March 17, 2010

Volkswagen should build in Maine

— As the euro has risen against the dollar, European companies are finding it difficult to be competitive in the United States with goods made in Europe.

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** FILE ** A worker attaches the VW logo to a Volkswagen Golf V in the assembling line at the Volkswagen plant in Wolfsburg, northern Germany, in this Feb. 15, 2007 file picture. The European Union's top court is to decide Tuesday Oct. 23, 2007 whether Germany's so-called "VW law" is legal in a ruling that will have immediate effect on the automaker's largest shareholder, Porsche, and impact governments' future ability to shield companies from unwanted takeover. (AP Photo/Kai-Uwe Knoth)

AP

It was not surprising then, that at the U.S. North American International Auto Show in January, Volkswagen Auto Group chief executive Martin Winterkorn said Volkswagen will decide this year where to build a new auto plant in North America.

Winterkorn said that if the plant were built in the United States, it would not be on the West Coast. He said locations in Canada and Mexico are also being considered. Some states are already working to capitalize on Volkswagen's interest in North American expansion.

After considering multiple locations, last fall Volkswagen announced it would move its North American headquarters out of the Detroit area to Virginia this month. The company's move to Virginia may be a hint of its intention to locate its manufacturing plant on the East Coast as well, but it is still uncertain where Volkswagen might build its plant.

Virginia Gov. Timothy M. Kaine has said he hopes Volkswagen will pick his state. However, last month Stefan Jacoby, chief executive of Volkswagen Group of America, said a location has not been chosen. There is still time to make a case for Maine.

According to Place and Prosperity, a report prepared for Gov. Baldacci by the Maine State Planning Office last July, manufacturers are the most sensitive to traditional location costs such as wage rates, proximity to markets or raw materials, transportation costs and utilities; quality of life factors are generally less important.

However, as noted by the Brookings Institution in 2006, ''Maine possesses a globally known 'brand' built on images of livable communities, stunning scenery and great recreational opportunities.'' This brand, Brookings asserts, has increased in economic value as ''the search for quality places grows in importance. In this regard, it asserts, ''Maine is surprisingly well-positioned for the future.''

Maine can make a compelling case to Volkswagen or other European countries, as follows.

First, Maine has a national reputation for its productive and skilled labor force.

Second, Maine can reach Volks- wagen's consumer base in the mid-Atlantic region due to its proximity to Canada and access to Europe through New England's largest tonnage seaport, as well as the world through its international airports.

Third, Maine's quality of life is top-notch. In fact, Portland was ranked 12th in the world by Frommer's in its list of top travel destinations last year. As a major tourist destination, Maine would offer Volkswagen impressive visibility.

In turn, Maine would benefit from a Volkswagen manufacturing plant not only because of resulting job growth, but also because the company's awareness of sustainability as a component of growth may increase its chances of becoming a stable economic partner.

In light of a recent J.D. Power study predicting diesel cars will increase from 3 percent to 7 percent of the U.S. passenger vehicle market by 2012, Volkswagen is equipped to take advantage of an increase in demand for better fuel economy.

Furthermore, there is some evidence Volkswagen is committed to sustainability. In January, Hans Dieter Potsch, of Volkswagen AG's board of management, outlined environmentally friendly technologies necessary to ensure sustainable mobility, in a presentation called Our Roadmap to Profitable Growth, complete with slides depicting a transition to ''ethical second-generation biofuels.''

Volkswagen may decide to keep its manufacturing outside this country. Similarly, Maine may discover that a partnership with Volkswagen is not viable.

But without a deeper look at this foreign company and others who are feeling a magnetic pull towards the region because of the falling dollar and consumer demand for sustainable products, valuable opportunities may be lost. There is still time.

-- Special to the Press Herald

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