Volkswagen opens Tennessee plant tomorrow

Logo of a Volkswagen Phaeton

JEREMY HOBSON: Volkswagen will open its latest auto plant in Chattanooga Tennessee tomorrow. The plant will assemble thousands of new Passats -- and it will mean 2,000 or more new jobs for the region. But Volkswagen will also be paying workers less in wages and benefits than U.S. car makers do.

Marketplace's John Dimsdale reports.


JOHN DIMSDALE: Workers at the Chattanooga plant will earn around $27 an hour when you add together wages and benefits. That's slightly more than half what a worker earns at the three U.S. car makers. A big reason -- VW will be saving on pension payments to its workers.

MICHELLE KREBS: I think guaranteed pensions are gone the way of carburetors by now.

Michelle Krebs with Edmunds.com. She says the days of companies guaranteeing retirement benefits for life are over.

KREBS: We've seen industry wide a move toward less fixed pensions versus 401K type of arrangement.

401Ks usually require workers to contribute more for their retirement -- reducing the company's overall labor costs. And that savings will represent a competitive challenge for GM and Chrysler, who have already cut costs to come out of bankruptcy.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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