Done Deal: Volkswagen Moves from Detroit to Virginia

Done Deal: Volkswagen Moves from Detroit to Virginia

Volkswagen of America announced at a press conference today that, indeed, it is moving its corporate headquarters from the Detroit suburbs to Herndon, Va.

At this morning’s press conference, VWoA’s new president and CEO, Stefan Jacoby, in that post only since Sept. 1, cited a host of reasons why the company is moving from Detroit to Virginia: closeness to customers; support of the state and business community; and a fresh start for VWoA, which is embarking on a new strategic direction after sales of its once-popular Volkswagen brand models have tanked while U.S. financial losses mount.

Jacoby said VWoA is setting out on a new strategy of delivering vehicles more suited to the tastes of U.S. customers, and that requires being closer to its customers. He said one of the key reasons VW chose Virginia from 14 locations considered since early 2006 was to be closer to VW’s customers.

“We put a premium on connecting more with our customers and fostering a culture of fresh idea sand bold thinking,” he said.

In an interview in today’s Washington Post, Jacoby said the VW brand will focus on models in certain categories, specifically small sport-utility vehicles with an environmental slant, and cars to compete with Toyota Corolla and Honda Accord.

Location and proximity to its customers was key in VWoA’s selecting Virginia, Jacoby said at the press conference.

“We already feel at home,” he said. “We already have a welcoming feeling seeing so many Volkswagens and Audis on the road here. This area has one of the highest concentrations of Volkswagen and Audi owners.”

VWoA’s corporate headquarters, which will house the headquarters of its Volkswagen, Audi and Lamborghini brands (Bentley wasn’t mentioned), will be located in a brand new office complex in Herndon, Va., near Washington Dulles International Airport. VWoA will invest more than $100 million in its new headquarters, which will house 400 employees. They begin moving in next April. The move will be completed by year-end 2008.

The business climate of the bustling corridor of Virginia where VWoA will be located was another draw, Jacoby noted. The area is also home to 35 of the country’s fastest growing companies and has been highly ranked by various magazines as a great place for entrepreneurs and other businesses.

“Support” from the Virginia government didn’t hurt. According to today’s Washington Post, Virginia Gov. Tim Kaine authorized incentives worth $6 million to draw VW, including a $1.5 million cash payment in the next year and $4.5 million over five years beginning in 2011. The company won't receive the grants until it meets benchmarks for employment and investing in the region. Fairfax County, Va., will spend at least $1.5 million to accelerate road and land projects to ease Volkswagen's move, the paper reported.

“As a CEO, this is exactly the kind of partner we’re looking for especially when the company is embarking on a new strategic course…We are a company of innovators and bold thinkers – people who want to challenge the status quo. Virginia is a trendsetter with international prestige and the perfect infrastructure for our new beginning.

“You made it easy to select Virginia,” Jacoby concluded.

A new headquarters may not be the only thing VW builds. Virginia Gov. Kaine hinted VW’s success could be followed by added facilities, and Jacoby said a manufacturing facility is a possibility. “It is not on today’s agenda, but will come on the agenda tomorrow,” he said.

Meantime, Virginia's gain is Michigan's loss. VWoA will eliminate about a third of its jobs, but leave 600 employees and contractors at its current headquarters in the Detroit suburb of Auburn Hills, Mich.

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.