VW Eyes Factory Site In North America

Anthony Fontanelle
December 7, 2007

Volkswagen AG is currently searching for the best auto factory plant in North America to trounce the effects of the slump in the value of the dollar.

The rising euro and high labor costs are leading the automaker to consider building new plant in the United States. "Our teams are looking hard in Mexico and the United States," VW production director Jochem Heizmann told the Automobilwoche, a trade weekly. "We need high volume in the dollar zone," he said.

With a second North American plant in addition to one in Puebla, Mexico, VW aims to sell 800,000 vehicles in the United States by 2018, Automobilewoche said, more than double the latest figure.

The largest European automaker reportedly wants to overtake Toyota of Japan as the biggest worldwide in 2018 by selling 11 million vehicles, but the North American market is presently one of the automaker’s weakest.

Persistent deflations by the dollar against the euro have made it harder for the automaker famed for the manufacture of Beetle and VW spark plug wire to sell vehicles that were made in Germany since they have become relatively more costly.

In mid-November, the move had been expected by mid-November by the head of VW of America, Stefan Jacoby. He said that the factory would likely be built in the Eastern Time Zone to facilitate communications with the mother ship in Germany, but no concrete plans have been mentioned. Jacoby added at the November Los Angeles Auto Show that an announcement on a North American factory would be made within the next six months.

A recent study by the Center for Automotive Research, completed prior to the recent fall of the dollar, found that autoworkers in Western Europe make almost $10 more per hour than their colleagues in the United States make.

VW could ultimately decide to expand its factory located in Puebla, Mexico, but the company mostly produces smaller models there, BusinessWeek reported. The German automaker is interested in expanding the number of models available in the U.S. and seeks to double its present sales on the continent to 800,000 units annually.

To stress, VW used to produce cars in a factory located in Pennsylvania but closed it in 1987 after sales of the models built there took a dive. The German carmaker said last week that it was investing $14.1 billion in production capacity around the world. Additionally, VW also opened its first factory in Russia last week.

Source:  Amazines.com