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TN Will Likely Keep Pledge to Grant VW $300M Incentives Package

Despite some Tennessee lawmakers displeasure with the growing influence of the United Auto Worker’s union at the Volkswagen plant in Chattanooga, the Legislature appears likely to approve a $300 million incentives package for the automaker.

A few members of the General Assembly’s Hamilton County legislative delegation grumbled to the Chattanooga Times Free Press editorial board last week that VW’s continued acceptance of the labor union was causing them some consternation about whether or not to approve the proposed incentives in this year’s legislative session.

Sen. Todd Gardenhire, a Chattanooga Republican, told TNReport Wednesday he was upset with the automaker and labor union for “not honoring” the outcome of the unionization vote last year. “They voted in a fair election not to be represented by UAW, and then they turn around and ignore that,” he said. But Gardenhire added that if a promise was made by the state’s governors, the Legislature would “honor that” because they didn’t want to “embarrass the state.”

Likewise, Senate Speaker Pro Tem Bo Watson said while the incentives could probably come up  during the greater budget discussion, the Volunteer State has “a long history of honoring its commitments, and none of us collectively are going to allow that not to happen.”

Additionally, House Majority Leader Gerald McCormick, R-Chattanooga, told reporters Wednesday that while he didn’t want the UAW to “slip in the back door because of a secret deal with Volkswagen,” he expected the Legislature to approve the incentives because “Tennessee will keep its promises.”

And despite the skepticism of Hamilton County legislators, the head of Volkswagen Group for the Americas said he is “very confident” the incentive package will be approved.

Gov. Bill Haslam said last week he understood the lawmakers unease, and he had “expressed” similar concerns as well, but he hoped the local lawmakers would support the incentives package because their votes — as the hometown gang — would be “very important” to its passage. The package was offered to the German company last summer to encourage expanded production at the Southeast Tennessee location. The automaker announced in July Chattanooga would be home to production lines for the new CrossBlue and Cross Coupe GTE.

“We’ll have those discussions about where we think Volkswagen is and why we think this is the right proposal for the state,” Haslam said.

Haslam added future efforts by Tennessee to recruit businesses could be harmed if the legislation fails. “We always put that as a caveat to the deal, that the Legislature has to approve, but historically, that has always happened in Tennessee,” he said.

Last February, the UAW failed an attempt to unionize the plant — 712 to 626 — leading them to file a complaint against several Tennessee politicians who suggested the unionization could interfere with the incentives. The UAW later dropped the case, citing the time it would have taken to settle.

Haslam said this Spring he hadn’t intended withholding incentives from the company as a threat — he was just making “a statement of reality.”

The UAW has since established a chapter at the plant, and currently claims to represent about 45 percent of VW employees, giving the labor group the right to meet with top managers every two weeks, as well as regular plant access. Because of the closeness of the labor vote Volkswagen adopted a new policy to allow multiple unions to represent workers, with representation rights depending on the number of employees the union speaks for.

A rival labor group — the American Council of Employees — has complained that VW is showing favor to the UAW. ACE has also been working to sign up members in what they call an effort to offer the plant’s employees a choice in representation.

The UAW announced in December that Chattanooga’s Local 42 had been invited to participate in an executive committee meeting of the Volkswagen Group Global Works Council in Germany this month. The ACE interim president has disputed the UAW’s numbers, and said a number of the signatures the autoworkers union claims are invalid.

The free-market Nashville-based Beacon Center of Tennessee awarded its 2014 Yuletide season “Lump of Coal” jointly to UAW and VW. The Beacon Center bestowed the “dubious distinction” on UAW and VW for having “seemingly worked together to bilk the taxpayers of the state out of hundreds of millions of dollars,” a Beacon Center blog post declared. The center also alleged that despite being “firmly rejected” by employees at the plant, “UAW has continued trying to bully its way into the plant, and VW has seemingly been more than happy to comply.”

Volkswagen Announces New SUV Line for Chattanooga

Volkswagen has announced that Tennessee will be home to its new SUV production line, representing a $600 million investment in the Volunteer State that’s expected to generate 2,000 more jobs at the company’s Chattanooga plant.

The automaker’s decision, which includes plans to establish a new strategic marketing and research facility in Tennessee, comes on the heels of an announcement by the United Auto Workers union that it would be opening an office for a voluntary chapter at the Southeast Tennessee VW plant.

“The impact of this announcement goes far beyond the 2,000 new jobs because of the large multiplier effect of the automotive industry,” said Tennessee Gov. Bill Haslam, in a press release, “and adding an additional manufacturing line and the National Research & Development and Planning Center sends a clear signal that Tennessee can compete with anyone in the global marketplace.”

The press release from the Governor’s office also notes that the state is providing a $165.8 million grant for site development, infrastructure, equipment acquisition and construction costs, as well as a $12 million grant for new employee training.

Volkswagen Group of America has agreed to waive certain tax credits related to its expansion as part of the incentive package.

And some other leaders in Tennessee auto manufacturing supplies — such as Kim Ketchum, Magneti Marelli’s corporate director of business development  or James Adams with eSpin Technologies, Inc. — echoed the Governor’s point that VW’s decision to increase production could create more demand for vehicle parts and positively impact other areas of auto manufacturing across the state.

