VW and 'Unionization' of Southern US Car Plants

There's much interesting politicking going on at the moment among Southern states in the US Sun Belt hosting foreign automobile plants. For a very long time, they have been drawing Japanese and European carmakers keen on avoiding the hassles American unions--in particular, the United Auto Workers--have introduced for their American counterparts in the Rust Belt. Large financial incentives for locating in the Sun Belt have certainly lured them there, too.

Now, however, one of the European biggies in Volkswagen seems to be encouraging the formation of labor representation in its plant in Chattanooga, Tennessee. One of the longstanding complaints about German firms is that while labor representation is considered important alongside capital owners and government in setting industrial policy, they are marginalized Stateside. After years and years, it seems Volkswagen is intending to do something about matters in introducing labor representation. However, it is not exactly the same sort of arrangement American unions are familiar with, but is intended to resemble the German variant of works councils:

This would also be something new for the United Auto Workers. They wouldn't have the same relationship with VW as they do with Chrysler, General Motors, and Ford. Rather, the idea is to create something called a "works council," which are widespread across Europe and enjoy tremendous influence over how plants are run. In America, that kind of body can't be established without a union vote -- but crucially, the works council would be independent of the union, meaning the UAW would give up some control as soon as it gained it.

While the details of the arrangement would be ironed out after the election, works councils -- which are elected by all workers in a factory, both blue and white collar, whether or not they belong to the union -- usually help decide things like staffing schedules and working conditions, while the union bargains on wages and benefits. They have the right to review certain types of information about how the company is doing financially, which often means that they're more sympathetic towards management's desire to make cutbacks when times are tough. During the recession, for example, German works councils helped the company reduce hours across the board rather than laying people off, containing unemployment until the economy recovered.

In other words, the German setup is not meant to be antagonistic since works councils are involved in making management-related decisions (especially those dealing with labor, obviously). Still, others in the Sun Belt do not seem to make this distinction, thinking that VW is "unionizing" Southern plants and that there is a domino effect that may follow, making the region unattractive to labor-averse foreign firms. So, plans are afoot among Tennessee lawmakers to roll back concessions granted to union-coddling carmakers like VW:

On Monday, state Republican leaders accused Volkswagen of supporting the UAW and they threatened to withhold any tax incentives for future expansion of the three-year-old assembly plant in Chattanooga if workers vote to join the UAW.

"Should the workers at Volkswagen choose to be represented by the United Auto Workers, then I believe any additional incentives from the citizens of the State of Tennessee for expansion or otherwise will have a very tough time passing the Tennessee Senate," State Sen. Bo Watson, R-Chattanooga, said in a statement sent to the Free Press.

A worker opposition group called Southern Momentum echoed that position in a statement. "Further financial incentives — which are absolutely necessary for the expansion of the VW facility here in Chattanooga — simply will not exist if the UAW wins this election," Maury Nicely, a Chattanooga labor lawyer representing Southern Momentum said.

Take that, VW pinkos! Actually, VW is currently in need of worker support at a time when sales Stateside are slipping--blame the weak-selling US-only Passat that trades European sophistication for American softness. VW is banking on the appeal of offering the opportunity to make these works councils to keep workers on their side.

Will it work? We'll know by Friday.

UPDATE 1: Hysterics from (mostly Republican) politicians aside, the vote does not seem to matter all that much to anyone else.

UPDATE 2: The vote lost anyway--and not by a small margin. So much for the renaissance of organized labor.