Volkswagen Group of America plans to start importing new vehicles through Tradepoint Atlantic in Sparrows Point, developing a new facility and bringing 100 new jobs to the site of the former steel mill by early next year, officials announced Wednesday.
Sprawling over 100 acres and with a new port facility, the Volkswagen distribution center will bring in about 120,000 cars a year — roughly one in five of the vehicles the German automaker and its affiliated brands sold in the United States last year.
The move brings Volkswagen’s imports back to the port of Baltimore after an absence of more than 25 years and satisfies part of the company’s historic $33.5 million settlement with Maryland for the automaker’s massive diesel emissions scandal.
The new import facility will bring Volkswagen business to Baltimore from the port of Davisville, R.I., said Jim White, executive director of the Maryland Port Administration.
The port of Baltimore has been the nation’s largest for auto imports for eight years running. Volkswagen also imports cars through Houston; Savannah, Ga.; Galveston, Texas; Jacksonville, Fla.; Benicia, Calif.; and San Diego.
It will give Volkswagen a choice of several different vehicle-processing companies and will put the automaker’s Baltimore operation on par with that of Mercedes-Benz, Chrysler and Honda, he said.
“Having Volkswagen here is going to be major,” White said.
Tradepoint plans to develop and lease a vehicle processing center for factory-new Volkswagen, Audi, Bentley and Lamborghini vehicles, along with new port infrastructure to handle the car-carrying ships, as part of the company’s long-term lease.
The car and sport utility vehicles Volkswagen imports will be shipped to dealerships throughout the Mid-Atlantic.
“The Mid-Atlantic region has long been a strong market,” said Anu Goel, an executive vice president at Volkswagen Group of America, in a statement.
The automaker faced a stiff penalty from the state if it did not return to the port of Baltimore.
Under the terms of a $33.5 million consent decree following the scandal over the company bypassing emissions controls in its diesel cars, Volkswagen would have owed the state $4.5 million more if it did not enter a five-year deal with a public or private auto terminal in Maryland.
A spokeswoman for Attorney General Brian Frosh credited the move to the consent decree, announced last year.
“We’re pleased that as a result of the settlement negotiated by the Attorney General’s office, Volkswagen will bring economic investment and opportunity to the Port of Baltimore and to the surrounding region,” Frosh spokeswoman Raquel Coombs said in a statement.
Locating the facility at Sparrows Point satisfies the consent decree, but Volkswagen Group of America spokesman Mike Tolbert said the automaker selected the location following a competitive bidding process that began in 2016.
“The selection of this site was not a requirement of the settlement with the State of Maryland but resulted in a reduced settlement amount, in recognition of the benefit for Maryland,” Tolbert said in an emailed statement.
The Volkswagen processing center offers potential benefits for Volkswagen, Baltimore and the broader region, according to Kerry Tan, associate professor of economics at Loyola Sellinger School of Business and Management.
“Baltimore is strategically located. Using Baltimore as a hub, Volkswagen will be able to extend its logistical reach to a strategic part of the country,” Tan said. “Anytime you can get new jobs, that’s always welcome. That’s 100 jobs that didn’t exist before.”
Tradepoint Atlantic is a 3,300-acre business redevelopment project on the site of the former Bethehem Steel mill, which closed in 2012 under a different owner. In late 2018, Baltimore County approved a $78 million assistance package for Tradepoint to help it build roads and other infrastructure at the site, where Amazon, FedEx, Home Depot and Under Armour have or plan distribution centers.
The new jobs would qualify Volkswagen for the state’s Job Creation Tax Credit, for which it has not yet applied, and the Tradepoint site is in a designated Enterprise Zone, which carries other benefits. But the state offered the automaker no major incentives, according to the Maryland Department of Commerce.
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Baltimore County Executive Johnny Olszewski Jr. credited Tradepoint, which he said “continues to impress by attracting great tenants who will be offering jobs and opportunity to Baltimore County.”
“I’m excited by the economic growth we have created and I am looking forward to continued growth with the addition of Volkswagen,” Olszewski said.
While Volkswagen has been absent from the port for years, Baltimore was one of its original ports of entry for its Beetle cars and Microbus vans, which were delivered to a pier in what is now the Inner Harbor.
In recent years, its only presence at the port of Baltimore has been its collection of diesel-powered vehicles it was forced to buy back because of the emissions scandal. Thousands of them are stored in a large lot at Tradepoint Atlantic.
White sees Tradepoint as a logical outlet for the continued growth in Baltimore’s auto imports, which currently flow mostly across state piers at Fairfield/Masonvile Terminals and Dundalk Marine Terminal.
The port, which imported 850,000 cars last year, recently sent an overflow of Chryslers to be processed at Tradepoint, White said.
“For me, it’s new business, homecoming or not,” White said. “It’s going to create more jobs and give Tradepoint Atlantic an opportunity to service cars. We hope that will continue.”