Others have expressed hope that the expansion will lead to more emphasis on STEM education in the Chattanooga region.

Volkswagen has also named global works council chairman Bernd Osterloh to the board of directors for it’s American auto group.

Political leaders and industry groups lauded the German automotive group’s decision to expand.

U.S. Senator Bob Corker, formerly Chattanooga’s mayor, reminisced about the day, “six years ago,” that he received a call from the Volkswagen board that Chattanooga was where they had decided to locate.

“Today’s announcement is a similar high point,” Corker said in a press release, “as VW’s significantly expanded presence means that thousands of more families will benefit from the good paying jobs being created at the plant.”

Tennessee Democratic Party Chairman Roy Herron praised former state senate colleague and current Chattanooga Mayor Andy Berke, as well as other city leaders and VW employees, for bringing the expansion and jobs to the state.

“We commend the management and workers at Volkswagen as well as Mayor Berke and other city and county leaders who persevered and brought these jobs despite Republican threats, attacks, and interference with the rights of this company and its workers,” Herron said.

The UAW’s secretary-treasurer, Gary Casteel, issued a statement Monday to congratulate Volkswagen, its employees and Tennesseans on the automaker’s expansion, and thank Haslam for extending the necessary incentives to make the expansion work.

“State officials assured the public and Volkswagen employees that the decision on incentives for Chattanooga would not be related to whether workers exercise their right to join a union, and they kept their promise,” Casteel said in the statement, as reported by WTVC in Chattanooga.

In the statement, Casteel also alleged that the autoworkers union’s decision to expand to the Scenic City played a part in the decision of the automaker. “The fact that the new line is being announced four days after the rollout of UAW Local 42 in Chattanooga reinforces the consensus that the UAW has reached with the company,” Casteel said.

The decision garnered national and international coverage from outlets such as the Associated Press, New York Times, Wall Street Journal, USA Today, Detroit Free Press, CNN, Reuters, Bloomberg, and Automotive News.

Haslam Announces VW SUV Coming to TN

Press release from the Office of Tennessee Gov. Bill Haslam; July 14, 2014:

NASHVILLE – Tennessee Gov. Bill Haslam and Volkswagen Group of America officials announced today the company will expand its sole U.S. manufacturing facility in Chattanooga, Tennessee. Volkswagen will add an additional manufacturing line and create the National Research & Development and Planning Center of Volkswagen Group of America. Volkswagen’s total global investment for the expansion will be $900 million, with $600 million invested in Tennessee and 2,000 new jobs being created in Hamilton County.

“Today is an exciting day not just for Chattanooga and Hamilton County but for all of Tennessee, and I want to thank Volkswagen for its significant long-term investment in our state,” Haslam said. “The impact of this announcement goes far beyond the 2,000 new jobs because of the large multiplier effect of the automotive industry, and adding an additional manufacturing line and the National Research & Development and Planning Center sends a clear signal that Tennessee can compete with anyone in the global marketplace.”

The expanded plant in the Enterprise South Industrial Park will manufacture a new automotive line, a midsize SUV for the American market. Production of the new SUV will begin in the fourth quarter of 2016 with the first vehicle expected to roll off the new assembly line by the end of 2016. The expansion will also create the National Research & Development and Planning Center of the Volkswagen Group of America.

“The United States of America is and will remain one of the most important markets of Volkswagen. Over the past few years, we have achieved a lot here. We are now launching the second phase of the Volkswagen campaign in the USA. With the midsize SUV, the expansion of the Chattanooga plant and the new development center, we are focusing on the wishes of US customers,” Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg said. “This is also a strong signal for the USA as an industrial and automobile production location. The Volkswagen brand is going on the attack again in America.”

“I deeply appreciate Volkswagen’s significant long-term commitment to the hometown and state that I love,” U. S. Senator Bob Corker said. “I am grateful for Governor Haslam’s steady leadership, for our mayors, our great community leaders and the workers at the Chattanooga plant, whose commitment to excellence helped pave the way for today’s announcement. Finally, I am thankful to be able to help see this through to today’s conclusion.”

Corker added, “One of the most meaningful days in my public service career occurred six years ago when I received the call from the Volkswagen board room that they had chosen Chattanooga. Today’s announcement is a similar high point, as VW’s significantly expanded presence means that thousands more families will benefit from the good paying jobs being created at the plant.”

“Hamilton County is pleased to partner with Volkswagen as they create 2,000 new family-wage jobs which will also generate very positive economic ripple effects for residents throughout our community,” Hamilton County Mayor Jim Coppinger said. “By working with Volkswagen to build on the tremendous success of their initial job creation project, we are establishing a foundation for continuing economic growth for years to come.”

“Volkswagen is one of Chattanooga’s largest and most valued employers. They have brought 12,400 living-wage jobs to our region, employed Chattanoogans and helped build our middle class. This expansion will result in a huge capital investment and thousands of new jobs,” Chattanooga Mayor Andy Berke said. “From day one, the city and county have worked hard to see today become a reality, when we can announce that Volkswagen will be adding more jobs, more investment and expanding their presence in Chattanooga.”

