Chattanooga - Volkswagen Group of America on Monday announced the formation of its new manufacturing company, Volkswagen Group of America Chattanooga Operations, LLC, to be based in Chattanooga, while saying the $1 billion plant at the Enterprise South Industrial Park "absolutely" will be built.

At a community briefing regarding the progress of the new Chattanooga facility, the company also unveiled the architectural renderings for the huge facility.

Frank Fischer, CEO, Volkswagen Group of America Chattanooga Operations, said, "2009 will be a big year for Volkswagen in Chattanooga, and I am pleased with the continued progress we have made at the plant. With the formation of the manufacturing company, the architectural renderings and construction set to begin on the paint shop, we are well on track to meet all our scheduled milestones.

"Our commitment to manufacturing in the U.S. is reinforced at the highest levels of our company. The Chattanooga facility is a critical part of our 2018 strategy and will be a benchmark for all future plants across the company."

The architectural renderings of the plant show an integrated assembly, paint and body shop, with a full scale training center located immediately adjacent to the facility.

The training center, developed in conjunction with Chattanooga State Community College will include a lean/corporate training center, a basic training center focused on the production processes, an advanced training center focused on the automotive components, an apprenticeship training center and a conference center. The training facility is scheduled to be completed by the 3rd quarter of 2009.

Progress also continues for hiring and supplier procurement. The company, which now has a head count of close to 100 full time employees, is preparing to move into new office space at Chestnut Towers in downtown Chattanooga in the first week of February. Those employees whose work is directly related to the construction of the new plant will remain at the Discovery Drive office space.

Additionally, equipment procurement for the paint shop has been issued, and more than 10 meetings with additional suppliers have been scheduled for this week alone.

"In a tough economic climate, Volkswagen is pleased to be bringing jobs and investment to Tennessee," Mr. Fischer said. "We appreciate the commitment from our state and local partners and look forward to an eventful year."

With an 18 percent downturn in automobile sales for the U.S. market in 2008, Volkswagen Group of America sales remained close to its 2007 totals, he said. As a result, the company's U.S. market share increased more than 20 percent. Additionally, Volkswagen Group globally saw an increase in overall sales in 2008.

The local plant will build a new mid-size sedan designed specifically for the U.S. market and is destined to play a key role in meeting the company's long-term goals, it was stated. The plant will create 2,000 direct jobs in the region. According to studies, the new plant is expected to generate $12 billion in income growth and an additional 9,500 jobs over the life of the project.

Start of production is slated for early 2011, with an annual capacity of 150,000 vehicles, 30 percent of which will be powered by Volkswagen's TDI clean diesel technology.

Mr. Fischer said work will start later this month drilling holes for the paint shop, and concrete will be poured in February.

He said, with the decline in the cost of steel and other products and with a shortage of building going on, now is a good time to construct the facility.

Mr. Fischer said officials of Porsche, which own a large stake in Volkswagen, are behind the Chattanooga project.

He said the mid-sized sedan to be built in Chattanooga "is a beautiful car" that will get up to 55 miles per gallon.

On whether Audis may eventually be built here as well, he said that is a possibility.