Union Suffers Big Loss at Tennessee VW Plant

(by Neal E. Boudette, The Wall Street Journal) – The United Auto Workers union [UAW] suffered a crushing defeat Friday, falling short in an election in which it seemed to have a clear path to organizing workers at Volkswagen’s plant in Chattanooga, Tenn.

The setback is a bitter defeat because the union had the cooperation of Volkswagen management and the aid of Germany’s powerful IG Metall union, yet it failed to win a majority among the plants 1,550 hourly workers.

Volkswagen workers rejected the union by a vote of 712 to 626 (53% to 47%). The defeat raises questions about the future of a union that for years has suffered from declining membership and influence, and almost certainly leaves its president, Bob King, who had vowed to organize at least one foreign auto maker by the time he retires in June, with a tarnished legacy. …

The UAW said that “outside interference” affected the outcome of the vote. “Unfortunately, politically motivated third parties threatened the economic future of this facility and the opportunity for workers to create a successful operating model that would grow jobs in Tennessee,” Gary Casteel, the union official in charge of the VW campaign, said in a statement.

Under an agreement the UAW has with Volkswagen, it now must cease all organizing efforts aimed at the Chattanooga plant for at least a year.

A win would have marked the first time the union has been able to organize a foreign-owned auto plant in a Southern U.S. state, and would have been particularly meaningful, because the vote was set in a right-to-work state* (see “Background”)  in the South, where antiunion sentiment is strong and all past UAW organizing drives at automobile plants have failed.

The Chattanooga workers had been courted steadily for nearly two years by both the UAW and the IG Metall union, which pushed Volkswagen management to open talks with the UAW and to refrain from trying to dissuade American workers from union representation.

Mr. King made forging alliances with overseas unions the centerpiece of his strategy after he was elected in 2010. The UAW’s alliance with IG Metall (Germany’s powerful union) was forged over the last several years by Mr. King, who traveled to Germany, Japan, Brazil and South Korea in hopes of getting unions around the world to combine forces. The [UAW] now must come up with a way to halt its decline. It once represented 1.5 million workers, but now has about 400,000, and diminished influence…

“The union needs new members. They have to organize the transplants or they don’t have much of a future,” said Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich.

Frank Fischer, the chairman and CEO of the Volkswagen plant in Tennessee, left, and Gary Casteel, a regional director for the United Auto Workers, hold a press conference at the Chattanooga, Tenn., facility on Friday, Feb. 14, 2014, after an announcement that workers at the plant rejected representation of the union. (AP Photo/Erik Schelzig)

The election was also extraordinary because Volkswagen chose to cooperate closely with the UAW. Volkswagen allowed UAW organizers to campaign inside the factory – a step rarely seen in this or other industries. …

The union’s loss adds to a long list of defeats for organized labor in recent years. States like Wisconsin enacted laws that cut the power of public-employee unions, and other states, including Michigan, home of the UAW, adopted right-to-work laws that allow workers to opt out of union membership if they choose.

The vote was held amid public campaigning against the union by Republican politicians, including Gov. Bill Haslam, and conservative activist groups. Conservative political groups, including one backed by antitax activist Grover Norquist, put up anti-union billboards around Chattanooga. A small but determined group of workers who oppose the UAW also worked to tilt their colleagues against the union, an effort that ultimately proved successful. …

The UAW had appeared to have strong chances in the election because both Volkswagen and the IG Metall union wanted the Chattanooga plant to have a works council, a formal committee of both union and nonunion employees who negotiate with management on day-to-day working matters at the plant.

Works councils are standard in German workplaces – almost all other Volkswagen facilities around the world have one. In the U.S., however, it appears to many labor-law experts that they can only be implemented legally if workers are represented by an outside union.

Since both Volkswagen and IG Metall have expressed a strong desire to have a works council in Chattanooga, the auto maker chose to work with the UAW. In addition to letting union representatives into the plant, Volkswagen kept members of management from expressing any views on the vote, and agreed to coordinate its public statements with the union during the election campaign.

“This vote was essentially gift-wrapped for the union by Volkswagen,” said labor lawyer Cliff Hammond.

The chief executive of the plant, Frank Fischer, said in a statement that Volkswagen will continue to search for a method of establishing a works council.

The works council concept also proved a winner for some Chattanooga workers. Jonathan Walden, 39 years old, earns about $19.50 an hour – about $4 an hour more than starting workers at GM, Ford and Chrysler – but he voted for the union because he wants a works council. “I don’t know why more companies don’t do this,” said Mr. Walden, who works in the paint shop.

But more workers were persuaded to vote against the union by the UAW’s past of bitter battles with management, costly labor contracts and complex work rules. “If the union comes in, we’ll have a divided work force,” said Cheryl Hawkins, 44, an assembly line worker with three sons. “It will ruin what we have.”

Other UAW opponents said they dislike the union’s support of politicians who back causes like abortion rights and gun control that rub against the conservative bent of Southern states like Tennessee. Still others objected to paying dues to a union from Detroit that is aligned with Volkswagen competitors like GM and Ford.

“I just don’t trust them,” said Danielle Brunner, 23, who has worked at the plant for nearly three years and makes about $20 an hour – about $5 an hour more than new hires at GM, Ford and Chrysler plants.

The no-UAW vote raises questions on how the union proceeds now in separate efforts to organize other foreign-owned plants in the South, and whether international cooperation can provide any additional leverage for labor unions. …

For the last two years the union has also been working to build support at a Mercedes-Benz plant in Vance, Ala., and at a Nissan Motor Co. plant in Canton, Miss. Its chances there now seem diminished, in view of how those companies are less willing to cooperate with the UAW than Volkswagen.

At Mercedes, workers who want UAW representation recently filed complaints to the National Labor Relations Board alleging they have been harassed by management because of their efforts to build union support. Daimler AG, the parent of Mercedes-Benz, has denied the charges.

The UAW’s loss in Chattanooga also seems likely to complicate contract talks it will have with the Detroit auto makers in 2015. Right now, GM, Ford and Chrysler pay veteran workers about $28 an hour, and new hires about $15 an hour, and the UAW wants to narrow that gap.

But without the ability to push wages higher at foreign-owned car plants, the UAW is likely to have little leverage in Detroit, said Kristin Dziczek, director of the Labor & Industry Group at the Center for Automotive Research in Ann Arbor, Mich.

“They have to organize at least one of the international auto makers in order to attempt to regain bargaining power with the Detroit Three,” she added.

Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved. Originally published at WSJ Feb. 15, 2014. Reprinted here for educational purposes only. Visit the website at wsj .com.