VW's decision could be beneficial

Montgomery - Existing suppliers to Mercedes-Benz and other auto makers could benefit from Volkswagen's announcement Tuesday that it will build a $1 billion automobile assembly plant in Tennessee instead of north Alabama, officials said.

"Alabama is obviously disappointed our state was not selected, but we are extremely pleased this Volkswagen plant will be located close to us," Gov. Bob Riley said in congratulating Tennessee after Volkswagen Group of America chose Chattanooga for a $1 billion, 2,000-employee assembly plant.

Alabama tried to sell VW on a site in Limestone County west of Huntsville but Alabama Development Office Director Neal Wade said Alabama will benefit from VW in Chattanooga like it will from Kia being just across the state line in West Point, Ga.

Dara Longgrear, executive director of the Tuscaloosa County Industrial Development Association, said Alabama auto suppliers will be able to court VW business like a recent supplier did Mercedes-Benz in Tuscaloosa County.

German supplier Stankiewicz in April announced it would invest $14 million and hire 200 people to supply noise abatement parts to Mercedes at Vance, Longgrear said. "We have the opportunity to grow the ones we have," Longgrear said.

Other areas of the state are looking with glee at VW.

"With Volkswagen, I believe there will be spinoffs we can take advantage of as a consequence of their geographic location," said Mike McCain, executive director of the Etowah County Industrial Development Authority.

In a losing bid, Alabama and local governments offered VW nearly $400 million in incentives.

"We picked up that Chattanooga was very aggressive at the local level demonstrating how much they wanted this project," Alabama Development Office Director Neal Wade said.

Wade said Alabama and local incentives were $205 million to buy land in Limestone County, $62 million for workforce development, recruitment and training, and $114 million in state and local tax abatements.

Wade said Alabama still seeks projects such as its recent successes: a $3.7 billion ThyssenKrupp steel plant near Mobile, the $350 million railcar plant in Colbert County, the $125 million Goodyear Tire and Rubber Co. modernization in Gadsden, and the $450 million U.S. Steel coke-substitute plant in Sumter County.

"We've got about 50 projects in the pipeline right now," Wade said. "What's great right now is our economic development is really flourishing all over Alabama."

For example, the same day VW announced, Etowah County had $134 million in announced investments.

Keystone Foods announced a 184,000-square-feet, $118 million food processing plant in Gadsden, adding 150 jobs. There's also a $9 million cold storage plant employing 40 and a $7 million expansion by a Mercedes-Benz supplier, McCain said.

Alabama has had tremendous industry recruiting success since Mercedes in 1993 said it would make cars near Tuscaloosa. Since then, Honda and Hyundai opened assembly plants, Mercedes built a second plant, and Toyota opened an engine plant in Huntsville.

Alabama has had disappointments including losing Kia to Georgia, and a Toyota plant that went to Mississippi, although Riley's office said Alabama "really didn't compete" for Toyota.

A company that makes automobiles under contract, Magna Steyr, looked at Guin but said it needed an existing site and couldn't wait to build a new one.

The Air Force initially picked Northrop Grumman and a European partner to build airplane tankers in Mobile. The project was worth 2,000 jobs and between $30 billion and $40 billion but the bidding is being investigated.

"What's going on at the Pentagon now is beyond our control, but the state competed for and won that project, and we fully expect Air Force tankers will be produced in Alabama," Riley spokesman Jeff Emerson said.

Emerson said Alabama had a record year in 2007 with $6.8 billion in announced capital investment. He said the plan is to diversify its base and not depend on one segment.

Dana Beyerle can be reached at (334) 264-6605 or dtb123@aol.com.