Kia has hired 2,000 workers. Roughly one-fourth of the jobs, though, are held by Alabamians.
“These manufacturers are smart and if they can locate their plants where they can draw workers from the biggest possible pool then they’ll do that,” said Stewart, the former economic development commissioner. “I’m convinced, though, that the majority of the benefit will be going to Georgia.”
VW’s Fischer says Georgia will also share in Tennessee’s auto-building wealth.
“I am 100-percent sure Georgia is benefiting from the factory, and it will also benefit from it in the future,” he said.