VW Workers in Chattanooga Say ‘No’ to Union Representation

VW workers in ChattanoogaAll eyes, it seemed, were on Tennessee. The stakes were enormous. If the United Auto Workers got to represent employees at the Volkswagen assembly plant on the outskirts of Chattanooga, which opened in 2011, it could create more organizing successes throughout the South. That gambit now is on hold. Last Friday, February 14, the announcement from VW came: Plant employees, by a 712-to-626 margin, voted to reject UAW representation. In choosing to remain nonunion, the majority expressed their preference for resolving wage, benefit and working conditions issues through a German-style ‘works council’ rather than formal collective bargaining; VW headquarters has instituted such councils at virtually all its plants around the world. That the union had done its best to avoid a secret ballot vote underscores a certain disdain it has for the workplace democracy it claims to champion.

Union Corruption Update last October reported on the United Auto Workers ramp-up of its organizing campaign in Chattanooga. This was a pivotal moment, emphasized union officials. UAW membership nationally was 380,000, a drop of about three-fourths from late-70s levels. The UAW still had clout, especially given that the financially-strapped Ford, General Motors and Chrysler in the fall of 2007 agreed to offload their expensive retiree health plans onto (since-instituted) union-managed Voluntary Employee Beneficiary Associations (VEBAs) in return for substantial wage and benefit concessions from the union. The unionized portion of the U.S. auto industry, specifically GM and Chrysler, was on the precipice of bankruptcy, a condition largely the result of UAW victories at the bargaining table. Unions wins over the decades had created highly cumbersome work rules and unsustainable wage and benefit hikes. During late 2008 and early 2009, the U.S. Treasury, first under President Bush and then under President Obama, provided emergency loans to the two carmakers. The Obama administration in the spring of 2009 proceeded to force Chrysler and then GM into bankruptcy, installing new management and giving the union, through its VEBA trust funds, a major equity stake in each company.

With unionized plants in Northern states at risk for downsizing or closure, the UAW, now more than ever, looked southward to its future. Starting in the Eighties, foreign automakers, including BMW (South Carolina), Mercedes-Benz (Alabama), Nissan (Tennessee) and Toyota (Kentucky and Mississippi), had built plants in the region. Right to Work laws and, related, a tradition of weak unionism served as key attractions. The United Auto Workers long had been trying to establish a foothold there. Organizers had tried to unionize the Nissan assembly plant in Smyrna, Tenn. (near Nashville) in 1989 and again in 2001, to no avail. But the union remained undeterred in its goal of organizing foreign-owned auto plants. UAW President Bob King recently offered his assessment: “If we don’t organize these transnationals, I don’t think there is a long-term future for the UAW.”

During these last several months, the future most of all lay in Chattanooga. In the spring of 2011 Volkswagen opened an assembly plant on the fringe of this southeast Tennessee city of 170,000. The facility, consisting of nearly 2 million square feet of building space on a 1,400-acre site, would produce, initially, the popular mid-sized VW Passat, a sedan that had gone through several design changes over the decades. The City of Chattanooga, led by then-Republican Mayor Bob Corker (2001-05), now a U.S. senator from Tennessee, took the lead in convincing the German auto manufacturer to expand in here. A combined $577 million in federal, state and local tax incentives sweetened the deal. The plant would be nonunion, paying somewhat less than union-scale wages and benefits. A UAW victory in Chattanooga, union officials believed, could serve as a catalyst for victories at nonunion plants throughout the South.

But an obstacle loomed: Volkswagen Group, the world’s third-largest automaker behind Toyota and General Motors, was a firm believer in works councils. These councils, which are a definitive aspect of German labor relations, are joint employer-employee committees that hold scheduled face-to-face discussions of workplace issues. Through non-adversarial “co-determination,” as management terms it, employees can resolve issues before they deteriorate to the point of a strike. German law requires factories in that country to have this arrangement. And Volkswagen has more than obliged. Half of the 20 seats on VW Group’s executive board consist of union and works council representatives. VW council leader Bernard Osterloh calls this system a “competitive advantage.” And it is standard at the company’s over 100 plants worldwide. Outside of China, in fact, the Chattanooga plant is the only VW facility without a works council. Chattanooga obviously isn’t a part of Germany, and thus is not subject to German law. Yet company headquarters in Wolfsburg (Lower Saxony) from the start has been determined to remedy this situation, whether or not the plant goes union.

The United Auto Workers has opposed the imposition of a works council insofar as it would operate independently of union guidance. The union wanted to set the terms. Otherwise, the council would amount to a company union, an arrangement ostensibly banned by the National Labor Relations Act. Unions across the board for decades have denounced “company unions” as mere fronts for union-busting employers. Yet, in fact, the NLRA definition of a legitimate labor organization – “any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rate of pay, hours of employment, or conditions of work” – doesn’t preclude the formation of a works council. Mutual cooperation doesn’t necessarily require a union. The issues typically discussed at worker council meetings in Germany are similar to those discussed at U.S. workplaces, unionized or not.

