According to VW USA’s CEO Jonathan Browning, America is missing out on huge investments and new jobs due to our “rising debt and political discord.” In 1999, the U.S. did attract 41 percent of all global foreign direct investment. Now, the number is less than 20 percent. The money is going to places like China where Volkswagen has 12 plants and three more on the way, while there is only one in the U.S. Browning is talking in code about several facts of post-bailout automotive life.
1) Union Trouble
Volkswagen is the last major automaker to build a new plant in the US. The UAW has been targeting it for organization since it opened for business. Neither VW nor its workers want the UAW around, even its German unions want to keep the UAW away, and yet the UAW pushes on. The result: Audi production that was supposed to be added to Chattanooga is going to Mexico. Still, the UAW has continued to push for unionization at Chattanooga, even into this year.
Largely prodded by labor unions, the Obama administration has embarked on a world trade war. This war is financed out of the pockets of consumers, it has not added a single job, and prevented many from being created. OEMs favor Mexico over the U.S., also because Mexico has trade pacts with major export markets, the U.S. has not. The pandering to union interests costs jobs and kills exports.
3) CAFE/EV Credits
Whereas GM’s DC Rep has cheerfully admitted that, for some strange reason, the latest round of CAFE negotiations were notable for their unprecedented cordiality and pulling-togetherishness, Volkswagen has been openly unhappy with the new rules, accusing them of being unfair, favoring truck makers (read: Detroit) and not technology neutral.
Interestingly, VW’s reasonable quibbles with environmental policy in both the US and Europe have earned it a long campaign of attacks from Greenpeace. Nobody has been able to explain why VW has been targeted by Greenpeace, as there’s no objective environmental reason for doing so. Conspiracy theories, anyone?
Upshot: Not only is VW not going to bring new Audi production to the US, it won’t build its next-generation Golf here either… both are going to Mexico. And this isn’t just a business decision: they say capacity in Chattanooga is “exhausted,” but it absolutely is not. I’ve been there, I’ve seen it, they have room to add entire new lines there. No way would they rather use their ancient Puebla plant rather than their shiny-gleaming new Chattanooga plant, all things being equal.
The business climate must be very rotten if a country embroiled in a shooting war with heavily armed gangs and sometimes rogue military elements is favored over a country that used to be proud of its enterprise spirit. The armed gangs seem to scare investors less than union thugs with friends in high places.