Tag Archives: incentives

Legislative hearing on VW becomes a pep rally?

By Erik Schelzig, Associated Press
CHATTANOOGA, Tenn. — A legislative hearing called by a leading Volkswagen critic just days after news of a diesel emissions cheating scheme broke last month turned into more of a pep rally than a grilling in the city that is home to the German automaker’s lone U.S. plant on Thursday.

A top Republican in the state House said he expects the scandal will turn out to be a “small bump in the road;” a former governor said critics were doing a disservice to more than 3,000 workers at the plant; and the state’s economic development chief went to a nearby dealership to put a $5,000 deposit on a new SUV to be made at the factory next year.

Volkswagen earlier in the day announced an official decision to stick with its lone U.S. plant in Chattanooga — including production of the new midsized SUV next year — despite the uncertainty caused by its emissions scandal.

The Chattanooga meeting was presided over by Sen. Bo Watson, R-Chattanooga, a longtime critic of the company for not taking a harder line against the United Auto Workers’ efforts to unionize the plant. But Watson opened the hearing by saying that labor issues were not the reason for the hearing, and the issue did not come up during the discussion.

“I’m kind of interested in what’s happening in my hometown and home state,” Watson said.

Christian Koch, the plant’s president and CEO, said that diesels made up an average of between 20 percent and 25 percent of the midsized Passat sedans produced in Chattanooga before sales were halted following the revelations. The plant has made more than 500,000 Passats since it opened in 2011.
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Haslam visits Volkswagen; says state investment ‘solid’

By Lucas L. Johnson, Associated Press
CHATTANOOGA, Tenn. — Gov. Bill Haslam said he visited Volkswagen’s Chattanooga plant on Wednesday to let its workers know the state is on their side amid an emissions cheating scandal involving the German automaker that he says has nothing to do with them.

The Republican governor spoke to employees then talked to reporters at a state transportation management center across from the VW plant.

“Everybody knows about Volkswagen’s struggles,” Haslam told the news media. “What is getting lost in that story is that there are some men and women right here in Chattanooga that are producing a great product, who have nothing at all to do with the problems that have been created.”

Haslam added: “One of the purposes today was to tell them, ‘The state of Tennessee is not going anywhere in terms of supporting you all. We want this to be a success.'”

The governor said he still has confidence in the plant and believes it can still successfully push out vehicles — including the production of a new sports utility vehicle — despite the scandal in which Volkswagen was caught outfitting diesel cars with software to defeat emissions tests.
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Legislators to talk clawbacks at Volkswagen hearing

State lawmakers plan to discuss the idea of clawbacks From Volkswagen at a special Senate committee hearing Oct. 29 in Chattanooga, reports The Tennessean.

“Metrics and ‘clawback’ provisions will be a part of the discussion, and it is too early to determine what, if any, metrics VW may have attained,” (Senate Speaker Pro Tempore Bo) Watson said in a prepared statement to The Tennessean.

“The purpose of the hearing is to allow for a transparent conversation between the Senate, ECD, and VW about how VW moves forward in Tennessee and insure the public that the Senate takes its fiduciary responsibility seriously, which means we will review the components of our most recent incentives and VW’s performance relative to the incentives.”

The German automaker faces billions of dollars in fines after a U.S. investigation revealed at least 11 million cars were installed with software that allowed them to cheat on emissions testing. The incoming chairman for VW recently said the scandal is “an existence-threatening crisis for the company,” according to USA TODAY and other reports..

…Tennessee Department of Economic and Community Development Commissioner Randy Boyd (mentioned) the idea of clawbacks — requiring a company to return state money if the company doesn’t meet previously agreed upon benchmarks — in a letter he sent in late September to the General Assembly. But that letter merely outlines the clawback provision in the latest $165 million capital grant provided to VW.

“Any discussion of clawbacks is hypothetical. We have assurances directly from company executives that Volkswagen’s expansion remains on track,” said Clint Brewer, a spokesman for the department.

