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2008 Economic Deal of the Year Awards: Silver


Tennessee Snares the Big Prize: Volkswagon’s $1-billion Assembly Plant

Project Title: The Volkswagon Project
Entered By: Chattanooga Area Chamber of Commerce

Project Impact Estimates:

• 2,000 direct jobs and 9,477 overall jobs in the region

• $511 million in annual new income for the region; $136.1 million in direct income; $375 million in indirect income

Volkswagon’s selection of the location for its new North American auto assembly plant was one of the most eagerly anticipated economic development announcements of the year. The excitement culminated in a memorable moment of triumph in July, when Tennessee Governor Phil Bredesen held aloft a daily newspaper with a huge front-page headline: “It’s Chattanooga!”

Chattanooga Area Chamber of Commerce is this year’s 2008 Economic Development of the Year Silver Award winner for its success in convincing Volkswagon Group of America to invest $1 billion in a new assembly plant at Chattanooga’s Enterprise South Industrial Park, said to be the largest single economic development project in Tennessee’s history.

The two-million-square-foot Chattanooga plant, which initially will have an annual production capacity of 150,000 vehicles when it opens in 2010, marks VW’s return to U.S. manufacturing after a 20-year hiatus following the closing of VW’s last U.S. production facility in Pennsylvania. VW anticipates that it will be selling more than 800,000 Volkswagon’s per year in the United States by 2018.

“The U.S. market is an important part of our volume strategy and we are now very resolutely accessing that market,” says Prof. Martin Winterkorn, CEO of Volkswagon AG.

Tennessee officials are predicting that the arrival of Volkswagon eventually may put the state in position to become the overall leader in U.S. automotive production.

“This project will have a significant impact on the economy of Tennessee and the region for decades to come,” Gov. Bredesen declared when the site selection was announced.

An analysis by the University of Tennessee predicts that VW’s investment in Tennessee will boost incomes in the region by $511 million annually and generate more than $55 million per year in new tax revenues for both state and local governments.

Overall, the project is expected to bring 9,477 jobs to the region, including construction and supplier activity in related sectors. The potential impact of the Chattanooga plant is being compared to the activity experienced by the Spartanburg/Greenville area of South Carolina after BMW located its U.S. manufacturing there.

The Chattanooga Area Chamber of Commerce worked in partnership with the Tennessee Department of Economic and Community Development in developing its bid for the VW plant. Key to winning the project was an attractive, comprehensive package of incentives enacted by the state and tied to job creation and capital investment. Additional support included assistance for public infrastructure and job training. Business Facilities congratulates Chattanooga and Tennessee for its achievement as our Silver Award winner.

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