“This announcement is great for Chattanooga and great for Volkswagen,” Ron Harr, president & CEO of the Chattanooga Chamber, said. “Thanks to Volkswagen’s expansion, we will have a much easier time recruiting additional automotive suppliers to help them build out their supply chain while also cementing Chattanooga as ‘The Center of the Automotive South.’”

The state of Tennessee is providing a $165.8 million grant for costs associated with site development and preparation, infrastructure, production equipment acquisition and installation, and facility construction. In addition, the state will provide a $12 million grant for training new employees. As part of the incentive package, Volkswagen Group of America has agreed to waive its right to claim certain statutorily available tax credits directly related to the expansion.

Volkswagen Chattanooga currently employs 2,500 people. Hiring for new production positions will occur closer to the launch of the new product. The details of that application and assessment process will be announced at that time.

Immediate needs will center around professional candidates with skills in areas such as purchasing, logistics, engineering, and human resources to begin the preparations for the parts, equipment and people needed to produce the new product line. Interested candidates can search and apply for open positions online at vwjobschattanooga.com or on major online sites such as LinkedIn and CareerBuilder.

About Half a Billion in Gov’t Bacon ID’d by Beacon

In Tennessee, taxpayer money has been used to dabble in the movie-making business, prop up car companies, and promote country music heritage — in Virginia.

Such projects are cataloged in a new Pork Report tracking $468 million in waste and public malfeasance in the past year, $216 million worth of loin, butt and chops at the state level, the Center says.

Authored by the Nashville-based Beacon Center, the report identified more than $182 million in what the center calls “corporate welfare.” Furthermore, “politicians went hog wild” spending the citizenry’s resources on what Beacon Center president Justin Owen described as “taxpayer-funded tourist traps,” including a country music museum in Virginia and a planned water-and-snow theme park in Nashville.

“Many times politicians try to convince us that somehow their visions are grander and more wonderful,” said Ben Cunningham, a Tea Party leader and spokesman for Tennessee Tax Revolt who Tuesday joined Owen at a press conference on Capitol Hill. “Sometimes they even try to convince us that they are a cut above — morally and intellectually above the rest of us — and that their grand, good intentions are somehow grander and more wonderful than the good intentions of the citizenry.

“But in fact, they’re ordinary human beings just like you and I, and they have to be held to the same standards that everybody else is held to.”

This is the seventh year the Beacon Center, formerly known as the Tennessee Center for Policy Research, has published the Pork Report. TCPR was founded in 2004 by Johnson City-native Drew Johnson, who next month will succeed 70-year veteran Tennessee newspaperman Lee Anderson as an opinion page editor for the Chattanooga Times-Free Press.

State spending Beacon’s 2012 Pork Report identified as wasteful included:

  • $2 million in film incentives in 2012.
  • $1.5 million in economic incentives for GM to expand its plant in Spring Hill.
  • $266,200 to Volkswagen to put a sign, only visible from the air, atop its plant in Chattanooga.
  • $500,000 for a planned country music museum in Bristol on the Virginia side of the state line adjacent to Lt. Gov. Ron Ramsey’s district.
  • $88.7 million for pre-kindergarten, which has “repeatedly failed to have a significant lasting impact on the education of Tennessee’s children.”

“This year state and local governments didn’t hold back when spending taxpayers’ money,” said Owen.

Political responsibility for much of the iffy spending and sketchy programs pegged in the report can be assigned to fiscally conservative-talking Republicans, who run state government and are not expected to lose their grip on power in this year’s legislative elections.

“Republicans spend just like Democrats do,” Owen said. “And when you’re spending someone else’s money, you have an incentive to spend it unwisely.”

Although the report points to spending made on Gov. Bill Haslam’s watch, the governor contends his administration is already on top of cutting out pork spending.

“I can promise you that government waste has got our full attention. Now, waste is obviously defined different ways by different folks,” Haslam told reporters Tuesday after defending spending on Pre-K, economic development and tourism.

“One of the value judgements you make every year in the budget is, what are you going to fund out of a lot of potential good things and what are you going to cut out of several things that people have an opinion about whether that’s critical or just nice to have.”

The Center thinks much remains in the latter category and says the state should adopt a law to return excess revenues to taxpayers and set up a state spending commission to root out waste.

The Center advocates strengthening a 1978 state constitutional provision meant to rein in growth. If the state is considering spending that exceeds the growth rate in personal income, lawmakers are required to take a separate vote on the amount beyond that cap. The Center says this vote should require a two-thirds approval, rather than the current majority, and that the measure of personal income growth should be replaced by a figure based on population growth plus inflation.

Southerland Holding Out Hope for NE TN Megasite

State Sen. Steve Southerland sounds enthusiastic about the possibility of Upper East Tennessee landing a TVA megasite like the ones taxpayers provided for Volkswagen and Hemlock Semiconductor.

But the Morristown Republican’s enthusiasm may be more a matter of a legislator cheerleading than an indication of any substantive action. Other officials, including some community leaders in the region itself, say they see no hint of a megasite headed to the area, for a variety of reasons.

State Economic and Community Development Commissioner Bill Hagerty said recently he had heard the subject come up in regard to Upper East Tennessee, but he downplayed the potential.

“In terms of a new large-scale megasite like West Tennessee, I think there is a lot of optimism we might be able to do that in other parts of the state, but there is nothing along that magnitude on the drawing board right now,” Hagerty said.

