Volkswagen Chattanooga Exceeds Projected Economic Impact

Tuesday, June 4, 2013

A new study by Dr. William Fox of the University of Tennessee Center for Business and Economic Research finds that Volkswagen Chattanooga Operations has exceeded the economic impact projected when the company announced its initial investment in 2008. The new study entitled, “Economic Impact of the Volkswagen Assembly Plant in 2012” includes new information on the number of jobs created, income from those jobs, and additional state and local tax revenue.

“When we completed the 2008 analysis of Volkswagen’s expected impact, the company was committed to directly employing 2,000 people,” said Dr. Fox. “By 2012, Volkswagen had hired 2,415 direct employees and that total has remained consistent since then. Volkswagen’s employment mirrors the pattern that Tennessee has had with other automobile plants where employment exceeded the totals discussed when the plant was announced.”

According to Dr. Fox, who based his study on established economic models for indirect and multiplier effects, Volkswagen’s direct employment, employee spending, and contracting with suppliers across the state of Tennessee have helped create an additional 9,985 new jobs for a total new employment of about 12,400 people.

Volkswagen’s contracting and spending by employees also provide positive economic impact. In 2012, the assembly plant purchased $233.6 million from companies located in Tennessee. Further, employees at both Volkswagen and its supplier companies spend their income on everything from housing to groceries spreading the economic impact among local businesses of all kinds.

Since the jobs provided by the Volkswagen Chattanooga assembly plant are high-quality jobs with all job types earning at least $50,000 with overtime and bonus on average in 2012, the company generates a strong multiplier effect for income. Volkswagen’s annual payroll is $159.2 million and drives additional income for people employed by other companies totaling $483.9 million for $643.1 million in income for Tennesseans each year.

Volkswagen’s spending, employment, and the economic activity it generates also drives significant tax revenue for state and local governments. The company pays sales taxes on much of its supplier purchases and utilities. It also pays property taxes for education to local government. As a result, Dr. Fox’s study estimates Volkswagen Chattanooga increases state revenues by $31.2 million annually and local revenues by $22.3 million each year for a total of $53.5 million.

The study also enumerates a number of intangible benefits including:

· Demonstrating environmental stewardship by establishing the world’s first LEED Platinum auto manufacturing facility as well as a 33-acre solar park, the largest installation of its kind at any U.S. automotive manufacturing facility and also the largest single solar park by any company in Tennessee.

· Generated positive publicity for the local area as the home of the Passat sedan, which has won praise from critics as well as a number of industry awards, most notably the 2012 Motor Trend Car of the Year.

· Established a “Partners in Education” program by donating $5.28 Mill to Tennessean schools and universities since 2008

· Support for many charities such as the Red Cross, March of Dimes, Urban League, the Land Trust, and many others.



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