Volkswagen mulls new plant in South

If Volkswagen decides to build its U.S. assembly plant in the South, the German company will join other foreign automakers that are increasingly turning the region into a hotbed of car manufacturing.

The South offers automakers ample highway and rail systems and proximity to the large market of U.S. consumers. But its main attraction: Existing auto plant workers who have rejected overtures by the United Auto Workers.

“Foreign-owned automakers have been a tough nut for the UAW to crack, and the South is particularly difficult,” said Harley Shaiken, a University of California, Berkeley, professor who specializes in labor issues. “That is without question an important part of their location decision.”

Volkswagen's plant will be part of the company's strategy to increase its presence in the U.S., where the maker of the Jetta, Golf and Beetle holds just 2 percent of the market. VW executives have narrowed their site options to Alabama, Tennessee and Michigan. All three states are offering financial incentive packages. The automaker's representatives and economic development officials won't discuss the site search.

A Tuesday meeting of the company's management board in Frankfurt, Germany yielded no decision on where to build.

Industry executives and analysts say there is plenty of room in the South, where foreign auto assembly plants have been locating since Nissan set up shop in Smyrna in 1983. Analysts say the region can easily provide another 2,000 skilled workers, as can Michigan, where there are autoworkers idled by cost-cutting American companies.

Honda spokesman Ted Pratt said Volkswagen or anybody coming into the area “will find what we found: a great quality of life and a great work force.”

Honda set up operations in east Alabama in 2001, and the assembly plant Kia plans for West Point, Ga., will be about 100 miles away. Two likely Volkswagen plant sites in Chattanooga and Huntsville, Ala., also are about 100 miles from the Honda plant.

The issue with unions isn't wages. Auto production line work in the U.S. pays about $27 an hour in both union and nonunion facilities, Cole said.

Erich Merkle, vice president of auto industry forecasting for the consulting company IRN Inc. in Grand Rapids, Mich., said the issue with unions is they go on strike. Employees at Nissan's Smyrna, Tenn., plant voted down a UAW organizing effort on a secret ballot in 2001. The union has made failed attempts to get a foot in the door at the Toyota plant at Georgetown, Ky., and last year Honda executives sent letters to employees at its Lincoln, Ala., plant warning that any move toward organizing would “radically change” operations.