When the United Auto Workers in April 2014 gave up on its bid to unionize hourly workers at the Volkswagen assembly plant in Chattanooga two months after its ballot defeat, then-President Bob King intimated the union would be back. It’s a lot more than an intimation now. On December 4, robotics and other machine maintenance workers at the facility voted 108-44 in favor of UAW representation. The National Labor Relations Board a week earlier had approved a union request for an election. Unlike the last time, VW is not siding with the union. Even before the vote, the German automaker had announced its intent to appeal the NLRB ruling. The victorious workers are but a fraction of all employees, but they are celebrating all the same. And the NLRB remains very much in the picture.
For decades, the United Auto Workers have viewed the South as prime organizing territory. It’s little wonder. Beginning in the Eighties, foreign automakers have built state-of-the-art assembly plants in the region: BMW (South Carolina), Mercedes-Benz (Alabama), Nissan (Tennessee) and Toyota (Kentucky and Mississippi). By contrast, domestic automakers, saddled with costly UAW contracts, have had fewer options. In some cases, they have closed plants. Membership over the last 35 years has fallen from about 1.5 million to less than 400,000. Until now, none of the UAW organizing drives in the region had delivered victory. The union lost campaigns, for example, at the Nissan plant in Smyrna, Tenn. in 1989 and 2001. More recently, an effort to organize the Mercedes-Benz plant near Tuscaloosa proved so time-consuming that even workers initially supportive came to oppose it. But Volkswagen was different, the union believed. Here was real potential for a breakthrough.
The Wolfsburg, Germany-based Volkswagen opened an eagerly-anticipated assembly plant in May 2011 in Chattanooga, in southeast Tennessee. The facility, consisting of nearly 2 million square feet of building space located on a 1,400-acre industrial park site, would produce, initially, the Passat, a long-popular mid-sized sedan. This event did not happen by magic. During the first half of the last decade, the City of Chattanooga, led by then-Mayor Bob Corker, now a Tennessee Republican U.S. Senator, worked overtime to sway VW headquarters. As an enticement, he and other Tennessee public officials secured nearly $600 million worth of federal, state and local tax incentives. The plant would be nonunion, paying somewhat less than union-scale wages and benefits. In 2008, VW selected Tennessee over other states as the location for the planned facility.
The plant opened on schedule. And it has been an almost unqualified success. By the close of 2013, more than 250,000 Passats had rolled off its assembly lines. Workers have expressed high levels of satisfaction over pay, benefits and working conditions. Customer satisfaction is high. Motor Trend magazine proclaimed the Passat its “Car of the Year” for 2012. But there was a complication. Management sought to apply a German standard of labor relations known as “co-determination.” Under this model, a forum, known as a “works council,” provides opportunities for management and labor, whether hourly or salaried, to resolve problems before they deteriorate to the point of a possible strike. Volkswagen wanted such an arrangement in Chattanooga, with or without an accompanying union contract. All VW plants in the world, save for those in China, had works councils. The UAW, for its part, was not opposed to the idea. But it did insist upon being the voice of workers on the council. Anything less, it argued, would amount to an illegal “company union.”
This situation led to an unlikely management-union alliance. The UAW took this as a cue to launch a high-intensity card check campaign to organize hourly workers. If a majority of targeted workers signed a pledge card, the union could present their signatures as evidence of a desire for UAW representation. In that way, they might be able to avoid having to go through an NLRB-supervised election campaign. In January 2014, the union proclaimed that it had obtained signatures from an overwhelming majority of workers. The claim was hard to accept. To this day, nobody at VW or anywhere else has seen these cards. Moreover, the campaign very likely used deception and coercion to obtain signatures. Eight Chattanooga workers in particular were so incensed over the union’s tactics that they filed a complaint with the NLRB in September 2013. On January 27, 2014, with the results of the card check up in the air, VW signed a neutrality agreement with the union, pledging non-involvement with any further organizing.
Tennessee political leaders felt no need for acquiescence. Senator Corker, Governor Bill Haslam and several other elected officials, openly stated that unionism should not be a prerequisite for having a works council. Though their comments were mild, union officials denounced them as though they were attacks on workers’ rights. Volkswagen management decided that a secret ballot election would be the best way to resolve the potential logjam. In short order, an election was held during February 12-14, 2014. And on February 14, management announced the result: The UAW lost by 712-626, a 53-47 percent margin. The plant would remain nonunion. It was not the United Auto Workers’ idea of a Valentine’s Day gift. One week later, on February 21, the union filed a complaint with the NLRB to negate the outcome. Two months later, sensing futility, it dropped the suit. President Bob King declared: “The UAW is ready to put February’s tainted election in the rear-view mirror.” Anyone could see that the union was ready for no such thing. The use of the word “tainted” was a sure sign that the union intended to press the issue.
