published Thursday, April 24th, 2014

Tennessee official to Volkswagen: 'Circumstances have changed'

NASHVILLE — Volkswagen was still moving forward with a draft memorandum of understanding on Tennessee state incentives to expand the automaker's Chattanooga plant as recently as two weeks before a union election at the factory, according to emails obtained by WTVF-TV.

But the package was withdrawn. A Jan. 31 email from Economic and Community Development Commissioner Bill Hagerty told Volkswagen executives that "circumstances have changed" since the state made the $300 million incentive offer in August, and that the package was "no longer relevant."

He did not specify which circumstances had changed. However, the letter came three days before Volkswagen announced it would hold a vote at the plant on whether workers there wanted to be represented by the United Auto Workers union. The UAW ultimately lost that vote 712-626.

There were revelations later, also reported by WTVF-TV, that the incentive package had been made contingent on the labor situation there concluding to the satisfaction of the state, where anti-UAW Republicans hold a vast majority.

That same day that Hagerty emailed company officials, his aide, Josh Helton, wrote an email to the Wolfsburg, Germany-based company's attorney and property management consultant to tell them that the dollar figures were being deleted from the draft agreement.

"The markup we send back to you will have those numbers completely removed," Helton said. "As we have communicated to Wolfsburg, our incentive offer dated August 23, 2013, is no longer applicable or relevant."

Hagerty spokesman Clint Brewer said in an email that the act of drafting of the memorandum did not mean Volkswagen had agreed to the deal. The company's attorney told the department that Volkswagen wanted to get the draft written "in the interest of saving time should an economic incentive package get worked out."

The company did not immediately return messages seeking comment Thursday.

The UAW had filed an appeal of the outcome of the union vote with the National Labor Relations Board, citing public statements from U.S. Sen. Bob Corker, Tennessee Gov. Bill Haslam and other GOP officials that the union argued raised fears among workers about the plant's future if they voted to organize.

But the union withdrew that challenge Monday and urged Tennessee to quickly approve incentives for the expansion without strings attached.

Haslam says he hopes to renew negotiations on the incentives, now that the challenge has been withdrawn.

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