HERNDON, VA – About 56,000 U.S.-market Passat sedans will roll out ofGroup of America Inc.’s new Chattanooga, TN, plant this year, officials here say.
The new model is slated to launch in North American markets in September, after taking its public bow at the North American International Auto Show in Detroit this week. U.S. dealers will begin receiving “preview” cars in June.
The sedan, which replaces the imported Passat in the U.S. market, is a lynchpin in VW’s goal to more than double sales in that market to 800,000 units per year by 2018 and is the first model the German auto maker has designed specifically with American consumers in mind.
In addition to sales in the U.S., Canada and Mexico, the locally built Passat may be exported to South Korea and the Middle East. The car will be produced in China, as well.
Chattanooga currently is in full system-trial mode, but expects to launch Job One during the first half of the year (official opening is set for April) and be up to maximum linespeed by the third quarter.
The $1 billion, 1,400-acre (567-ha) plant initially is set to produce 150,000 cars annually on two shifts. But Frank Fischer, president and CEO of the operation, says output could be boosted to as much as 170,000 under existing planning.
Annual capacity could be taken further to 250,000 vehicles within the plant’s existing structure, he tells a group of U.S. and foreign journalists at a backgrounder here ahead of the car’s North American International Auto Show unveiling today in Detroit. But that would require an additional paint shop line and a few more robots in the body shop.
A doubling of U.S. capacity to 500,000 vehicles per year is possible, if an identical sister plant were constructed on available land adjacent to the existing facility.
Fischer says the current plant could go to a 3-shift operation if VW determined it needed to boost production quickly, but that would be something “we would try to avoid.”
“If you look at the parts supply chain, it is better to have a 2-shift operation,” he says. “It gives you time to solve problems.”
The existing plant, modeled after the Emden, Germany, facility that produces the European-market Passat, has the flexibility to build “at least three product lines,” Fischer says.
Currently, there are 1,300 workers at the plant, including about 183 long-term expats and 140 employees who have come from other OEMs. Employment is expected to rise to 2,000 people once full production is reached.
Pay starts at $15 an hour but increases with experience, a setup similar to the Detroit Three’s tier-two wage program. Workers also can qualify for bonuses if certain metrics are met, officials say.
The United Auto Workers union has said it will target the Chattanooga plant in an organization drive, but Fischer says there is no sign of union activity yet. “It will be up to our employees,” he says of unionization.
Fischer admits launching an all-new plant and vehicle using a new supply base is a daunting task. But he promises the rollout will go smoothly and VW won’t repeat any of the mistakes it made in building problem-plagued cars in Westmoreland, PA, in the decade beginning the late 1970s.
“We are absolutely dedicated to make it happen,” he says. “We’ve learned (lessons) from Westmoreland and our other more-successful plants.”
To ensure a quality launch, VW took the unusual step of overseeing production die design for many of the key outsourced parts “to make sure (suppliers) were using the right methods,” Fischer says.
Three production trials have been run at Chattanooga, producing 331 bodies and 226 finished cars to date.
Fischer also points to the plant’s layout as a quality-directed design. Management occupies one central office area located down the spine of the facility within easy view of and access to production operations. Body, paint and assembly quality check points are located within a circle less than 300 ft. (92 m) in diameter, he notes, ensuring problems are spotted and solved “really quickly.”
There are two tracks onsite, one for high-speed testing and the other to check for squeaks and rattles.
Some 160 suppliers provide parts for the U.S. Passat, including 30 companies new to VW. Most of the parts will come from Mexico and the Michigan area, with much of the remainder produced in Tennessee, Georgia and Alabama.
Ninety-percent of the car’s content will be “U.S. dollar-based,” Fischer says, with about 80% produced in North America. The Passat’s main 2.5L engine will be sourced from Mexico, but VW will import an optional 2.0L turbodiesel and a V-6 gasoline engine for the car from Germany.
Transmissions also will be imported for now, but Fischer says VW ultimately would like to manufacture those in the U.S., though the auto maker has not begun a site-selection process.
Seven suppliers are located on plant grounds, including Chattanooga Seating Systems, a joint venture ofInternational Inc. and Hollingsworth Logistics, and Emcon, an exhaust subsidiary of SA.
Also on site is a separateoperation producing fascias and trim; ThyssenKrupp AG (chassis systems); M-Tek (headliners, door panels); Wingard Wheel Works LLC (wheels); Ceva Logistics (logistics); and Draexlmayr Group Automotive (sequencing). Stampings will come from a nearby Gestamp Corp. facility.
“We tried to get as many parts (locally) as possible,” including raw materials such as plastics and steel, Fischer tells Ward’s.
“It’s important in being flexible and (to protect against) currency (fluctuations),” he says.