Bloomberg News

VW Backs Union Vote at U.S. Plant in Foreign Carmaker First (1)

February 04, 2014

A Volkswagen AG (VOW) plant in Tennessee is poised to become the first foreign-owned car factory in the U.S. with a union after the company agreed to let employees vote on whether to be represented by the United Auto Workers.

Volkswagen has agreed for workers at a Chattanooga assembly plant to vote next week on whether to join the UAW. The U.S. National Labor Relations Board will supervise the Feb. 12-14 vote after a majority of employees there signed authorization cards, the union said yesterday in a statement.

The UAW is seeking to establish German-style worker councils in Tennessee, a traditionally non-union state where elected officials such as Republican Senator Bob Corker have warned of job losses if unions take hold. As foreign auto companies have opened factories in the U.S., generally in states with less union activity, the UAW has struggled to add members from those facilities.

“Essentially the UAW, which has for years been trying to make inroads into foreign-owned plants, finally has a foreign-owned plant it can organize,” Gary Chaison, a labor law professor at Clark University in Worcester, Massachusetts, said in an interview. “That’s really remarkable.”

The UAW has organized workers at foreign-based auto plants in California, Michigan and Illinois where U.S. companies had an interest. The Chattanooga plant would be the first wholly owned foreign manufacturer to join, according to the union.

Workers Council

The UAW, which has lost 75 percent of its membership since 1979, has pushed to gain recognition at Volkswagen’s plant in Chattanooga, which opened in 2011. In next week’s vote, the UAW is seeking to set up a workers council, an employee body that’s common at most large German companies to resolve labor disputes and protect jobs.

The Chattanooga plant, which has about 1,550 hourly employees, is the only major Volkswagen plant without some form of union representation, the UAW said.

“Volkswagen Group of America and the UAW have agreed to this common path for the election,” Frank Fischer, chairman and CEO of Volkswagen Chattanooga, said in a statement. “That means employees can decide on representation in a secret ballot election, independently conducted by the NLRB. Volkswagen is committed to neutrality and calls upon all third parties to honor the principle of neutrality.”

In Germany, union affiliation isn’t required for employees to form worker councils, Chaison said. It isn’t clear if that’s the case in the U.S.

‘Unexplored Territory’

“This is the way to open the door for the UAW to get into these companies,” Chaison said. “We’re really talking about unexplored territory here.”

The Chattanooga plant is the favored North American production site for the company’s forthcoming mid-sized sport-utility vehicle, based on the Crossblue concept, which may not hit showrooms until 2016. Wolfsburg, Germany-based Volkswagen, the world’s third-biggest automaker, is also weighing other locations including a factory in Puebla, Mexico, which offers lower costs, company executives said last month.

“Volkswagen is known globally for its system of cooperation with unions and works councils,” UAW President Bob King said in the statement. The union seeks to work with the company, he said, “to set a new standard in the U.S. for innovative labor-management relations that benefits the company, the entire workforce, shareholders and the community.”

Products, Jobs

The workers council wouldn’t represent employees in talks over wages or benefits.

“With a local works council, workers would have a voice they can use to make Volkswagen stronger,” Jonathan Walden, a Volkswagen paint technician, said in a statement. “Global representation means Chattanooga workers may have a strong voice in seeking new products and bringing more jobs to Tennessee.”

The distinction between the role of the council and full union representation created some confusion among plant employees, leading to a complaint to the labor board that was ultimately dismissed, Chaison said.

“Some workers were saying, ‘What are we voting for? Traditional collective bargaining or an alternative, German-type labor relationship?’” Chaison said. “The question is the word unionized. It’s not traditional unionization.”

Even so, organizing employees into worker councils could help the UAW increase membership, Chaison added.

Union leaders frequently hold the top spots on the councils, though the groups represent all employees, even those who aren’t union members. Volkswagen and the UAW met in Wolfsburg in August to consider setting one up at the Chattanooga factory.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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