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Haslam, TN Lawmakers Optimistic VW Will Overcome Emissions Scandal

No talk yet of initiating subsidy ‘clawback’

Volkswagen still has vocal supporters in Gov. Bill Haslam and Chattanooga-area lawmakers who joined him outside the carmaker’s Hamilton County plant this week to publicly display faith in the controversy-beset company.

Haslam paid a visit to workers at the southeast Tennessee factory on Wednesday to express his support for their hard work and focus in what are troubling times for the corporation as a whole.

“Everybody knows about Volkswagen’s struggles,” the governor told reporters gathered across the road from VW’s plant following his visit to the facility. “What is getting lost in that story it that there are some men and women right here in Tennessee, in Chattanooga, who are producing a great product, who have nothing at all to do with the problems that have been created. They are doing everything that they can to get past that.”

Haslam said he found it “impressive” that the plant is still “putting out a great product” in the midst of a roiling controversy that began recently when the U.S. Environmental Protection Agency announced it had discovered about half a million VW automobiles were using emission control systems that were rigged to fool government pollution regulators.

U.S. Volkswagen CEO Michael Horn told a Congressional hearing Thursday that 11 million of the German automaker’s cars worldwide are fitted with emissions-test “defeat” software that can sense the difference between road-driving and lab-operating conditions.

But Gov. Haslam told reporters Wednesday that, “for better or worse,” Tennessee taxpayers are “married” to Volkswagen at this point.

According to the Chattanooga Times Free Press, the state of Tennessee divvied out an estimated $358.2 million of the original $577.4 million in incentives that Volkswagen wrangled seven years ago as a condition of building its billion-dollar facility in Hamilton County. The other $219.2 million was supplied from local governments. State and county taxpayers this year financed another $260 million in incentives to win the job of producing a new sports utility vehicle line for VW.

“We have a concern about taxpayer’s dollars that have been invested in this facility, really twice: in the original plant, and the second one when they agreed to build the SUV here,” Haslam said Wednesday. “Obviously, there is a lot of concern that taxpayer’s dollars are being protected. I think the mechanism is in place to do that.”

The governor said he supports enforcing so-called “clawback” provisions that allow the state to revoke and retract taxpayer funding from companies found not to be living up to promises they made in exchange for subsides and incentives.

Still, Haslam said he’s confident VW will ultimately put the current scandal in the rearview mirror and earn its way back as world leader in automotive sales.

Volkswagen is a “solid investment” for taxpayers, Haslam said.

Haslam rejected criticism that the VW scandal — as well as past failures by incentive-receiving companies to deliver on the promise of job-creation, like happened in Clarksville with Hemlock Semiconductor — shows why spending taxpayer dollars on corporate giveaways is a bad idea.

“I disagree with the conclusion,” Haslam said.

The governor said nobody in his administration — nor the administration of Democrat Phil Bredesen, the prior Tennessee governor who offered VW hundreds of millions in publicly financed support to locate in Chattanooga — anticipated such impropriety.

“I don’t think anybody could foresee this happening,” said Haslam. “I would love to know the person who could have told you this was coming around the corner.”

The Republican governor, who prior to winning election to Tennessee’s highest office in 2010 served eight years as mayor of Knoxville, said he still believes the state’s deal with VW was prudent. If the future proves otherwise, “we have the provisions in place to bring the money back,” said Haslam.

“We have to do our homework up front to make certain that we have the provisions in place to protect our taxpayers,” he said. “That’s No. 1. And No. 2 is that we are making wise investments.”

Among the lawmakers who participated in the press event with Gov. Haslam were Senate Speaker Pro Tem Bo Watson of Hixson and House Majority Leader Gerald McCormick of Chattanooga, both Republicans.

Watson and McCormick have each been critical of Volkswagen management for flirting with the prospect of inviting the Detroit-based United Auto Workers union into the Hamilton County factory to represent Tennessee workers.

But on Wednesday, both backed Haslam in supporting the company in its time of trouble.

“I think you are going to see a sort of rise-from-the-ashes kind of story that comes out of this plant,” said Watson, vice chairman of the powerful Ways and Means Committee.

McCormick seconded that sentiment.

“This is going to be a bump in the road for them. There have been other car companies that have had problems much greater than what is happening with Volkswagen, and they have bounced back fine — and Volkswagen will too,” he said.

Other area lawmakers who attended the event were Sen. Todd Gardenhire of Chattanooga and Reps. JoAnne Favors of Chattanooga, Kevin Brooks of Cleveland and Mike Carter of Ooltewah. Favors is a Democrat, the others are Republicans.

A state legislative subcommittee is scheduled to meet Oct. 29 at the Hamilton County Department of Education to inquire into “the financial impact on the state from the Volkswagen misconduct.”

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