Haslam College of Business - UT Study: Volkswagen Plant Expansion to Add 9,800 Jobs to State Economy

KNOXVILLE— The expansion of Volkswagen’s Chattanooga manufacturing facility to produce a new midsize sport utility vehicle could add about 9,800 jobs to the Tennessee economy, according to a study released today by the University of Tennessee, Knoxville.

The expansion includes the opening of a North American Engineering and Planning Center. Volkswagen currently employs 2,400 Tennessee workers.

The study, from UT’s Center for Business and Economic Research, shows that Volkswagen’s $704 million investment in the plant would:

• Generate $217 million in new income and 5,400 jobs in Tennessee during the construction and development phase.
• Be responsible for $373 million in additional annual income once the plant is fully operational.
• Increase state and local tax revenue by $35.1 million annually once the plant is fully operational.

The UT study shows the facility would add 9,800 full-time permanent jobs to the Tennessee economy, including 1,800 jobs at the production plant, 200 engineering jobs at the new North American Engineering and Planning Center, and other positions created indirectly throughout the state as a result of Volkswagen-related spending associated with its new hires.

“Some of these new jobs will be with Volkswagen suppliers, while others will be associated with the multiplier effect and will be jobs in many industries such as grocery stores, restaurants, shopping malls and construction,” said Bill Fox, CBER director and the study’s author.

Construction for the expansion project is underway and is expected to be completed in summer 2016. Production of the Volkswagen midsize SUV is scheduled to begin later that year. New employees will be added over a five- to eight-year period.

The North American Engineering and Planning Center will open in a temporary facility in the next few weeks, while the initial hiring of the first 130 positions is starting now.

In 2013, CBER prepared an economic impact report about the earnings and employment impact from the direct operation of Volkswagen’s current assembly plant in Chattanooga. At the time, Volkswagen had 2,415 employees and spent $159.2 million annually in income for its employees. The study found that Volkswagen Chattanooga operations created 12,400 full-time jobs in Tennessee and was responsible for $643.1 million in annual income. Operations of the facility also increased state and local tax revenues by $53.5 million.

To view an infographic describing the impact of Volkswagen’s expansion, visit https://media.vw.com/release/982.

For more on the Center for Business and Economic Research.

C O N T A C T :
Bill Fox (865-974-6112, billfox@utk.edu)
Tyra Haag (865-974-5460, tyra.haag@tennessee.edu)