Volkswagen AG's plan to move its North American headquarters from Michigan marks the latest setback for a state that has struggled with the loss of manufacturing jobs and one of the nation's weakest economies.
Volkswagen announced Thursday that it would relocate its headquarters from Auburn Hills, Mich., to northern Virginia, leaving 600 of the current staff of 1,400 in Oakland County. About 150 employees in Michigan were expected to transfer to Virginia in the shakeup.
Gov. Jennifer Granholm, D-Mich., who met with Volkswagen leaders to try to maintain the automaker's Michigan presence, said the state was "grateful that so many Volkswagen jobs are staying in Michigan" and noted that the company may expand in the state.
Stefan Jacoby, Volkswagen of America president and chief executive, told Michigan reporters in a conference call that there was nothing Michigan could have done to change their decision, which was part of a larger strategy to downsize its staff and be closer to its base of consumers.
"This decision was not a referendum on Michigan," he said.
But the move generated more disappointment from state and local officials who have tried to turn around a sluggish economy. Michigan's unemployment rate in July was 7.2 percent, the highest rate in the nation, and the state has one of the nation's highest foreclosure rates.
"We need to retain jobs, not watch them walk out the door," said State Senate Majority Leader Mike Bishop, R-Rochester.
Earlier this year, Comerica Inc. said it will move its banking headquarters to Dallas from Detroit to be closer to its faster-growing markets, a similar argument made by Volkswagen.
Volkswagen's relocation comes as Detroit's Three automakers are implementing restructuring plans that have shed thousands of jobs and closed factories. Major Michigan-based auto suppliers, Delphi Corp. and Collins & Aikman Corp., are attempting to emerge from bankruptcy protection.
"Detroit is the Motor City," said Rep. Joe Knollenberg, a Republican from Oakland County's Bloomfield Township. "There will be no turnaround in this state without an auto industry turnaround."