Southern states favored in bid for Volkswagen plant

Volkswagen has confirmed that it is considering the three states for a potential plant, offering a crown jewel of economic development that could help the states expand their auto industry presence.

Lured by incentive packages, an eager work force and a lack of unions, several Southern states have attracted automotive plants during the past two decades.

Three auto companies have already landed in Alabama. Daimler AG builds sport utility vehicles in Vance, Honda Motor Co. produces minivans and SUVs in Lincoln, and Hyundai Motor Co. brought its first U.S. assembly plant to Montgomery, where it builds the Sonata passenger car and the Santa Fe SUV.

Tennessee is the home of Nissan Motor Co.’s North American headquarters near Nashville and has plants in Smyrna and Decherd. The state also has a General Motors Corp. assembly plant in Spring Hill.

Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids, Mich., said Alabama is the likely front-runner followed by Tennessee. He said Alabama may have an edge because Mercedes-Benz has had a successful run in the state and “there’s a German supply base that’s already pretty well-established.”

But he noted Tennessee has come close to bringing an auto plant to a 1,600-acre site in Chattanooga in recent years. The region was a contender for a Toyota Motor Corp. plant that is being built near Tupelo, Miss., and a Kia Motors Corp. plant that went to West Point, Ga.

Michigan, meanwhile, could be undercut by the long-standing dominance of the United Auto Workers in the state. VW executives have been evaluating potential sites at a time when GM has faced a local strike at a plant near Lansing, Mich., and threats of strikes elsewhere.

Michigan would have a considerable edge in its availability of skilled workers, thanks to the recent rounds of buyouts from the Detroit automakers. And given the state’s economic problems, it would be highly motivated to land another assembly plant, said Jeremy Anwyl, chief executive of the Edmunds.com automotive Web site.

Others noted that Volkswagen recently moved its North American headquarters from metropolitan Detroit to Herndon, Va., outside of Washington, citing the need to be closer to its East Coast customer base. Bringing an assembly plant to Michigan would seem to run counter to the rationale for making the move, they said.