With the United Auto Workers adamant about unionization, it had the support of the roughly 2.25 million-member German metal and auto workers union, IG Metall. Less expectedly, the union also enjoyed the implicit support of Volkswagen headquarters. This past January 27, the company signed a neutrality agreement with the union, committing itself to non-interference with the United Auto Workers organizing campaign. Though officially on neither side, company officials made clear that if unionization were the only way possible to create a works council, then it would support unionization. And the UAW was ready to persuade the National Labor Relations Board (NLRB) to declare a union-free works council illegal.

Stronger obstacles to union representation loomed statewide. One was the political leadership in Tennessee, where only about 6 percent of the total work force in unionized. Senator Corker, in an interview published in the Washington Post on the eve of the vote, explained his opposition to the UAW campaign:

I’m a former mayor of Chattanooga. I recruited [Volkswagen] to our state. I was the first person to call their number, and two of the three meetings with them took place in my home in Chattanooga. I know [Volkswagen CEO Martin] Winterkorn really, really well. We’re in constant contact with Volkswagen at every level…

Our concern is not with the works council and never has been, and Volkswagen knows that very well…It’s really been the fact that the UAW would be the implementing entity. We’ve even told Volkswagen that: ‘Why don’t you guys create your own union within the plant, if you feel like that is something that is necessary to fully implement this in a way you see fit.’ I will say that BMW has implemented its works council without the UAW.

Tennessee Republican Governor Bill Haslam, meanwhile, last June indicated that UAW representation would be “a negative” for his state’s business climate. And this February, Bo Watson, Chattanooga-area Republican Tennessee state senator, informed VW management that any expansion of the VW plant would have a “very tough time” winning tax breaks in the legislature in the event of a union victory.

The ultimate obstacle to United Auto Workers representation, however, was the Chattanooga workers themselves – a good many of them anyway. More than 1,500 of the roughly 2,000 employees at the VW plant stood to be covered by a union contract. Many seemed satisfied with the way things were. A group of employees, “No to Uninformed Auto Workers,” (www.no2uaw.com), printed and distributed handbills, held meetings and created an online petition to oppose UAW organizers. Their online manifesto declares:

First, we like the pay. Our hourly wage is right in line with the Big 3. Actually, a little better. We trust our employer will continue this trend without any need for outside representation, arbitration or strikes. Four years ago, Frank Fischer and team crafted a pay scale that is working quite well. And on top of that, unanticipated, unbargained for, quarterly bonuses!

Second, we like our benefits. Correction: LOVE our benefits. We have our choice of two levels of health care, two 401(k) programs, a workout facility, a lease car program unmatched by any other car company and so much more…For others, you have to put money down AND carry insurance. We are the envy of all who wish they could work here, too.

Third, our hours. Right now, team members are enjoying a 4-day, 40-hour work week with 3-day weekends off! Yes, we have the battle scars from getting our plant up and running. We survived two weeks of midnights at a time. We survived meeting our relief coming and going in a ten-hour shift. We did what we had to do because we know that hard work pays off.

This high morale may explain the high quality of the vehicles rolling off the assembly line. In November 2011, Motor Trend magazine named the VW Passat its “Car of the Year” for 2012.

Knowing a union secret ballot victory was anything but assured, UAW leaders decided to conduct a card check campaign. As Union Corruption Update has explained on many occasions (such as here), a card check is a longstanding, and increasingly common, union device for achieving representation without necessarily having to go through an NLRB-supervised secret ballot election. If organizers can extract pledge card signatures from a majority of potentially affected workers – the larger the majority, the better – at a nonunion site, they can make a convincing case to the employer that an election would be redundant. Or to put it another way: Resistance is futile. On a couple of occasions during the last decade, Democratic members of Congress sponsored legislation, eventually blocked by Senate Republicans, that would have forced private-sector employers to recognize as binding a majority-supported card check. While forced recognition wasn’t possible, the United Auto Workers believed notwithstanding that with 60 percent, or better, 70 percent of union-eligible employees signing their names, VW would capitulate.