Alan Palmieri, mayor of Jefferson County, said he has heard the subject raised for his region — but only “for years and years and years.” Mayor Bill Brittain of Hamblen County, which includes Morristown, said this week he has not heard the matter come up.

But in talking to a reporter at a recent event in Morristown, Southerland made it sound like efforts are underway for landing a megasite.

“We’ve got sites in the area that could be a megasite,” Southerland said. “It has a good possibility, because our counties are working together. We know it has to be a joint, regional project.

“We approved three megasites. We’ve got one in West Tennessee, Middle Tennessee and then one in Chattanooga. But we have not received one for Upper East Tennessee. It’s our turn. We spent the money down there. If the people are willing to work together up here and we have somebody wanting to come this way we’re going to go for it.”

Megasites have been noteworthy for several reasons recently. Tennesseans have begun to see the fruits of preparing large tracts of land and infrastructure, with Volkswagen opening its manufacturing plant in Chattanooga and Hemlock making an impact in Montgomery County, including ties with Austin Peay State University.

A third megasite, in Haywood County in West Tennessee, has begun to get more attention from government officials, but it remains vacant.

Gov. Bill Haslam has taken some of the glimmer off the headline-grabbing practice of attracting large businesses to the state, pointing out that most of the job growth comes from existing businesses, not high-profile relocations.

Nevertheless, Haslam has repeatedly said that doesn’t mean the state has abandoned the big relocation approach. At an economic development meeting in Morristown, Haslam said the administration is still ready “to move heaven and earth” to get such investments.

Southerland picked up on that line.

“Just like he said, we’d move heaven and earth to get another Volkswagen here,” Southerland said. “When you look at Hamblen County, we’re like a hub for other counties bringing in automotive jobs.”

Taxpayer bill can reach hundreds of millions of dollars

State and local taxpayers typically can end up contributing hundreds of millions of dollars to the development of a megasite.

In the case of the Enterprise South industrial site that attracted Volkswagen to Hamilton County, the government’s bill, including tax breaks, was estimated in one report at $500 million. Volkswagen made an investment of $1 billion, roughly the amount Hemlock put into the megasite in Montgomery County.

Arrangements for the sites can involve help from federal, state and local governments. After that, the value of the investment is widely open to debate. Economic development officials routinely have said the kinds of businesses attracted by the megasites are giant winners for the locations. But increasingly, questions exist as to the return on the investment in attracting jobs, as states have become highly competitive.

Haslam has expressed surprise at what some companies want in return for creating jobs in Tennessee, although he has said his administration remains interested in attracting the types of investments made by Volkswagen and Hemlock.

“In this state, the funding for the megasites has been a combination of local government money and state government money, with some participation from TVA funding the certification process,” said Clint Brewer, spokesman for the Department of Economic and Community Development.

In Montgomery and Hamilton counties local governments handled the purchase of the land. For the Haywood County megasite, where local governments lack such resources, the state has purchased most of the land. Theoretically, private entities could have to assemble the property at a megasite.

“The local communities pay for the site’s due diligence and improvement, such as environmental reviews, infrastructure improvements, etc.,” said Mike Bradley, of the TVA news bureau in Knoxville, by e-mail Thursday. “This sometimes is done even after the site has been certified as a megasite. The effort is usually championed by a local economic developer.”

The Tennessee General Assembly this year passed legislation (SB1239) to allow the East Tennessee Regional Agribusiness Marketing Authority, or ETRAMA, to issue bonds.

The idea of economic development in the region is to enhance development along the I-81 corridor.

Two issues face the region on infrastructure for business development: hooking up a sewer system to accommodate large capacity and getting connectors in place for major rail lines in the region. Plans for the sewer line would involve trunk lines that would feed wastewater into a plant in Lowland, which is in Hamblen County.

The vacant megasite in Haywood County has 1,720 acres. Another vacant TVA megasite in Hopkinsville, Ky., has 2,100 acres. Those kinds of numbers may work against mountainous Upper East Tennessee.

“I was told years ago because of our geography it’s hard to collect 500 flat acres,” said Rep. Tony Shipley, R-Kingsport. “Maybe we don’t get a megasite. Maybe we get a mega-area.

“The same amount of money is being spent in Chattanooga, West Tennessee and the Nashville basin area. Maybe that same amount of money could come here, because we are distinctly different.”

Palmieri, the Jefferson County mayor, makes a similar observation.

“You look at the land, and you say, ‘Where are you going to locate this?’ Terrain would be part of the process because whatever you do, you’ve got to make it economically feasible. If you’re going to have to go in and take down mountains and blast and everything else, it’s going to add to the cost, which everybody wants to avoid.”

In another way, however, geography is a plus for the region. State and local government officials point to the fact the region is within driving distance of a large portion of the nation’s population.

Like Disney World theme park, talk of megasite ‘just conversation’

Palmieri has heard talk of a megasite but sees little in the way of real progress.

“I know various mayors have talked about it for many years. Various chambers (of commerce) have talked about it. Nothing has really developed outside the fact it’s just conversation,” he said.

“Where would you go? Who’s going to bring in something that massive today? It’s probably been put on the back burner, but it’s been going on for I guess probably the last 10-12 years.”

