• Sep 19th 2013 at 9:30AM
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A Volkswagen executive said the company's Chattanooga, Tenn., plant will likely build an all new crossover SUV for the company, even as conservative politicians bash the automaker for inviting the UAW to organize workers at the plant.

Marc Trahan, executive vice president of quality for Volkswagen in the U.S. said at an Automotive Press Association luncheon on Tuesday that Volkswagen will decide by the end of this year where to build the seven-passenger SUV, which the company believes it needs in the U.S. market. Trahan said the decision will be based on cost.

"Right now I'd have to say Chattanooga's in the lead," over factories in Mexico, he said.

Over objections from Republican Tennessee lawmakers, including the Governor and both U.S. Senators, Volkswagen is trying to create a similar arrangement with workers at the Chattanooga plant as it has at most of its plants around the world. It's known as a Works Council, which acts collaboratively with management while at the same time representing worker rights. German companies like VW and Daimler-Benz even have a Works Council member on their supervisory boards as well -- unheard of in the U.S.

A letter from Frank Fisher, the chief executive officer of the VW plant, sent to employees earlier this month is the boldest support of a foreign-owned automakers recognizing a union workforce in the U.S. to date.

"In the U.S., a Works Council can only be realized together with a trade union," read the letter signed by Fischer. "This is the reason why Volkswagen has started a dialogue with the UAW in order to check the possibility of implementing an innovative model of employee representation for all employees."

Past Organizing Attempts Hit A Wall

Attempts to organize workers at plants in the U.S. owned by Toyota, Honda, Nissan, Mercedes-Benz have all failed. Those companies' U.S. plants are mostly in right-to-work states -- such as Tennessee -- which allows workers to hold a job at a plant without joining a union if he or she doesn't want to. Management at those plants have in the past waged whisper campaigns in some cases to let workers know they would consider closing a factory if they organized it.

The move by VW to essentially invite the UAW into its plant is not playing well with Republican politicians who vigorously oppose labor unions, especially Republican Tennessee Governor Bill Haslam. "I've had several folks recently say that if the UAW comes, that would dampen our enthusiasm for Tennessee," he told the Chattanooga Times Free Press. "They feel like, 'We're looking at Tennessee because it's a right-to-work state.'"

For VW, though, working with unions is the norm and what the company is comfortable with. The company has about 100 plants worldwide, and all of them except for the Chattanooga factory and the company's six joint-venture plants in China have such a council.

The UAW, whose membership has dwindled in the last 20 years, has gotten a bad reputation, some of it earned, especially during the bankruptcies of General Motors and Chrysler. The union, for example, had long negotiated safety nets for laid off workers, called jobs banks, which paid workers who didn't have jobs to go to. The union also has had a higher absentee rate than other worker groups. Their healthcare benefits were especially burdensome to the automakers, and the union was owed so much money for future healthcare at the time of bankruptcy that its healthcare trust currently owns large stakes in GM and Chrysler, which the union plans to sell at some point to pay for their members' health care expenses.

Republicans are especially belligerent toward labor unions, and the UAW specifically, because historically it spends millions of dollars a year supporting and organizing members around Democratic candidates.

Weakened Unions Have Wind At Their Back

Labor unions have been weakened in large part because companies have moved manufacturing in the U.S. offshore to Mexico, China and Latin America where hourly wages and healthcare costs are much lower, or where healthcare is provided nationally.

But because of UAW concessions, the gap between the union's wages and those of Toyota's, for example, in the U.S. is closing. By 2015, GM's total cost for wages and benefits will be about $59 an hour, compared with $56 at Toyota. Chrysler's average hourly labor costs will be $53.

When VW opened its plant in 2011 it set a record for low wages among auto workers, paying its entire production workforce the lowest starting wage for new U.S. autoworkers -- $14.50 per hour. That wage, though, is high for hourly work in the Chattanooga area. Volkswagen received over 35,000 applications for its initial hiring batch of 1,500 employees.