The union was on its way to gathering signatures from a large majority workers, or so UAW Southeast Regional Director Gary Casteel insisted. A secret ballot election, he and other UAW officials said, would be “divisive.” But the card check generated a lot of unwanted controversy for the union. Though President Bob King insisted everything was above board, members of No to Uninformed Auto Workers believed otherwise. The union, said the dissenters, employed undue tactics of coercion and bribery, and intentionally provided misleading information. Last September 25, eight employees at the Chattanooga plant filed a complaint with the NLRB stating as much. Represented by attorneys from the National Right to Work Legal Defense Foundation, the plaintiffs charged that organizers had refused to inform workers that a signature could constitute a vote for representation. Foundation President Mark Mix noted: “Despite making it so easy to sign union ‘cards’ at the workplace, UAW officials are now demanding that workers go to the union office to exercise their right to reclaim their cards. This case underscores how card check unionization schemes make it easy to check in, but impossible to check out.” After the wheels of the secret ballot election process were in motion, Mix noted: “I think that if those eight employees hadn’t filed charges, the card check might have worked. To this day, nobody has seen the ‘majority’ of cards the UAW claimed to have.”

The legal action would prove unsuccessful. The NLRB on January 24 ruled that the United Auto Workers and VW management had not violated any federal labor laws during the on-premises card check. Still, the dissenters had made made enough of a stir to create the possibility of a long and public battle. Very reluctantly, VW management called for a secret ballot election, in turn, triggering National Labor Relations Board oversight. The UAW, though unable to stop this election, did succeed in reducing the window of opportunity for opposition. First, it coaxed VW into signing a neutrality agreement on January 27, only 18 days before the February 14 election. The “agreement” stipulated, among other things, that the company would not follow through on its planned expansion of the Chattanooga facility in absence of unionization. Second, the union also persuaded the NLRB to establish a nine-day limit for opponents of unionization to make their case.

With VW corporate opposition muted, and to a degree supportive of the union, the UAW now had an excellent shot at a victory. Adding fuel to the union’s case was that Tennessee was a Right to Work state. Thus, in the event of union representation, workers wouldn’t be forced to pay dues in order to keep their jobs. In the final weeks of the campaign, Chattanooga was a national battleground. “It could very well be a game-changer,” stated Clinton-era Labor Secretary Robert Reich, a strong union supporter. American Prospect Editor-at-Large Harold Meyerson wrote in the magazine’s blog two days before commencement of the voting: “If the unions get a foothold in the South, Americans’ wages might just start leveling up instead of down. What’s more, if unions grow in the South…then Southern states might see their political balance of power altered.” Opponents of unionization made their voices known as well. The Center for Worker Freedom, a project of Washington, D.C.-based anti-tax activist Grover Norquist, covered Chattanooga with anti-UAW billboards and radio ads. And Heritage Foundation labor policy analyst James Sherk cautioned, “If the union used its power as a cartel to raise wages too much, it would make Volkswagen’s cars less competitive and put their jobs at risk.”

Affected workers got down to the business of casting ballots last Wednesday through Friday, February 12-14. When the results were announced late Friday night, opponents of UAW representation prevailed by a 712-626 margin – close, but still a victory. And with an 89 percent turnout, the vote could not be said to be unrepresentative of workers’ views. At a post-election news conference, an angry Bob King explained the outcome in terms of insidious influences: “I think it was unprecedented that outside forces, whether it was the Koch brothers and the money they spent here, whether it was Senator Corker, whether it was Grover Norquist, all these people who were going to come in and threaten the company and threaten workers, to me was outrageous.” King also accused Sen. Corker of “intimidation.” Apparently, the UAW chieftain didn’t have a problem with top union officials flying down from Detroit to Chattanooga to speak to plant employees about the benefits of belonging to a union. Nor did he have a problem with President Obama publicly supporting the union campaign. UAW Secretary-Treasurer and heir apparent to King, Dennis Williams, similarly weighed in: “While we’re outraged by politicians and outside special interest groups interfering with the basic legal right of workers to form a union, we’re proud that these workers were brave and stood up to the tremendous pressure from outside.”

As of now, the union may be taking the attitude of “It ain’t over till it’s over.” By law, a union losing a representation vote has seven days to file a challenge with the NLRB. If there is a next round, then, we aren’t likely to know as much until near or at the end of this week. “I would say there’s a better than 50 percent chance that the UAW will file objections with the intent of setting aside this election result and re-running the election,” noted National Right to Work Legal Defense Foundation spokesman Patrick Semmens. Frankly, it’s hard to see where the union has a case for a re-vote. Chattanooga plant managers openly welcomed UAW officials and organizers to the premises. And the VW headquarters-union neutrality agreement clearly put the company at a disadvantage.

With or without a second vote, the formation of a works council at Chattanooga appears imminent. But there is no reason to assume that it must be accompanied by monopoly collective bargaining. UAW officials, more than anything else, appear driven by a desire to reverse their decades-long slide in membership from around 1.5 million to 380,000 during the last 35 years. Yet the main issue at hand isn’t the institutional viability of the union.  It’s the long-term decline of the domestic auto industry relative to foreign producers. The Volkswagen experience in the U.S. is one of high employee morale and job security. Last week’s vote in Chattanooga suggests a majority of workers there knew a lot more than what the union wanted them to know.