Southerland sees other factors.

“We know with the earthquake in Japan and the value of the U.S. dollar that Japan will be looking more at investing in the United States in automotive plants. And we’re hoping to get one of whatever comes this way,” Southerland said. “You’ve got to be prepared because when they come they’re going to be looking for somebody that’s already ready to go.”

Palmieri said that for years there was talk that the people from Disney World were going to put a theme park in Cocke County.

“I heard that for 20 years,” he said. “That was a hot one there for awhile. It was going to be just a regular theme park, like a Disneyland or Dollywood. That was before Dolly owned Dollywood.”

But if the region were to get a large plant, Palmieri says the automotive or airline industries would make good sense. He said the area’s workforce, which has experience in production lines, would be good for a manufacturing base.

When asked why the airline industry would be a good fit, Palmieri said, “Everything they have is predominantly in a high-tax area. What they’re having to pay the workforce there is probably three or four times what they could have to pay a workforce here in Jefferson County or East Tennessee.

“Transportation-wise, with the Interstate and everything else, easy access in and out, I can see where they could save a lot of money, and it’d be much more profitable for their company.”

Aircraft maker Boeing has recently been involved in a dispute with the National Labor Relations Board over a plant it plans to build in South Carolina. Palmieri said Tennessee should get a look.

“If Boeing ever took a serious look, they could come in, acquire property and build buildings and have a workforce ready to go, and they would save money almost right off the bat,” he said. “South Carolina is more expensive. They have payroll taxes and everything else. I don’t understand that.

“I have family there. It’s a beautiful state. I can’t stand Steve Spurrier (the South Carolina football coach). But why would you go to South Carolina when Interstate access, transportation needs, centralization, taxes, everything is so much better right here in East Tennessee? I don’t understand that.”

Bredesen Busy Traveling, Lecturing, Promoting Health Policy Book

Former Gov. Phil Bredesen remains zip-lippped about what’s in the state’s deal with Amazon.com, although he has plenty to say about what he’s been doing since leaving office, which is traveling the country making speeches, mostly about health care.

“I’m not retired. I’m not vegetating,” Bredesen said. “I’m very active and trying to figure out how I can best use the next few years.”

Bredesen was at a campaign event Saturday in support of Nashville Mayor Karl Dean, who is running for re-election.

Nashville is still home base for Bredesen, but since leaving office in January he has traveled to various locations, from Chicago to Florida to the West Coast, to speak. He has primarily talked about health care, including one joint appearance with former Florida Gov. Jeb Bush, but he has also spoken on the state’s experience recruiting international businesses like Volkswagen and Wacker Chemie.

One domestic business recruitment with Bredesen’s brand on it, however, remains a point of controversy in the state. Amazon is building two large distribution centers in and near Chattanooga. The Internet sales giant is making a $139 billion investment, offering 1,400 jobs and comes in with the agreement that it will operate without collecting sales taxes as a retail outlet would.

A couple of key lawmakers have cried foul, presenting legislation to force Amazon to collect the tax, but that effort has met resistance and even a threat from Amazon that it might pull out if forced to collect. Lawmakers have even asked the state’s attorney general to weigh in on their effort. The bill has been deferred to 2012.

Among lawmakers’ questions have been to what degree the agreement with Amazon has even been in writing.

“I’m just not commenting on stuff that’s going on like that right now,” Bredesen said. “We had an understanding with Amazon, and it was really Matt Kisber (former commissioner of Economic and Community Development) who did all the detail work on the thing.

“I think it was the right decision. I think the current governor thinks it was the right decision to get them here. I think they will be an important piece of the economy.”

The Bredesen administration made the deal after Bill Haslam was elected governor in November but before Bredesen left office. The most widely reported explanation for the arrangement has been that Bredesen told Haslam the state could either grant Amazon the ability to avoid collecting the tax or see the company go a few miles down the road and build its facility in Georgia. The same issue has played out in other states. Bredesen wanted the jobs in Tennessee, and Haslam has publicly said the state will honor the commitment.

Bredesen said there were compelling reasons for striking such a deal.

“Part of what appealed to me about Amazon was I worked real hard to get some of the knowledge-based jobs that require a college education, where you’ve got good salaries and so on,” Bredesen said. “A lot of the Amazon jobs are a little different from that. They’re working in a warehouse. We need those jobs, too.

“There are a lot of people in this state who just need a job with a good company with good benefits, and they’re not going to go back to college to do it.”

When asked last week where the attorney general is on the Amazon issue, Sharon Curtis-Flair, spokeswoman for Attorney General Robert Cooper, said, “We’re working on it,” but she offered no elaboration on a potential opinion or when it might come.

Bredesen said getting a well-respected company like Amazon to build in Tennessee at a time when jobs are hard to come by seemed like the right deal to make. He was asked about the precedent, however, of setting up that arrangement, since Amazon is already making overtures of building even more distribution centers in Nashville or Knoxville.

“I think the governor has got to figure that out,” Bredesen said. “But in the scheme of things, if an Amazon were to be located here, ultimately these tax issues are going to be solved by the Congress.”

