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Volkswagen Opens New Plant in Tennessee

Altrendo Images/Getty Images(CHATTANOOGA, Tenn.) -- Volkswagen AG will open a new auto plant near Chattanooga, Tennessee on Tuesday, giving the German automaker an edge over its American and Japanese counterparts who manufacture cars in the U.S.

The new Southern plant will help Volkswagen save significantly in labor costs.  Citing industry analysts, The Wall Street Journal reports that workers there will earn about $27 an hour to start compared to the estimated $52 an hour workers in Detroit get when they begin their employment.

The plant will also give Volkswagen protection from currency fluctuations.

"The dollar is very weak compared to the Euro.  If they are selling vehicles that are made in Europe, using European parts and European labor, it's very easy for that to become a money-losing proposition, here in the States," says AutoPacific Industry Analysis Director Ed Kim.

Kim adds that the American South has become a new automotive-manufacturing center in America for import automakers, like Volkswagen, because there's "a lot of very favorable tax incentives from the local governments there."

Copyright 2011 ABC News Radio

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