#438. Economic Impact of the Volkswagen Assembly Plant in 2012 – Chattanooga, TN

Economic Impact of the Volkswagen Assembly Plant in 2012 – Chattanooga, TN

The University of Tennessee’s Center for Business & Economic Research released a report in May 2013 that examined the economic impact that the Volkswagen assembly plant has had on Chattanooga, Tennessee and the surrounding area.

Some key facts from the report include:

• In the summer of 2008 Volkswagen announced its intention to invest $1 billion to build an assembly plant in Chattanooga, Tennessee and employ 2,000 people at the facility. Within three years, the company had met its projections for investment and hiring. As of 2012, Volkswagen had added an additional 415 direct jobs and helped attract 17 supplier companies to the area.
• Volkswagen’s investment has dramatically benefitted Chattanooga, Hamilton County, and the State of Tennessee. The initial benefits came from the construction and equipping of the plant, which resulted in significant employment and incomes from the summer of 2008 to the beginning of 2011.
• Volkswagen Chattanooga operations have created 12,400 full time equivalent jobs in Tennessee and are responsible for $643.1 million annually in income. As a result, state and local governments benefit tremendously from the facility. Each year, Tennessee receives $31.2 million in additional revenue, while local governments in Tennessee receive $22.3 million in additional revenue related to the project.
• Volkswagen generates significant tax revenue for the state and local governments. The company pays sales taxes on much of its supplier purchases and utilities, and pays property taxes for education to local government. State and local sales taxes are also paid as Volkswagen’s employees and those associated with supplier and multiplier effects spend earnings and live in Tennessee. We estimate that nearly $19 million in state sales taxes are generated plus $12 million in other state taxes. In total, we estimate that the Volkswagen assembly plant will increase state revenues by $31.2 million annually and local revenues by $22.3 million each year.

At Agracel, we’ve found that assembly plants like the Volkswagen plant generate a number of parts supplier plants, often in smaller towns within 50 to 100 miles of the assembly plants. They have a huge positive impact upon these communities.

Click here for the full report.