Fahrvergnügen?

Volkswagen Trips Over Tennessee's Touchy Union Politics


The Germans from Volkswagen (VLKAY) are finding a cultural clash in the American South. The company’s desire to install a “works council,” an advisory group that’s part of the operations at nearly all of its assembly plants outside of China, has run into a hornet’s nest of local labor politics in Chattanooga over the involvement of the United Auto Workers.

The union has been seeking to organize workers at the VW plant, which employs 2,500 people to turn out Passat sedans, as well as other foreign automakers with operations in the region. It remains unclear, under U.S. law, whether the company would need to accommodate some type of union organization to form a “works council,” but executives from the automaker seem inclined to that view. In Germany, where VW’s plants are unionized, the councils collaborate with executives on workplace issues and implement the decisions of a 20-member supervisory board, half of whose members are labor representatives.

“It’s important to note that the issue for us is works councils, not unions,” Bernd Osterloh, the head of VW’s global works council and a member of the company’s supervisory board, told the Associated Press last week during a visit to Tennessee. “And your law says if I want to transfer authority to a works council, I need to work with a union.”

Unlike the Volkswagen leadership, however, local politicians are less than keen to see a union invited into a large manufacturing operation, even if it’s only as part of an advisory process. Tennessee Governor Bill Haslam and Republican Senator Bob Corker, a former Chattanooga mayor, have sharply criticized efforts by the United Auto Workers to organize the VW plant and have urged the company to consider other ways to achieve its goal.

“I’m not anti-union,” Corker said in an e-mail. “However, I have seen the negative impact the UAW has had on the automobile manufacturing industry in our country.” Opposition stems, in part, from concern that a toehold for organized labor would damage efforts to lure other manufacturers to Tennessee, or possibly prompt Volkswagen to decide against expanding in the state.

Gary Casteel, the UAW’s regional director, did not respond to an interview request.

The political opposition to union activity in the South, where collective-bargaining efforts have thus far failed at Nissan Motor (NSANY), BMW (BMW:GR), Daimler (DDAIY), and Toyota Motor (TM), has at times taken on a hyperbolic air. In May, for instance, Matt Patterson, a former consultant at the Competitive Enterprise Institute, wrote an op-ed likening the union drive to a similarly named invading force: the Union Army during the Civil War. “Today Southeastern Tennessee faces invasion from another union—an actual labor union, the United Auto Workers,” Patterson wrote in a post subsequently removed from the Competitive Enterprise Institute’s website. “The UAW has its heart set on organizing Chattanooga’s Volkswagen plant, which employs several thousand and supports thousands more throughout the Southeast.”

The fevered debate has left Chattanooga Mayor Andy Berke on a lonely diplomatic path, not taking sides. “I see my job as a way to promote and support business here in Chattanooga,” says Berke, a former attorney in his family’s local law firm. “If Volkswagen and its employees come to a decision for or against a union, I’m going to be just as fervent in helping them succeed in Chattanooga.”

For Osterloh, meanwhile, setting up an advisory group in the Tennessee plant isn’t part of any labor showdown—it’s just how the German automaker does business: He told the AP that works councils give the company “competitive advantage.”

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • VLKAY
    (Volkswagen AG)
    • $45.36 USD
    • -0.50
    • -1.1%
  • NSANY
    (Nissan Motor Co Ltd)
    • $19.31 USD
    • -0.11
    • -0.57%
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