Volkswagen Westmoreland Assembly Plant

Volkswagen Westmoreland Assembly
General information
Status dormant (2010)
Type Factory Complex
Construction started 1969, by Chrysler
Completed 1978 completion
Volkswagen Westmoreland Assembly Plant (Pennsylvania)

The Volkswagen Westmoreland Assembly Plant is a manufacturing plant formerly operated by Volkswagen of America (VWoA), 35 miles (56 km) south of Pittsburgh in Westmoreland County, Pennsylvania near New Stanton. The complex manufactured 1.15 million vehicles[1] from 1978 to 1988.[2] When VWoA began manufacturing at what had been an unfinished Chrysler plant, it became the first foreign automobile company to build cars in the United States since Rolls-Royce manufactured cars in Springfield, Massachusetts from 1921 to 1931.[3][4][5]

Chrysler had called the facility the New Stanton plant; Volkswagen changed the name to simply Westmoreland.[6]

The factory manufactured a range of fuel-efficient small cars with gasoline or diesel engines, all variants (or rebadged models) of Volkswagen's Golf: the Rabbit (79–84); Rabbit GTI (83–84); Rabbit Pickup (1979–1982); the Golf Mk2 and GTI (85–89) and the Jetta (87–89). Built with the largest incentive package the Commonwealth of Pennsylvania had ever offered, the factory had an estimated annual capacity of 240,000 cars and reached production of 200,000 in 1980.[1] Engines and drivetrains for Westmoreland production were sourced from Germany.[1] Employment, projected at 20,000, reached its highest level in mid-1981 at 6,000 [1] and by 1984 had dropped to 1,500.[1]

Initially, the plant was highly successful, but numerous factors contributed to a sharp decline in sales of the cars manufactured at Westmoreland and the factory's ultimate demise: increased competition in the North American small car market, easing of the period's fuel crisis, poorly received changes to the character of the cars, VWoA's long product life-cycle, the internal economics of the plant itself, persistant labor unrest at the plant and poor networking between Westmoreland and Volkswagen headquarters in Germany.[7] The factory operated at less than half its design capacity and VWoA suffered operating losses during the last five years of its operation.[4] Sales of Volkswagen's U.S.-built cars plummeted by nearly 60 percent between 1980 and 1985.[8]

Japanese manufacturers soon followed VWoA's unionized plant into production in the U.S. – achieving success at non-unionized plants including Honda at their Marysville, Ohio, plant and Toyota at their Georgetown, Kentucky, plant.[9]

By the early 1980's, Volkswagen began retreating from manufacture in North America, selling another assembly plant it had begun developing[1][10] and two ancillary plants to Westmoreland in West Virginia and Texas.[8] With the plant operating at 40 percent capacity and annual losses of $120 million,[9] Volkswagen officially closed Westmoreland Assembly on July 14, 1988.[11]

The Westmoreland plant was subsequently used by Sony in the production of televisions from 1990-2008 and as of 2010, sits idle. Volkswagen later expanded production of cars in Puebla, Mexico and in 2011 inaugurated its Chattanooga Assembly Plant.

Contents

Beginnings

Prior to development of Westmoreland Assembly, Volkswagen of America was headed by James W. (Jim) McLernon, a former Chevrolet manufacturing chief. Toni Schmücker, VW management board Chairman, selected McLernon to investigate feasibility of U.S. production,[1] in part to help the company avoid international currency fluctuations and high German wages.[12]

After investigating five sites and narrowing the field to two alternate sites, a former Westinghouse appliance factory in Columbus, Ohio, and a federal tank plant in the Cleveland suburb of Brook Park,[13][3] VWoA signed a thirty year lease on Chrysler's unfinished New Stanton plant originally constructed in 1969[14] on 1,200 acres (5 km2)[5] at Route 119 in East Huntingdon Township – just outside New Stanton, Pennsylvania.