News release below
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TN politicians fretting about VW troubles

Excerpts from a Times-Free Press story:

House Majority Leader Gerald McCormick, R-Chattanooga, said VW needs to get to the bottom of the scandal.

“You know they’re talking about fines. I think they need to be talking about people going to jail if they did this,” McCormick said. “It’s a huge fraud by a huge company that has plenty of attorneys to vet this kind of thing. There’s no excuse for it.”

McCormick said plant workers have asked him, “‘Do you think this is going to affect us? Or are they going to close the plant, that kind of thing. I can’t imagine they would close the plant after making that big investment. It wouldn’t shock me if they didn’t slow down their expansion plans though.'”

Meanwhile, Haslam said he has two concerns.

“No. 1, we have an investment in the original plant and then the expansion. Second, we obviously have a vested interest in their success; I mean, in them selling cars. And so we’re urging them to get everything out in front of everybody as quickly as possible so existing customers can understand what the solution is going to be and [so] that Volkswagen can have a clear path forward.”

Tennessee government provided an estimated $358.2 million of the original $577.4 million in incentives that drew Volkswagen to build its Passat in Chattanooga. Local governments provided the remaining $219.2 million.

And this year Tennessee, Chattanooga and Hamilton County governments committed to more than $260 million in incentives for a new line of SUV production.

“Obviously there’s a lot of questions out there in the consumers’ mind. I think that’s why it’s really important for Volkswagen to come out quickly and say, ‘Here’s what we’re going to [do to] address our existing customers and here’s why we can assure potential customers that they’re going to get the vehicle they think they’re buying,'” Haslam said.

Watson said there are worries of a domino effect on jobs related to the plant and its suppliers.

“That’s all of our concerns,” the Senate speaker pro tempore said.

Haslam, other politicos: VW troubles shouldn’t hurt TN

By Erik Schelzig, Associated Press
NASHVILLE, Tenn. — As an emissions cheating scandal engulfs the German automaker Volkswagen, Tennessee officials are trying to soothe fears about the potential impact on the company’s Chattanooga factory, the crown jewel of the state’s economic development efforts of the last decade.

Republican Gov. Bill Haslam said Thursday he’s been assured by officials at the Tennessee plant and Volkswagen’s Wolfsburg, Germany, headquarters that “nothing has changed” for their Tennessee operations.

“Obviously we’re concerned about the impact, but their reassurance is this is not going to change their business plan in Chattanooga,” he said.

Chattanooga was selected in 2008 as the site of Volkswagen’s first U.S. plant in decades. It was part of a strategy endorsed by then-CEO Martin Winterkorn to boost North American sales. Winterkorn resigned Wednesday, days after admitting that the world’s top-selling carmaker had rigged diesel emissions to pass U.S. tests during his tenure.
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VW troubles escalate; TN legislature to investigate

As Volkswagen’s troubles escalated internationally on Tuesday, state Sen. Bo Watson called for a legislative committee hearing “at the earliest possible date” to consider possible impact within Tennessee, where lawmakers honored Gov. Bill Haslam’s request for $165 million in incentive payments to Volkswagen earlier this year.

“While all of the relevant facts may remain unreported at this time, I am very concerned as to the financial impact these violatons could present to the State of Tennessee,” Watson wrote Senate Finance Committee Chairman Randy McNally in a letter distributed to media Tuesday.

“It therefore seems prudent and responsible that the Finance, Ways and Means Committee of the Tennessee Senate consider a public meeting to hear testimony from Volkswagen and state officials as to the impact upon Tennessee’s investment in Volkswagen,” Watson said.

McNally said later, according to a Senate Republican Caucus spokeswoman, that he “will schedule a hearing as soon as we coordinate with committee members and the other parties involved.”

Watson, R-Hixson, represents a portion of Hamilton County, where Volkswagen has built a major facility and received huge payments for doing so from the state.

