Study: VW expansion to rev up jobs, revenues in Chattanooga and Tennessee

Construction continues on the new Volkswagen Chattanooga expansion on Tuesday, May 26, 2015.
Construction continues on the new Volkswagen Chattanooga expansion on Tuesday, May 26, 2015.

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BY THE NUMBERS

* 9,800: New direct and indirect permanent jobs in Tennessee due to VW expansion * $372 million: Added annual income to Tennessee economy * 5,300: Temporary construction and other jobs due to expansion * $217 million: Temporary income from construction and other jobs * $35.1 million: Annual increase in state and local tax revenue * $20.5 million: Temporary hike in state and local tax revenue due to construction, other jobs * 2,000: New direct VW jobs at Chattanooga plant * $100.9 million: Salaries VW will pay to new employees annually Source: UT Center for Business & Economic Research

photo David Geanacopoulos, Executive Vice President of Corporate Affairs and General Counsel for the Volkswagen Group of America, speaks with Chamber and city officials about the details of a study dealing with the economic impact of the VW plant expansion in Chattanooga while at the Chattanooga Area Chamber of Commerce on Wednesday, May 27, 2015.

Nearly 10,000 new jobs.

That's the impact Volkswagen's Chattanooga plant expansion will have on the Scenic City and the rest of Tennessee, says a new study unveiled Wednesday. The study also found that VW adds $372 million in annual income to Tennessee's economy.

"There are many more good things to come," said Christian Koch, the plant's chief executive, as he talked about the new sport utility vehicle on which VW is spending $900 million to expand the factory.

Hiring for some 200 of the 2,000 new VW jobs already has begun. VW is ramping up a one-of-a-kind-in-the-Southeast automotive engineering and planning center that's part of the expansion.

"There will be high-level thinkers here," said Dr. William Fox, whose Center for Business and Economic Research at the University of Tennessee conducted the study for VW.

Koch said the other 1,800 new VW employees will work on the shop floor overseeing production of the SUV that's slated for assembly in late 2016 or early 2017.

Hiring for them will start in mid-2016, he said. They'll join the nearly 2,400 who already work at the plant making the Passat sedan.

The nearly 8,000 other jobs cited in the study will be created in Tennessee from a combination of new suppliers and businesses in other sectors, the study said. These include grocery stores, restaurants, shopping malls and construction companies.

Fox said the expansion "impacts every part of the state's economy."

Chattanooga Area Chamber of Commerce chief Bill Kilbride said the business group already is on the receiving end of a lot of calls from suppliers.

"Suppliers intuitively want to be as close to the factory as they possibly can," he said.

Some $271.7 million in new income will come from suppliers and other businesses annually, the study said.

Chattanooga Mayor Andy Berke said it's not just the jobs the expansion is creating; it's building a base for the city's middle class and supporting quality of life.

He cited an automotive workforce task force he has suggested to make sure the jobs on the horizon are filled by qualified employees.

"This is a great benefit we know is coming," Berke said about the expansion. "Let's be ready for it."

The expansion and jobs also are to fuel new tax revenues. The study projected $35.1 million in monies from sales and other taxes annually.

"This is what happens when you partner with a world-class company," said Hamilton County Mayor Jim Coppinger.

Gov. Bill Haslam last week signed into law the state's $33.8 billion spending plan that included about $166 million in state incentives for the VW plant expansion. The city and county also earmarked a total of $52.5 million for the project.

That package comes on top of the $577 million of incentives offered to VW in 2008 from federal, state and local governments to initially convince the German automaker to build in Chattanooga. The VW incentives were among the most generous government aid ever provided for an automotive plant in the United States.

David Geanacopoulos, VW Group of America's executive vice president for public affairs, said the study's findings demonstrate the incentives will result in an economic growth multiplier of several times the state's investment.

He said the state has a business environment that's "mutually beneficial for the state and local economy as well as for companies like Volkswagen that have operations in the state."

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

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