Tennessee Crunches the Numbers

Effects of lost tax revenue, declines in auto sales still being measured

General Motors workers on the engine line at the General Motors Spring Hill Manufacturing plant in Spring Hill, TN. (Photo by Sanford Myers for General Motors)

Tennessee’s massive automotive sector, with both OEMs and a broad network of suppliers, is still weeks away from being fully re-started but state and municipal officials are at work trying to chart the damage caused by Covid-19.

Nearly all the state’s 100,000 autoworkers had some down time in March and April, and some plants remain closed or at partial capacity. Lost tax revenue has lawmakers wondering what cuts in state spending will be necessary in the near future.

“There’s really no doubt that automotive manufacturing has taken a more significant hit than other sectors or manufacturing overall,″ Bradley Jackson, chief executive of the Tennessee Chamber of Commerce & Industry in Nashville, told Ted Evanoff of the USA Today Network.

- Sponsor -

“It really ripples through when you have major manufacturing facilities closed for a period of time. You have to look at the taxes that are not going into the economy.”

The state’s 10 largest manufacturers pay about 70 percent of the sales and use taxes collected by Tennessee state government, the article said.

Tennessee’s huge auto-parts sector feeds components to auto plants throughout the South. The state also boasts a Volkswagen mega-complex in Chattanooga, which has resumed operations at least in part.

General Motors, with its Spring Hill factory, along with Nissan’s plants in Smyrna and Decherd, have discussed returns to production by mid-May.

USA Today reports that a 12 percent to 18 percent drop in auto sales for the year likely will cut into autoworkers’ overtime pay, reduce demand for temporary workers who can comprise as much as 10 percent to 25 percent of a plant’s labor force, and in turn reduce demand for components made in the supply plants. Such a chain reaction lowers revenue throughout the economy.

Stay updated!

Get the latest news and insights into the automotive industry delivered right to your inbox