Here’s an AP story on Volkswagen’s troubles, filed about the same time Watson’s letter was sent:

BERLIN (AP) — Volkswagen AG’s smog-test scandal escalated Tuesday as the company issued a profit warning, set aside billions to cover the fallout and lost billions more in market value. VW’s CEO said he is “endlessly sorry” that the world’s top-selling carmaker has squandered worldwide trust in its brand.

The rapid-fire developments came as Volkwagen stunningly admitted that some 11 million of the German carmaker’s diesel vehicles worldwide contain software that evades emissions controls, not just the half a million cars that the U.S. Environmental Protection Agency said violate the Clean Air Act.

Volkswagen also warned that future profits could be affected, and set aside an initial 6.5 billion euros ($7.3 billion) to cover the fallout.
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Bredesen-era electric car rebates revived with leftover $682K

NASHVILLE, Tenn. (AP) — The Tennessee Department of Environment and Conservation is restarting a rebate program for electric car buyers.

WPLN-FM (http://bit.ly/1cRP2Hn) reports the state had $682,000 left two years ago after shutting down the subsidies, which were approved five years ago under former Gov. Phil Bredesen. The funds have remained unspent.

The station reports that instead of finding another use for the money, the state agency decided to begin giving out rebates again.

Beginning in June, those who purchase electric cars would be eligible for a $2,500 rebate while hybrid car-buyers would be eligible for $1,500.

Program manager Molly Cripps said there were various reasons to offer the subsidies even with the market growth for electric cars.

“I mean, air quality is one piece, certainly,” she said. “It is also to support not just Nissan, but any manufacturers of whether it be an electric vehicle or more sustainable transportation.”

The state originally set aside $2.5 million for rebates and issued 727 over a time period of about two years.

The same terms that applied then apply now. Car buyers must live in Tennessee and purchase the vehicle at a dealership in the state.

Note: News release is HERE.

Company fires 600 workers after collecting $1.25M in state incentives

Conduit Global will lay off nearly 600 workers in Memphis after spending $1.25 million in state incentives provided for construction and training, reports the Commercial Appeal.

However, the company, which disclosed the layoffs Wednesday, is not yet in danger of having to repay the state of Tennessee.

Conduit Global promised to provide 1,000 new jobs at the call center that opened last year, but the New York firm has until Dec. 15, 2018, to reach its jobs target before the state could seek to “claw back” any of its $1.25 million.

“The grant term is five years, and the department is monitoring the project closely,” said Clint Brewer, Tennessee Department of Economic and Community Development assistant commissioner for communications and marketing.

“We are hopeful that during the grant term Conduit Global will meet its employment obligations,” Brewer said by e-mail.

Conduit Global on Wednesday told its employees as well as the state that it will lay off 592 employees by July 2 due to an unexpected loss of a client for its customer care call center services. The pink slips began that day, with about 90 wireless trainees, according to information the company filed with the state.

State gives $8M to ‘Nashville’ TV show

The ABC drama “Nashville” quietly secured economic incentives from the state last week as part of Gov. Bill Haslam’s amended budget, according to The Tennessean.

The Haslam administration allocated a combined $16 million to the Department of Economic and Community Development’s film and television incentive fund, and $8 million of that has been earmarked for “Nashville” to continuing filming in Music City. Lobbyists for the show’s production team have also been in talks with Mayor Karl Dean’s administration about additional incentives from Metro.

Unlike last year when representatives from “Nashville” kicked the tires on filming the show elsewhere amid down-to-the-wire negotiations with the state and Metro, discussions have gone smoothly this time. There’s still the question of whether ABC will pick up the music-focused series for a fourth season, and the production team feels the incentives are necessary to justify the costs of filming remotely.

“They’ve done a great job proving their economic value so we wanted to be supportive,” said Randy Boyd, ECD commissioner.

In addition to the $8 million for “Nashville,” $4 million will go to productions based in Memphis, $2 million to Knoxville productions, and $2 million will go to the recurring incentive fund for various productions across the state. Even with extra funding in Haslam’s budget, Tennessee’s film and television incentives pale in comparison to other states. Boyd pointed out that Louisiana gives approximately $270 million to lure productions there.