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Volkswagen Heading For Virginia

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The Associated Press

Published: September 7, 2007

HERNDON, Va. - Volkswagen is moving its North American headquarters out of the Detroit area - the nation's automotive capital - to the suburbs of the nation's capital and will cut 400 jobs in the process, the German auto maker said Thursday.

Volkswagen of America's move from Auburn Hills, Mich., to Herndon, Va., will begin in April and be completed by the end of next year, the company said.

It said that 600 of the current 1,400 staff will remain at Auburn Hills in call center and technical services positions, and 400 jobs will be transferred to Virginia. About 150 employees in Michigan are expected to move to Herndon, Volkswagen of America President and CEO Stefan Jacoby said.

The remaining 400 jobs will be cut, the company said.

Jacoby said the company scouted 14 locations before settling on northern Virginia, which offered $6 million in economic incentives.

He said he wanted to get Volkswagen's headquarters closer to the company's customer base, which is strong on the East and West coasts and particularly strong in the Mid-Atlantic region. He also said Virginia's reputation as a business-friendly state and proximity to Dulles International Airport, a major international hub, were strong factors.

'This decision is not a rejection of the state of Michigan. We will remain a major force in Auburn Hills,' Jacoby said.

Jacoby said he did not think it would be difficult to find qualified auto executives and senior staff in the Washington area, given the educational levels in the region.

Headquarters for affiliated brands and services, including Audi of America, Audi Financial Services and Volkswagen Credit, also will move.

Volkswagen is trying to boost its presence in the U.S. market, and Jacoby said he wants to do a better job of developing and marketing cars that will appeal to American consumers.
Volkswagen AG is the world's fourth largest producer of passenger cars and is Europe's largest auto maker, but accounts for just 2 percent of the U.S. auto market, company spokesman Steve Keyes said. The U.S. market accounts for a little less than 5 percent of Volkswagen's worldwide sales.

Volkswagen CEO Martin Winterkorn said that 'the U.S. market has top priority for Volkswagen.'

The company's decision to move its North American headquarters highlights the disparate economic fortunes of the Washington area and Detroit.

Metropolitan Washington has one of the lowest unemployment rates of any metro region, at 3.3 percent, and Detroit, with an 8.4 percent unemployment rate, has the nation's highest. Fairfax County, home to the new headquarters, has the highest median household income of any county in the nation, according to the most recent census estimates.

Virginia Gov. Timothy Kaine said the $6 million incentive package is typical for a deal of this size. The governor said he was particularly pleased to add a major automotive company to Virginia's corporate roster after the loss of a Ford Motor Co. manufacturing plant in Norfolk, which closed this year.

Volkswagen does not have an assembly plant in the United States but has expressed interest in building one. Kaine said he hoped that Volkswagen would pick Virginia if it chooses to expand.

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