4/24/2014 Union Vote At VW Factory In Tennessee Will Send Tremors Through U.S. Auto Industry - Forbes

http://www.forbes.com/sites/joannmuller/2014/02/03/union-vote-at-vw-factory-in-tennessee-will-send-tremors-through-u-s-auto-industry/print/ 1/2

AUT O S | 2/03/2014 @ 7:32PM | 34,942 views

Union Vote At VW Factory InTennessee Will Send TremorsThrough U.S. Auto Industry

No matter the outcome, next week’s vote by Volkswagen’s 1,500 U.S. workers

on whether to join the UAW will have far-reaching implications for the entire

American auto industry.

The secret-ballot election, conducted by the National Labor Relations Board,

is scheduled for Feb. 12-14 at VW’s three-year old assembly plant in

Chattanooga, Tenn. It is the first time in 13 years that the UAW has sought

the right to represent workers at a foreign-owned assembly plant. In 2001, the

UAW lost a bid to organize Nissan workers in Smyrna, Tenn., by a 2-1 margin.

A UAW win this time around could bolster the union’s efforts to organize

other foreign-owned factories, and reverse a decades-long decline in

membership. It would also likely lead to higher wages at VW and potentially

other non-union plants, narrowing the earnings gap between foreign and

domestic auto workers in the U.S.

A loss, however, would likely suppress wages across the industry, even at

unionized plants owned by General Motors, Ford Motor and Chrysler Group,

a unit of Fiat Chrysler Automobiles, which in recent years have introduced

lower wage scales for new hires in order to remain competitive with their

foreign-owned rivals. Current labor contracts with Detroit automakers expire

Joann Muller, Forbes Staff

I write about industrial innovation and the global auto industry

4/24/2014 Union Vote At VW Factory In Tennessee Will Send Tremors Through U.S. Auto Industry - Forbes

http://www.forbes.com/sites/joannmuller/2014/02/03/union-vote-at-vw-factory-in-tennessee-will-send-tremors-through-u-s-auto-industry/print/ 2/2

This article is available online at:

http://www.forbes.com/sites/joannmuller/2014/02/03/union-vote-at-vw-factory-in-tennessee-

will-send-tremors-through-u-s-auto-industry/

in 2015, and UAW President Bob King, who retires in June, has said he wants

to see an end to the two-tier pay system.

Tennessee politicians and business groups, including Tennessee Gov. Bill

Haslam, are opposed to the unionization effort, saying that auto makers and

their suppliers would avoid investment in the state if the UAW succeeds at

VW.

Still, the upcoming vote looks to be the UAW’s best chance yet to organize

auto workers in the South, where anti-union sentiment has attracted

manufacturers like Toyota, Nissan, Hyundai, Kia, Mercedes and BMW. That’s

because Volkswagen is not opposing the unionization drive, in the hopes that

it will lead to creation of a European-style “works council” in Tennessee

similar to those it has at other plants around the world. The works council

allows workers and managers to collaborate on the running of the plant,

setting work rules, schedules and other conditions, but not wages or benefits.

Under U.S. labor law, however, a company can only have a works council if

the labor force is represented by an outside union. UAW organizers are

optimistic about the election, saying the majority of workers have already

signed cards backing a union.

UAW membership has fallen steadily since reaching a peak of nearly 1.5

million in 1979 to almost 400,000 in 2012. Detroit’s declining market share,

along with increased automation and outsourcing, are to blame. The only

foreign automaker in the U.S. that is unionized is a Mitsubishi Motors

assembly plant in Illinois.

“Volkswagen Group of America and the UAW have agreed to this common

path for the election,” said Frank Fischer, chairman and CEO of Volkswagen

Chattanooga, in the 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.”

“Employees have the right to decide, by voting in a secret ballot election, on a

matter that concerns their own interests,” said Sebastian Patta, vice president

of human resources at the plant in Chattanooga. “Volkswagen respects this

democratic right at all locations world-wide.”

The Chattanooga plant, which opened in May 2011, manufactures about

150,000 VW Passat sedans a year. The union vote comes at a critical time,

when VW’s top management is considering where to build a new sport-utility

vehicle for the U.S. market. Chattanooga has the capacity to build as many as

250,000 vehicles a year, making it a likely choice.