At Westmoreland, Volkwagen developed three major buildings, two minor buildings, and a waste water treatment system. Richard S. Cummins, the plant manager, described the inside of the largest unfinished building with 2.1 million sf, as a "three-dimensional chess-board covering an area of over 37 football fields."[15] Land had to re-shaped for a new railway spur, and underground holding tanks constructed for the various fluids to be pumped into the building.[15] The complex included several two-story buildings: an administration building, a building with worker facilities and a metallurgy, plastic, rubber, and electrical testing lab, a building with a paint lab as well as durability and emissions testing as well as a railway yard.[15]

VWoA purchased the site with a $40 million loan from the state of Pennsylvania and then invested about $250 million to ready the factory for assembly.[1] In the richest corporate deal to date in Pennsylvania history, state and local officials offered VWoA an incentive package worth nearly $100 million in government assistance, highway and rail improvements and a property-tax exemption.[5]

VW subsequently purchased an American Motors stamping plant in South Charleston, West Virginia, investing further to make the factory capable of producing exterior sheet metal stampings for Westmoreland[1] and then purchased a small plant in Fort Worth, Texas for manufacture of the air-conditioning and heating systems and plastic-trim to facilitate integration of factory installed air-conditioning in the Westmoreland-manufactured cars. VWoA would later purchase a former Chrysler missile plant in Sterling Heights, Michigan to begin developing its second North American assembly plant.[1]

On April 10, 1978, VWoA dedicated Westmoreland Assembly[16] by driving its first car off the line, a two-door white Rabbit (in Rabbit C or mid trim level, as with all the initial production)[17] — which had actually been assembled the week before[16] and was shipped after the plant dedication to Volkswagen's Wolfsburg headquarters for its museum.[17] Toni Schmücker, Richard E Dauch, James McLernon, U.S. Treasury Secretary Michael Blumenthal, Pennsylvania Governor Milton Shapp and 1,200 employees were on hand the day the first car came of the line.[18] In his remarks, Schmücker, CEO of Volkswagen AG, paraphrased Neil Armstrong remarks when stepping onto the moon, saying "this may be one small step for America, but it is a giant step for Volkswagen."[16]

According to Richard Dauch, who was general manufacturing manager for Volkswagen Manufacturing of America from 1976 to 1978, "within 18 months, from 1976 until April 10, 1978, we had production, excellent quality with no product recalls, over 1,000 (completed cars) a day within two months of launch, two-door, four-door, diesel, K-Jetronic (fuel injection), 10 different body colors, four different interiors. And in that period, every single goal set by the board of directors was met or exceeded, we launched on time and early. We were staying within budgets. We were actually making profits."[1] As of 1979, Volkswagen was "extremely pleased with the quality and productivity" of Westmoreland Assembly.[12]

Problems

Prior to manufacturing the first car, VWoA conceded that Westmoreland "was a gamble in 'a problem market' marked by sluggish sales and intense competition from other small car makers."[5] Changes to the cars' Germanic character were not well-received; problems surfaced with the plant's economics as well as vehicle quality; and finally, Westmoreland was beset with labor problems.

Americanization

Neither buyers nor company executives in Germany were pleased with the Americanization of the Rabbit using a softer suspension, less expensive interior materials and decidedly un-Germanic color-keyed interiors.[19] Popular Mechanics said "inside is where you really see the Americanization of the Rabbit, the interior is comfortable but puffy. In fact, it's downright tacky"[17] – adding that the side marker lights on the Rabbit looked as if they "came off a kids bike."[17] USAToday, in 2010 described the Americanization of the Rabbit from Westmoreland: "Malibu-ing the Rabbit was the dismissive comment at the time, a reference to a soft-riding Chevy model unloved by fans of German makes."[20] By 1983 Westmoreland went back to using stiffer shocks and suspension with higher-quality interior trim.[19]

Management at Volkswagen of America was also described as having become Americanized[21] and having struggled with advertising for Westmoreland's main product, the Rabbit. In his 2002 book Getting the Bugs Out: the Rise, Fall, and Comeback of Volkswagen in America, David said "German character was fading into oblivion."[21]

Plant Economics

In some respects, the Westmoreland plant was "virtually outdated by the day it opened."[21] A similar plant opened at the same time by Chrysler had far more automation and could produce half again as many cars as Westmoreland.[21] VWoA's plant had to run at 85% of capacity to break even, rather than the projected 50% — which proved detrimental when Rabbit sales fell and VWoA had to begin offering rebates on a stock of unsold cars. The West Virginia stamping plant arrangement proved problematic; the plant wasn't automated, was four hours from Westmoreland and body panels had to be shipped between the two sites.[22] At times, crucial parts were rushed to Westmoreland by helicopter or Lear jet to avoid a shutdown.[23]

Quality

Consumers Union ranked the VWoA Westmoreland vehicles in 1977-79 had "worse than average maintenance record, including an oil burning problem."[24] An analyst with Drexel Burnham Lambert said in 1987 "the quality of the cars built in Pennsylvania wasn't up to the quality of the cars in Germany."[25] An analyst for Global Insight, John Wolkonowicz, said the Rabbit was "probably the most troublesome Volkswagen ever built."[5]