Haslam has also said no single state should have to work out the issue of collecting sales taxes on online sales. The issue is complex. Amazon is based in Seattle. Company officials point to the commerce clause of the U.S. Constitution and say the existence of a “fulfillment center,” as Amazon is building, does not create substantial presence, known as nexus, to qualify as a point of sale.

“The two facilities happened on my watch, I think we made the right decision, I think the governor has backed that up, and how he treats the next two or three is up to Gov. Haslam,” Bredesen said.

As for the former governor’s travels, they’re the kind of speaking engagements one would normally expect after the publication last year of Bredesen’s book, Fresh Medicine — How to Fix Reform and Build a Sustainable Health Care System.

“I had a lot of requests to do that after the book came out in the fall, and you really can’t do it as a sitting governor,” Bredesen said. “You can’t take off and go to California for a few days and give speeches.”

He said the topic in such settings is beginning to move more toward the future of the health care system, rather than just reaction to the health care reform law. Bredesen’s book is due for a paperback version this fall.

“I’m up to my eyebrows in health care,” Bredesen said.

The event with Jeb Bush was a health care discussion held by the venture capital group Health Evolution Partners, where they had a “D” and “R” program, with Bredesen the “D” as a Democrat and Bush the “R” as a Republican.

Bredesen said he has put the notion of trying to serve at the federal level on health care policy on the shelf, adding that when it came up it was probably given more attention than it deserved. He also said Saturday he has no intention of running for the Senate. Bredesen was at one time considered a candidate to be President Barack Obama’s secretary of Health and Human Services, which ultimately went to Kathleen Sebelius, a former governor of Kansas.

So for now, Bredesen is doing the speech-making tour and deciding what’s next. Bredesen was mayor of Nashville for two terms from 1991-99 and governor for two terms from 2003-2011.

“When I left the mayor’s office, after I left on Saturday, on Monday morning I was setting up my desk in a new office,” he said. “I’ve said this time, don’t do that, when you’ve got one more good career in you. Get a little space. Get some of these speeches done you wanted to do. Do a little writing, and let things gel a little bit.”

Bredesen said former first lady Andrea Conte now “enjoys being out of the line of fire,” and she’s doing a lot of the same things as her husband is.

“She’s been out and active and around doing different things, giving talks to different groups. She is spending serious time in the garden, and we’re having a great time right now,” said former governor Bredesen.

Mike Morrow is a correspondent for TNReport.com, a not-for-profit news organization supported by donors like you.

Volkswagen Opens Chattanooga Plant

Volkswagen formally unveiled its automotive manufacturing plant Tuesday in Chattanooga. Company officials say the facility, built on one of the state’s taxpayer-financed economic development megasites, will boost its efforts to make a major impact on the national automotive market.

“The Chattanooga plant really does represent a very significant commitment toward our overall U.S. product strategy,” Jonathan Browning, president and CEO of Volkswagen Group of America Inc., told a huge room of people at an elaborate press conference at the plant. “This is a strategy we’ve talked about for some time. It’s a strategy that represents an investment of $4 billion into the U.S. market. It’s a key driver of our long-term success in the United States.”

Volkswagen is building the Passat, a midsize sedan, at the Chattanooga plant. Company officials said the car will get 43 miles per gallon on the highway and can provide nearly 800 miles on a single tank of gas. While Tuesday marked the grand opening, the plant has already assembled test cars and customer cars, and the first customer car rolled off the assembly line April 18.

Dignitaries at Tuesday’s event included Gov. Bill Haslam as well as the German ambassador to the United States, Klaus Scharioth. The plant currently has 1,700 workers and will have more than 2,000 employees when fully staffed, Frank Fischer, head of the Chattanooga plant, said.

The plant has been presented as a prime example of how the state can attract businesses with a huge capacity for hiring. Bill Hagerty, commissioner of the state Department of Economic and Community Development, said Tuesday he will travel next month to Germany to talk to Volkswagen officials and will visit other car manufacturers there for further recruitment.

Hagerty said recent reports that the State of Tennessee, under Haslam, will emphasize expansion of existing businesses rather than seeking to attract big businesses like Volkswagen, were somewhat misleading.

“It’s not a ‘rather than.’ It’s ‘in addition to,'” Hagerty said. “We actually are beefing up the department that does these large sort of home-run activities. We’ve still got four overseas offices.

“We are adding more resources at the local level on focusing on existing businesses, so it’s a resource addition on the recruitment side of our department altogether.”

When Fischer said Volkswagen hopes to expand its number of suppliers to the plant, Hagerty noticeably applauded.

Haslam was quick to give credit to former Gov. Phil Bredesen and Bredesen’s team of business recruiters for their work landing the Volkswagen plant that held its grand opening in Chattanooga on Tuesday.

“I must confess to you, I feel a little bit like someone who got to jump in and run the last mile of the marathon after other people had run the first 25,” Haslam said.

“I can’t help but acknowledge the contribution of my predecessor, Governor Bredesen, and his team who worked hard to make certain this happened.”

Haslam also gave credit to leaders in Chattanooga and Hamilton County for their work in attracting the German automaker to Tennessee. Deputy Gov. Claude Ramsey attended Tuesday’s opening and kept a low profile, but he was Hamilton County mayor before joining Haslam’s administration.