The wait for Round Two would not be long. In July 2014, the United Auto Workers, with Dennis Williams having taken over as president the previous month, established Local 42 in the hope of representing Chattanooga workers. VW management initially was supportive, something that union officials did not hesitate to point out. New Secretary-Treasurer Gary Casteel, who had headed up the Chattanooga organizing drive, stated: “We have a consensus agreement with Volkswagen management to form the local and be recognized when we get a majority of the workers to join.” The union decided upon incremental organizing as the best route to representation. The UAW’s initial organizing target was the plant’s roughly 160 maintenance employees, formally known as “skilled-trades” workers. The campaign lasted through most of 2015. Early this November, the National Labor Relations Board granted the union permission to hold a vote. And on Friday, December 4, the employees voted 108-44 in favor of the UAW representing them at the bargaining table.
Volkswagen management, while not opposed to representation per se, opposes the UAW’s latest organizing drive. Company officials argue that by representing only a small portion of all Chattanooga employees, the union is undermining workplace unity. Only days prior to the NLRB’s green light, VW issued this statement: “While the company remains neutral in regards to our employees’ right to representation and an election, we believe that the maintenance-only union requested in the petition is not consistent with our one-team approach at Volkswagen Chattanooga, our production system and organization designed, nor long-established NLRB law.” The automaker had indicated it would challenge the holding of the election. Following the tally, VW reiterated its intent: “We believe that a union of only maintenance employees fractures our workforce and does not take into account the overwhelming community of interest shared between our maintenance and production employees.” On Tuesday morning, December 1, the company announced that it would appeal the NLRB’s decision to allow an election.
The latest UAW campaign, if nothing else, is a case of bad timing. For well over a year, the State of Tennessee had been in competition with the company’s Mexican operations for the manufacture of a proposed mid-sized crossover sport utility vehicle. The company last July awarded the contract to Tennessee. VW would spend about $600 million on expanding the existing Chattanooga plant, creating as many as 2,000 new jobs. As sweetener, Tennessee offered $300 million in state and local tax breaks, employee training grants, and infrastructure upgrades. Unfortunately, VW right now is on the receiving end of a crisis of consumer confidence and possible legal action. This September, Volkswagen headquarters admitted that about 11 million of its diesel-powered cars sold in America, going back several years, had been rigged by VW personnel to provide false readings on emissions tests in order to meet strict EPA air quality standards. An internal probe is underway. The bad publicity contributed to a steep sales drop in November in Passats made in Chattanooga. Some Tennessee lawmakers are reviewing the possibility of mandating a clawback of public aid to Volkswagen. “Because Volkswagen has been dishonest about their emissions-system technology,” remarked State Senator Bo Watson, a strong supporter of the Chattanooga operation, “I think it’s fair to ask.”
The United Auto Workers has its own focus: maximum representation of Chattanooga employees, the skilled-trades workers vote being merely a first step. UAW Local 42 President Mike Cantrell explains: “We have said from the beginning of Local 42 that there are multiple paths to reach collective bargaining. And we believe these paths will give all of us a voice at Volkswagen in due time.” Only the naïve would believe that the union is limiting itself to Volkswagen when it comes to organizing the southern region. If successful, the likelihood of strikes will loom more real. UAW President Dennis Williams was a key organizer in two bitter and prolonged strikes during the Nineties against Caterpillar. The impact would not be favorable. The fact that Southern states have Right to Work laws and low union density was instrumental in getting foreign automakers to expand into the region in the first place.
Nobody is disparaging the UAW’s right to organize. But there are long-run consequences of unionization, especially in the auto industry. One of them, ironically, is a potential loss of union jobs. By forcing foreign auto manufacturers to pay wages and benefits similar to those provided by domestic automakers, the automakers would have to price a sizable number of consumers out of the market. The financial troubles of Ford, Chrysler and General Motors – and the eventual 2009 forced bankruptcies of the latter two companies – were very much the result of unsustainable union-driven commitments, especially for health and retirement benefits. Unionization no doubt is good for workers in the short run. But the question arises: How is it that the United Auto Workers since 1980 has managed to lose about three-fourths of its members? The answer shouldn’t be that hard to figure out.