Labor unrest

For the assembly line, Volkswagen did not develop its own skill base for Westmoreland, instead bringing in workers from Detroit. 100 workers were brought in from Great Britain.[26] A field of 40,000 applied for jobs at Westmoreland.[16] No more than 20% of the workers had ever worked for an automobile manufacturer,[27] and the average age of workers was 24-26, at the time considered a demographic considered "independent and militant."[27] VWoA chose employees not by skills, but by how long they had been unemployed.[23]

The plant was organized by the United Auto Workers; a 1992 New York Times article described it as the only "transplant" factory, meaning a factory by a foreign autmotive company in the United States, that the UAW had succeeded in representing, and that the plant "began with a strike and lurched from problem to problem before closing"[28]

From the outset, minorities picketed the site, seeking fair treatment in the hiring process[5] and by its first twenty months of operation, workers had staged six walkouts.[29]

On October 13, 1978, six months after the plant opened, UAW workers staged a wildcat strike at Westmoreland for salaries equal to those received by General Motors Corporation employees.[30] Picketing workers chanted "No Money, No Bunny."[31] In 1981, Westmoreland Assembly avoided a strike when it reached agreement with the UAW over essentially the same issue: the disparity between wages earned at Westmoreland, where assemblers made an average of $10.76 per hour, and those at domestic auto plants in Detroit, where at GM and Ford, for example, assemblers made an average of $11.42 per hour.[32]

Volkswagen settled a 1983 discrimination suit with the United Auto Workers to settle claims that they discriminated against black employees at Westmoreland Assembly. Plaintiffs had sought $70 million when filing suit, charging that management had initiated or tolerated "a pattern and practice" of limited hirings and promotions of blacks, that blacks were also subject to arbitrary firings and demotions and that the company openly allowed racial insults and threats in the workplace. Volkswagen of America Inc. denied the charges and later settled the case in 1989, paying 800 plaintiffs $670,000 and the United Auto Workers $48,000.[33] The most prominent black executive at the Westmoreland factory and spokesman for the "VW Black Caucus" committed suicide, bringing further notoriety to the suit.[34]

Demise

Sales of the VWoA models built at Westmoreland dipped "as gas prices fell and consumer preference shifted to larger models,"[5] dropping by nearly 60 percent between 1980 and 1985[8] VW dealer defections became common.[35] In 1983, Volkswagen and Chrysler entered discussions about joint-venturing at Westmoreland.[36] The Detroit Free Press had earlier reported that Chrysler would take over VWoA's assembly operations.[36]

VWoA built the last Rabbit model at Westmoreland on June 15, 1984, a white, two-door, fuel-injected, five-speed manual transmission Wolfsburg Edition Rabbit,[37] before spending about $200 million to retool the plant for the slightly larger and more powerful second generation Golf model.[25] Tim Moran, writing for Automotive News in 2005 said the styling of the main product became too old, the fuel crisis had eased, Wolfsburg was too slow to adapt to changing conditions and costs became too high.[1]

In September 1982, VWoA President Jim McLernon resigned amid widening losses.[25] In 1983 VWoA sold its Sterling Heights, Michigan plant back to Chrysler, the same former Chrysler missile plant it had previously purchased to develop as its second North American assembly plant. Subsequently, VWoA sold the former American Motors stamping plant in South Charleston, West Virginia and its air-conditioning and plastic-trim plant in Texas to Valeo SA.[1] Over the Thanksgiving weekend in 1987, Volkswagen announced it would close Westmoreland Assembly[5] and on July 14, 1988, VWoA closed the plant.[21]

After VWoA

After its closing, VWoA sold the welding line,[38] tooling and other production equipment from Westmoreland Assembly to First Automobile Works of Changchun, China.[33] Unverified reports suggest the actual stamping dies for the Rabbit and Rabbit Pickup may have been used to start Volkswagen Caddy and Citi Golf production in South Africa. VWoA sold the facility itself to the Commonwealth of Pennsylvania and the factory remained dormant for several years.

In 1990, Sony announced it would begin manufacturing televisions at the site.[39] The facility employed more than 3,000 people in the late 1990s, however that number dwindled to just 250 in 2007.[40] On December 9, 2008, Ed Rendell, Governor of Pennsylvania, announced that Sony planned to close the facility.