“Good things like this don’t just happen,” Haslam said. “You have to have people willing to stick out their necks and make the investment as local government both in buying the site and preparing it, and then the state to come in with additional infrastructure with the interchange back to the interstate.

“I get to be the lucky person who gets the baton at the last minute and runs across the finish line, but I do that in full knowledge that other people worked really, really hard to get us to this day.”

The Volkswagen plant represents a $1 billion investment by the company, and the plant sits on one of the state’s three megasites geared toward economic development.

Only a day before, Haslam presided over the first meeting of the West Tennessee megasite board, which hopes to attract a large business to a site in Haywood County. The state’s other megasite is in Montgomery County, where Hemlock Semiconductor operates a solar plant, another $1 billion investment that has already led to further expansion.

State and local taxpayers have contributed hundreds of millions of dollars in incentives toward luring Volkswagen to Tennessee, with one estimate in 2008 putting the figure above $500 million. The land at the Enterprise South site in Chattanooga was purchased for a reported $81 million, and a reported $43 million went for connections to highways and roads.

Volkswagen has a presence at 30 locations across the United States.

Browning said the Passat will play a major role for the company.

“The Passat produced here in Chattanooga will be a key enabler of our growth and will allow us to compete very much in the core of the midsize sedan segment here in the U.S., the largest single car segment in the U.S.,” Browning said.

“You could say the future for Volkswagen begins here in Chattanooga.”

The Passat is expected to be one of two high-volume vehicles the company makes in this country, the other being the Jetta.

The plant’s opening comes after Volkswagen announced in July 2008 that it was choosing Chattanooga from nearly 400 potential sites, with the aim of making 150,000 midsize sedans each year.

Construction of the plant began in February 2009. The first robots for making cars were in place by February 2010. The company is emphasizing attention to having an environmentally friendly plant. Among the techniques toward that end is collecting rainwater from the roof for use inside the plant cooling welding guns. Fischer said the plant will use 35 percent less energy than a standard automotive plant.

Much was made Tuesday of promises being kept, both by Volkswagen and by state and local governments. Much was also made of the potential for attracting suppliers for the plant, which can greatly enhance the economic impact of the facility.

“If you talk to their management team, to a person, they say Tennessee has delivered on what they said they would. Of course, we feel the same way,” Haslam said. “They said they would have a $1 billion plant and have it open in three years, and they did it.”

Haslam said his two daughters, Leigh and Annie, as well as daughter-in-law Hannah, have Volkswagens. When asked why there are so many Volkswagens in the family, Haslam said simply, “It’s what my daughters wanted.”

Browning said one of the things that stood out to Volkswagen officials has been the enthusiasm and attitude of the local people, whether they were public officials or residents. He explained that last September when Volkswagen was launching a new Jetta and had 650-700 Jettas in Atlanta for a dealers’ meeting, the company wanted the dealers to see the Chattanooga plant. Dealers drove the Jettas from Atlanta to Chattanooga. A local radio station picked up on it, and it led to a reaction.

“Spontaneously, local residents came out, standing on bridges on overpasses over the highway with ‘Welcome Volkswagen’ signs, showing a true sense of enthusiasm about Volkswagen coming to the local area,” Browning said. “That’s a perfect example, not just from the official level but also the individual level. The community is very enthusiastic about Volkswagen coming to the area.”

Ramsey said the plant is a success story.

“It just tells me the right things are happening,” Ramsey said. “It can happen again. It just takes time and patience.

“It means the future is very bright here.”

Political Movement on Megasite

Gov. Bill Haslam presided over the first meeting of the governing body of the Haywood County megasite Monday in Jackson, but it was Deputy Gov. Claude Ramsey who offered the most pointed advice to the new board.

He spoke from experience.

“You will have a lot of highs and lows,” said Ramsey, who was Hamilton County mayor as Chattanooga pursued the Volkswagen plant that ultimately brought a $1 billion investment to the megasite there.

“This is a very patient process that a lot of people will be impatient about. It’s hard work. There will be times people will say that nothing is happening. I’ve been called a lot of funny names. There will be those days when it’s a little bit slow.”

But the message was perseverance, and Ramsey encouraged West Tennessee leaders to weather the down times as the site seeks a client like Volkswagen or Hemlock Semiconductor, which made its own $1 billion investment at a megasite in Montgomery County and has already announced a substantial additional investment there.

After the meeting, Ramsey visited the Haywood County site, accompanied by Rep. Jimmy Eldridge, R-Jackson, and Rep. Curtis Halford, R-Dyer, as well as other officials working on the project. The group included Haywood County Mayor Franklin Smith, whom the board elected chairman at its meeting on Monday. Haslam did not visit the site Monday but has been to the location on more than one occasion.

Haywood County is the last of the state’s three TVA megasites, designed to attract major business relocations, an issue that not only plays a role in the state’s economic future but has become a political football in its own right.

Haslam recently announced that the state will move away from the emphasis on attracting huge business re-locations and concentrate on feeding the growth of existing businesses in the state. But Haslam told board members Monday that the significance of the West Tennessee site has not diminished.

“I can assure you there are few things we care as much about as the proper development of the megasite,” Haslam told the group at a conference room at the McKeller-Sipes Airport in Jackson.

