Open for business: VW begins building Passats in Tennessee

VW's new Passat assembly plant in Chattanooga, Tennessee, goes operational today.

With rising demand for its North American-oriented vehicles, like the redesigned Jetta, Volkswagen is bullish on its second effort to build cars in the United States.

The new facility in Chattanooga, Tennessee, formally opens today, with a workforce of around 1,700 that could grow to more than 2,000. It will be the exclusive home to the North American-market Passat, which isn't expected to be sold overseas.

This isn't VW's first effort in the U.S.: Many potential Passat buyers probably won't be aware of the Westmoreland County, Pennsylvania, plant that VW ran from 1978 to 1988. Between questionable management, shoddy quality and designs oriented too much to American buyers, Westmoreland-built VWs developed a negative stigma that led to poor sales.

But this isn't the same VW, the automaker promises. Through the end of April, sales are up 23 percent, driven primarily by a big 87 percent increase in demand for the redesigned 2011 Jetta. Aimed specifically at buyers in the U.S., the car was nearly universally panned by critics because of its perceived Americanization, but has hit a home run with consumers thanks to its roomier interior and lower price.

The workforce
So far, VW has resisted attempts by the United Auto Workers union to assemble its 1,700-strong workforce - something it did not do back in 1978 when it opened the Pennsylvania plant.

VW says its base wages are slightly higher than those found at UAW plants; assembly positions start at $14.50 but can raise in three years to $19.50 and there are performance-based bonuses. UAW plants pay workers $28 per hour, but 2007 concessions mean that automakers only need to pay new hires $14 per hour.

The German automaker puts each assembly line worker through a three-week non-manufacturing training, which includes mandatory classes to learn about the history of VW. In addition, workers get to test drive new VW products. Then, workers spend six to nine weeks in on-the-job training.

VW can't bar the UAW from talking to its employees and encouraging them to join its ranks, but the union has rarely succeeded in convincing employees of foreign automakers to unionize.