Volkswagen-Funded Study Determines Incentives Given To Volkswagen Are Good Business
No, you didn’t stumble onto the Onion website – that headline is for real.
All Volkswagen needed was New Jersey Governor Chris Christie to chopper into Chattanooga, Tennessee to make the revelations in a press release this week seem even less credible. See, Volkswagen is touting a University of Tennessee study that determined controversial incentives from the state of Tennessee for the expansion of VW’s assembly plant in Chattanooga are, in fact, a damn good investment for the state.
The sunny conclusions of the report may even be mostly accurate, at least with some context. Problem is, Volkswagen paid for the study. To its credit, the company openly said so.
But Volkswagen’s relationship with Tennessee is starting to feel like Chris Christie’s with New Jersey. Subsequent to becoming embroiled in the infamous 2013 New York-New Jersey “Bridgegate” scandal, Governor Christie became almost as infamous for then underwriting an investigation conducted by his own administration that – surprise! – exonerated him of any responsibility for the politically motivated shutdown of the George Washington Bridge that links New York City and Fort Lee, New Jersey.
Concept version of the midsize crossover SUV Volkswagen will build in Chattanooga, TN. Trouble is, product-deprived VW needed this thing yesterday, not two years from now when the Tennessee plant’s politically charged expansion will be ready to build it. (Courtesy Volkswagen of America)
For Volkswagen, the release of this study’s positive economic-impact conclusions seems fortuitously timed to calm to the rancor surrounding the $300-million incentive package Tennessee approved to secure the company’s commitment to expand the four-year-old Chattanooga plant. Apart from the general political divisiveness that typically comes with big-money corporate lures, the conversation became superheated when it was reported that prominent state officials had tied the incentive deal to VW’s willingness to hinder the United Auto Workers from unionizing the Chattanooga plant.
Extra intrigue came in February 2014, while VW still was undecided about whether to expand in Chattanooga or at a plant in Mexico. U.S. Senator Bob Corker said he had been assured VW would choose the Chattanooga plant for the $704-million expansion provided a worker vote rejected the UAW. The union’s two-year effort to organize the plant failed later that month after a reasonably close and contentious vote and the UAW vowed to continue its organizing efforts.
“I hope for the good of our state and the auto industry in the state … that the UAW does not represent them (VW assembly plant workers),” the ChattanoogaTimes Free Press reported U.S. Senator Bob Corker as saying last August. “I hope that with every cell of my body.”
Now with the plant’s enlargement approved and underway, all parties may be anxious to demonstrate, via the results of the study released this week from the University of Tennessee’s Center of Business and Economic Research (CBER), that the public good ultimately was served. The Center determined the state’s $300-million incentive package “could” result in an additional 9,800 jobs and $370 million annually added to the state’s coffers.
Volkswagen and UT’s CBER are previous acquaintances; in 2013, CBER released a study that said, based on data gathered in 2012, Volkswagen’s economic impact in Tennessee had exceeded initial projections established before the Chattanooga plant was constructed. To entice VW to choose Chattanooga for the plant that was started in 2008, the state ponied up a then-record $577 million in incentives.
Upon the release of that first CBER study, Greg LeRoy, executive director of Good Jobs First, a Washington, DC-based organization that scrutinizes corporate subsidies nationwide, was skeptical of the data, he told the Times Free Press. He said he believed numbers for created jobs were exaggerated – and speculated the true cost of incentives to VW may in turn have been underestimated.