“I said back when I was campaigning, and I’ll say it again now, I think it is one of the best assets we have for the state when we look at economic development. We do not have a lot of pieces of property like this that are available.”

The site sits near Stanton, north of exit 42 on Interstate 40. At this point, the project remains only a conceptual plan. The site was originally certified to meet the potential needs of an automotive manufacturer. There is no indication that an auto maker will move into the site, but state officials hope a business will locate there that can attract numerous suppliers, as an automotive manufacturer would.

“We’re not pinning all of our hopes for job development on the megasite. We have some prospects right now in this part of the state we’re working hard to hopefully bring here,” Haslam said after the meeting. “But this is a great long-term project.”

Board members were briefed on where progress on the site stands now. It is in a vastly rural area, which creates challenges for infrastructure. Authorities told the board Monday the location would need 3 million gallons of water a day and that three wells are being dug into the Memphis aquifer to meet that need. Each well would draw 1.5 million gallons, and the board was given assurances Monday the amount of water would be adequate to meet the need. Waste water services will also be necessary.

The site will need a water treatment system, which will be on the property, and Highway 222, which runs through the middle of the site, will need to be re-routed. The board was told that while no specific funds were put into the budget just passed by the Legislature that flexibility is in place to make funding available if a client is found for the site. The state already has $34.7 million set aside in the Department of Economic Development for use on the Haywood County project.

The site includes 3,800 acres, with the core site comprised of 1,700 acres.

Democrats had criticized Haslam and other Republicans during the legislative session that ended Saturday for not putting more funds into the megasite at a time when the state is desperate for jobs. Several lawmakers from West Tennessee, including Democrats from the House and Senate, attended the meeting Monday in Jackson. But there seemed to be agreement and optimism among lawmakers from both parties that the project is on the right track.

Nevertheless, it still figures to be at least two years before a big business could be up and running at the site, the board was told Monday.

Rep. Craig Fitzhugh, D-Ripley, the House Democratic leader, Sen. Lowe Finney, D-Jackson, chairman of the Senate Democratic Caucus, and Rep. Johnny Shaw, D-Bolivar, had been critical of Haslam’s lack of attention to the megasite in his budget earlier this year. But all three attended the board meeting Monday and appeared upbeat about the project.

Smith’s selection as chairman was noteworthy in that he has been an integral player in seeking support for the megasite and made a campaign ad for Haslam in last year’s gubernatorial race, although Smith is a Democrat.

“We’ve been patient. I’ve been working on this almost seven years,” Smith said after the board meeting in Jackson. “Patience is something we’ve got.

“What people need to understand is this is a state project. There is statewide support for this project. I want folks to understand this is not a Haywood County project. It will benefit everybody in West Tennessee.”

Bredesen Announces Job Recruitment Trip to Germany, Spain

State of Tennessee Press Release; June 4, 2010:

Governor, Commissioner to Meet with Volkswagen, Potential Suppliers, Clean Energy Experts

NASHVILLE, Tenn. – Governor Phil Bredesen and Economic and Community Development Commissioner Matt Kisber today announced they will travel to Germany and Spain June 13-19 to meet with officials from Volkswagen and potential Volkswagen suppliers who may have an interest in developing manufacturing or distribution facilities in Tennessee. The Governor and Commissioner will hold discussions in Berlin and Wolfsburg, Germany, then travel to Barcelona, Spain.

“Since Volkswagen’s announcement in 2008, we’ve focused our job creation efforts on maximizing the jobs created by that $1 billion investment,” said Governor Bredesen. “We’re working to expand the ripple effect of that ‘anchor project’ across Tennessee’s economy.”

In addition to the focus on Volkswagen and its suppliers, the Governor and Commissioner will also be meeting with trade and business development officials in Spain, especially those focusing on the clean energy economy. The trip comes after Spanish Consul General Miguel Angel Fernandez de Mazarambroz met with Commissioner Kisber to discuss potential trade openings between Tennessee and Spain in April. While visiting Spain, Governor Bredesen will hold high level talks with senior government officials from the Spanish state of Catalonia and from the Spanish Energy Ministry.

“Tennessee has developed a strong reputation in the development of solar and other renewable technologies,” said Commissioner Kisber. “The Pew Center for the States has called Tennessee ‘one of the three fastest growing states in the U.S.’ for clean energy jobs and we want Spanish companies to know that if they plan to enter the growing American clean energy market, Tennessee is the best place to locate.”

Germany is Tennessee’s 6th largest trading partner, having purchased more than $620 million in goods and services from Tennessee companies in 2009. Spain is Tennessee’s 18th largest trading partner, purchasing more than $200 million in Tennessee goods and services.

Accompanying the Governor and Commissioner Kisber will be Revenue Commissioner Reagan Farr and Finance and Administration Commissioner Dave Goetz. In the early part of the last decade, Spain established tax and governmental policies which generated explosive growth in the Spanish solar industry, followed by retrenchment as government subsidies shrank. The Tennessee delegation hopes to learn from Spain’s experience in solar development.

The Tennessee Department of Economic and Community Development’s mission is to create higher skilled, better paying jobs for all Tennesseans. The department seeks to attract new corporate investment in Tennessee and works with Tennessee companies to facilitate expansion and economic growth. To find out more, go to www.tnecd.gov or www.investtennessee.org.