Volkswagen Tennessee Plant Tops Production Estimate With More Than 100,000 Passats, Higher Than Expected Employment

Volkswagen AG's (ETR:VOW3) Chattanooga, Tenn., auto plant has exceeded the firm's estimates for its contribution to the local economy, highlighting the importance of attracting foreign direct investment into communities -- whether they’re in Bangladesh or the United States.

A study released Tuesday shows the plant has exceeded the German automaker's predictions for both output and employment at the plant, which rolled out its first car in 2011.

William Fox, professor at the Center for Business and Economic Research at the University of Tennessee, Knoxville, focused his research compass on Chattanooga, 112 miles to the southeast, to see what effect Volkswagen’s $1 billion investment has had.

What the study found:

- The plant employs 2,415 workers who earn an average of $50,000 per year, including overtime, benefits and bonuses. Initial projections estimated the employment of 2,000. The current rebound in the U.S. auto market is certainly playing a role in higher-than-expected employment, but Fox concludes that the plant will retain higher-than-expected direct employees over time.

“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,” Fox said in the study.

- Volkswagen’s presence in the southern Tennessee city of about 170,000 residents also indirectly employs an additional 9,985 people through its relationship with local suppliers and other businesses. The 1.9 million square-foot plant has attracted 17 suppliers to the city.

- The factory is responsible for $643 million in annual income, of which $159 million is paid in wages. Its annual tax bill breaks down like this: $31.2 million to the state and $22.3 million to the local treasury.

On Friday, the plant rolled out its 100,000th Passat after manufacturing its first one on April 18, 2011. The Tennessee-made cars are sold in North America, South Korean and the Middle East.