Speaking to reporters at the Paris Auto Show, VW CEO Martin Winterkorn revealed that his company would seek a portion of the $25b in bailout loans recently passed into law. Automotive News (sub) reports that Winterkorn hopes his firms new Tennessee plant would qualify for loans. “We will raise our hand when the time comes,” said Winterkorn. But has Piech’s hatchet man had time to read the fine print between rounds of anti-Porsche pugilism? A quick look at Section 136 (g) of the Energy Independence Act of 2007 reveals that “The Secretary shall, in making awards or loans to those manufacturers that have existing facilities, give priority to those facilities that are oldest or have been in existence for at least 20 years.” It’s great that Mr Winterkorn would like his brand new plant to qualify for the loans, but he fails to understand that their rules have been written to exclude nearly everyone other than the Detroit 2.3. And with the regulatory rules still to be written (with help from Detroit lobbyists), the likelihood of VW getting a penny in government loans is only going to shrink.
With VW being directly subsidized by their own wonderful public entities for decades, I can’t say that they have a single proverbial leg to stand on.
Professor Doctor Martin Winterkorn (yes, that really is his full title) being clueless about what is actually going on in the US? I am shocked, just shocked!
Attention consultants and brokers! How about a closed 2.8 facility?
It does say “give priority” to the older plants, not that new ones would automatically be excluded. It doesn’t hurt VW to ask for some of the money, especially if their own lobbyists are any good.
From the Energy Independence Act section 136:
(b) Advanced Vehicles Manufacturing Facility- The Secretary shall provide facility funding awards under this section to automobile manufacturers and component suppliers to pay not more than 30 percent of the cost of–
(1) reequipping, expanding, or establishing a manufacturing facility in the United States to produce–
(A) qualifying advanced technology vehicles; or
(B) qualifying components; and
(2) engineering integration performed in the United States of qualifying vehicles and qualifying components.
(c) Period of Availability- An award under subsection (b) shall apply to–
(1) facilities and equipment placed in service before December 30, 2020; and
(2) engineering integration costs incurred during the period beginning on the date of enactment of this Act and ending on December 30, 2020.
(d) Direct Loan Program-
(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, and subject to the availability of appropriated funds, the Secretary shall carry out a program to provide a total of not more than $25,000,000,000 in loans to eligible individuals and entities (as determined by the Secretary) for the costs of activities described in subsection (b).
(2) APPLICATION- An applicant for a loan under this subsection shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including a written assurance that–
(A) all laborers and mechanics employed by contractors or subcontractors during construction, alteration, or repair that is financed, in whole or in part, by a loan under this section shall be paid wages at rates not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with sections 3141-3144, 3146, and 3147 of title 40, United States Code; and
(B) the Secretary of Labor shall, with respect to the labor standards described in this paragraph, have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (5 U.S.C. App.) and section 3145 of title 40, United States Code.
(3) SELECTION OF ELIGIBLE PROJECTS- The Secretary shall select eligible projects to receive loans under this subsection in cases in which, as determined by the Secretary, the award recipient–
(A) is financially viable without the receipt of additional Federal funding associated with the proposed project;
(B) will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively; and
(C) has met such other criteria as may be established and published by the Secretary.
Even if one would assign all of the $25b to VW they would not know what to do with it. They probably would show up with a derivative of their famous Phaeton with a triple turbo Diesel V15, all wheel steering and a German beer tap in the glove compartement.
Sounds like the Professor has not understood the fine print.
Maybe he can get some money for the plant that builds his German engineered mini van.
Last I checked there’s plenty of tax payers in Deutschland to fund Mr. Winterkorn’s golden parachute handout. Ditto that for Japan and S. Korea and anyone else.
Winterkorn,
Your company is poised to fail in NA. We are still waiting for the new Golf, you have just re-badged a Chrysler Minivan, and the re-launched Phaeton is going to go over like a fart in an elevator.
Don’t even get me started about the cost of the Tiguan. Tigwan. Tig… whatever you call it.
Perhaps Winterkorn feels that VW requires a chunk of the bailout pie to help subsidize all of the warranty claims for their finely crafted, “German Engineered” vehicles.
Detroit 2.3? Did we lose more of Chrysler all of a sudden?
Maybe they could take the plant in PA where they used to build Rabbits out of mothball.
Buick61: As of mid-day, Chrysler is actually trading at .376 automakers. Its automaker status is tied to a composite of the average sale price of one-year-old Chrysler vehicles, the average sigh length upon seeing Chrysler marketing materials, and warranty claims. It’s a complicated system.
Well, VW does have modern, highly efficient engines (TDI). It’s just too bad North America doesn’t get many of them, and it’s only in the Jetta and Touareg. At least they do have the balls to sell some efficient vehicles even though most people can’t appreciate it. Maybe if Ford, GM and Chrysler had learned anything from the PNGV, they’d be able to compete without a bailout. VW doesn’t get many things right in North America, but at least they actually try to sell efficient vehicles that aren’t an afterthought.
If they get the MK6 GTI on our shores by the end of 2009 (something that VWVortex.com thinks is possible), instead of forcing a two year wait like they did with the MKV GTI, I’ll support this. ^_^
Hey – I’m all for putting fellow Tennesseans to work building cars! Not at all for giving more of my tax dollars to companies who fail to adapt to the markets.
Am wondering if the bailout for Detroit will somehow apply to their Mexican plants? Will Detroit simply shift their now freer budget to the Mexican plants?
I say let them all eat grass. Scrap the bailout and let things work themselves out. Maybe the $40K per week crowd will get back in touch with the $40K per year crowd.
Maybe one of the experts around here can Show me an example of VW getting government money in the last decades?
Yes, the state owns 20%, but they also get a dividend. There are no subsidies, quite the contrary: VW pays the highest wages in the industry, thanks to unions who have a tight connection with state agencies.
Remember, it’s ok to rant, only it should be based in facts…
200k-min:
And the last time I checked taxpayers don’t fund anything for VW
Also, Mr. Winterkorn doesn’t need a baylout or a golden parachute, because VW is producing two very exotic (at least for US automakers) things:
Positive earnings and cash flows.
Crazy, isn’t it?
Sigh.
Yet another reason why VW is my most hated automaker by a country mile.
I wish they would just go away.
Good, I hope they get it. They deserve it just as much as the D3 does, which is to say, not at all.
Vega: Google “incentives to VW from Tennessee and you will see where they got $577mil from the Tennessee government.