Automotive News reported in 2005, that the Corporation for Enterprise Development, a Washington economic think tank, estimated that "taxpayers were left with more than $70 million in incentives and loans used to lure (Westmoreland Assembly), whose promise never fully materialized."[1]

As of 2010, the 2,000,000 square feet (190,000 m2)[41] plant remains idle, the largest block of commercial space available in Western Pennsylvania.[41]

In 1988, Volkswagen spent $1 billion to expand operations in Puebla, Mexico, to build Golfs and Jettas.[1] Twenty-three years after closing Westmoreland, Volkswagen inaugurated its new Chattanooga Assembly Plant[42] in a "right-to-work" state, one of 22 in the United States that give workers the choice to join or not to join the dominant labor union on the premises — and with an estimated $577 million in incentives.[43]

Overview timeline

References

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  34. ^ a b "Bias Suit Made Grimmer by a Suicide". The New York Times, Ben A. Franklin, January 29, 1983. January 29, 1983. http://www.nytimes.com/1983/01/29/us/bias-suit-made-grimmer-by-a-suicide.html?scp=15&sq=volkswagen%20westmoreland&st=cse. 
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  36. ^ a b c "Chrysler and VW Hold Talks". New York Times, June 25, 1983, Kenneth Gilpin. June 25, 1983. http://www.nytimes.com/1983/06/25/business/chrysler-and-vw-hold-talks.html?scp=1&sq=volkswagen%20westmoreland%20chrysler%20joint%20venture&st=cse. "The Chrysler Corporation and Volkswagen said yesterday that they were holding talks on a wide range of subjects, but Chrysler denied published reports that it was negotiating the purchase of Volkswagen's American operations. Volkswagen was less adamant. Although it also denied in a statement that any takeover talks had been held, a spokesman for Volkswagen of America Inc., Ted Kade, said that he could neither deny nor confirm that executives of the two companies had discussed a joint venture in which Chrysler would take over manufacture of Volkswagens in this country. The statements by Chrysler and Volkswagen were issued in response to an article in The Detroit Free Press that quoted an unidentified Chrysler executive as saying that in three to six months Chrysler would take over Volkswagen's assembly plant in Westmoreland, Pa., and a stamping plant in South Charleston, W.Va." 
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  45. ^ "Business: THE PAINFUL PROCESS OF SLOWING DOWN". Time Magazine, August 1, 1969. August 1, 1969. http://www.time.com/time/magazine/article/0,9171,901198,00.html. "Chrysler Corp., whose earnings plunged 51% last quarter, has deeply slashed its $300 million capital-spending plans for 1969. At New Stanton, Pa., construction of a $200 million assembly plant was halted even as the steel was going up." 
  46. ^ a b Kemezis, Paul (April 24, 1976). "Germans Approve VW Output in U.S.; Choice of Plant Site Is Still Undecided; GERMANS APPROVE VW OUTPUT IN U.S.". The New York Times, April 24, 1976. http://select.nytimes.com/gst/abstract.html?res=F70810FF395F167493C6AB178FD85F428785F9&scp=56&sq=volkswagen%20%22new%20stanton%22&st=cse. "WOLFSBURG, West Germany, April 23 Volkswagen's supervisory board agreed unanimously today to produce its Rabbit automobiles in the United States starting in late 1977. The decision came only after auto workers were given strong guarantees that the plant would not cost German jobs." 
  47. ^ "Owners of: S.C. plant optimistic; Holding employment levels steady, finding new business goals this year". Charleston Daily Mail, January 6, 2005, GEORGE HOHMANN. http://www.highbeam.com/doc/1P2-9931728.html. "TIMELINE South charleston plant milestones 1974: American Motors Corp. begins operating the 922,000-square-foot stamping plant in South Charleston to make roofs, doors, lift gates and other parts for the Pacer. 1978: Volkswagen of American buys the plant to make external body parts for its Golf automotive assembly plant in Westmoreland County, Pa. and other assembly plants worldwide. 1984: VW signs agreements with Chrysler, General Motors and Ford to stamp body parts for those manufacturers at South Charleston. 1985: VW announces it will phase out the plant. VW begins negotiating with C&F Stamping of Grand Rapids, Mich., for a possible sale. 1986: VWs talks with C&F Stamping break off." 
  48. ^ a b "Volkswagen produces its millionth car". Pittsburgh Post Gazette, Wash Gjebre, Nov 15, 1985, p. 14. http://news.google.com/newspapers?id=jK9RAAAAIBAJ&sjid=2W4DAAAAIBAJ&pg=4723,4561869&dq=volkswagen+westmoreland&hl=en. 

External links

Popular Mechanics, November 1978 issue, with photographs of Westmoreland Assembly