Spurned by VW, Indiana turns to Right to Work

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Is the scale about to tip in favor of the industrial, unionized Midwest when it comes to landing new auto assembly and parts plants?

The Republican governor and lawmakers of Indiana think so, and a German automaker played a bit role.

Gov. Mitch Daniels of Indiana is citing Volkswagen AG, in part, for his decision to support a Right to Work bill set to become law.

Indiana would become the first state in about a decade, and the first in the industrial upper Midwest, to pass such a measure.

The laws -- popular across the South, where suppliers and foreign automakers have established manufacturing hubs, creating thousands of jobs -- ban unions from collecting mandatory dues from workers at private companies.

Daniels, appearing on INside Indiana Business Television this month, said he was frustrated year after year when Indiana missed out on projects that were awarded to states with Right to Work laws.

The state's recruiting efforts became especially frustrating when the economy screeched to a halt and jobs vanished altogether, Daniels said.

Still, southeastern Indiana was able to snag a $550 million Honda assembly plant that opened in 2008 to build the Civic and will launch Acura ILX output beginning this spring.

Toyota assembles crossovers and minivans at a plant in Princeton, Ind., and shares production with Subaru at Fuji Heavy Industries factory in Lafayette, Ind.

General Motors -- a longtime employer in the state -- retained a large pickup plant in Fort Wayne, Ind., during its trip through bankruptcy.

But one prize that Indiana missed out on, according to Daniels, was the VW assembly plant that ended up in Chattanooga, Tenn.

The $1 billion project -- courted by many states -- is expected to play a central role in VW's push to increase U.S. sales to 800,000 units by 2018 and become the world's top automaker.

"I couldn't get VW to return our call," Daniels said on the program. "We've won on Honda, we won on Toyota ... we're clearly the fastest growing automotive state, and we couldn't even get them to talk to us."

"Why would that one company not even talk to us? I think I know."

VW declines to comment on the matter.

Time will tell if Right to Work laws tip the balance when it comes down to the nitty-gritty of industrial site selection.

You can reach David Phillips at dphillips@crain.com.

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