VW's Works Council in Germany, which didn't like the ultra-low wage in Chattanooga, has told the company that it will not support or consent to an expansion VW would like to do at Chattanooga unless the workers are represented. VW officials say they would like to make a decision about building a new SUV at the plant, or in Mexico, by the end of this year.

What form a U.S. Works Council would take, and how close it would be to the European model or a more traditional UAW union shop, is still open for discussion and debate among workers and the union. Gary Chaison, a professor of labor relations at Clark University in Worcester, Mass., said it would take "tremendous flexibility" for the UAW to agree to a works council that falls short of traditional collective bargaining.

"Some people will see this as unions getting a foot in the door and asking for more," he said.

The open discussions are significant. With such a start, and VW's cooperation from the get-go, it is unlikely that some kind of organization of the workers who are building VW Passat sedans and eventually an SUV, will not be organized in some way.

Workers at auto supplier companies in Tennessee, as well as other right-to-work states and industries that have so far held off UAW-style organizing, will watch closely to see if a 21st century labor organizing model can work. Restaurant workers, which recently staged a walk-out in several states, are looking for a new labor organizing model.

The Associated Press contributed to this report.

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    • 1 Second Ago
      • 1 Year Ago
      I don't guess to many read about all VW plants except the US is union or atleast have labor representation,and that's coming from Germany.
      • 1 Year Ago
      The UAW will get into the plant, go one strike within 3 weeks, shut down the plant for 4 weeks, drive up the cost of the vehicles coming off that production line, the public will stop buying, demand will slow, the plant will shut down and the UAW Virus will find another host to feed off of. I am all for making an honest wage, but $60+ dollars an hour for setting lug nuts on with a machine? That's just plain greed.
      • 1 Year Ago
      We drive Toyota and VW because both were non union in the US, next cars will not be VW now that they are supporting the communist takeover of our country. VW now sux as bad as Government Motors
      • 1 Year Ago
      no more vw's for me
      • 1 Year Ago
      I'm certain that if Tennessee objects to VW encouraging its workers to organize, it would be possible for VW to find some other state that doesn't object to such an arrangement, in fact would encourage it, and take its jobs out of Tennessee and into that other state. I don't really see where the politicians of Tennessee have anything to say about how VW wants to treat its employees, they don't seem to have any objections to companies that routinely underpay and misuse their employees. And for those people who want to malign the unions, just look at the correlation between graphs representing the decline of the unions and the decline of the middle class. you will see that they correlate exactly! Guess who fought for the end of child labor, for the 40-hour work week, for overtime pay, for vacation pay, and for many other aspects of the labor market that just 20 or 30 years ago were taken for granted and now are under attack?????
        • 1 Year Ago
        You are equating an effect with a cause. Unions are a major cause of the decline of the middle class, Union workers, especially in government but not exclusively, have dismantled local governments and put a pack of idiots in their place, raising taxes on everyone and making a living wage no longer livable, they have also imported so much illegal labor that several industries are no longer viable options for people who like to eat.
        • 1 Year Ago
        henry ford brought in th 40 hr wk long before the unions organized frank,wise up
      • 1 Year Ago
      Unions are a scourge of American society. They tell themselves and anyone who will listen that it is they that are responsible for a "decent wage". In reality, they hold businesses and government hostage until they hike the cost of their goods or services beyond market value, which get passed on to the the consumer, making everything they touch more expensive. They also make getting fired for incompetence literally impossible, thus insulating their members from any consequences of their actions. Incentive towards excellence dies. So, not only does the cost of goods goes up, but also the quality goes down. VW is making a huge mistake, but they will not see it until it is too late.
        • 1 Year Ago
        Management is the scourge of American society. The constantly beat the workers down to lower classes of living. Most of non union management charge just under Union wages to be competative and then keep workers pay to a minimum and skim the money betwween as profit. There are a very few exceptions like Costco that look out for both the customer and the workers. Good Product and happy workers sell.
      • 1 Year Ago
      Its VWs business to go where it likes and deal with unions as it sees fit. On the other hand the people of TN may not want to go the way of detroit and need a bail out mainly due to the cost of doing business. When you dissect the actual cost of doing business under the union system you soon see that the union officials skim a lot and the actual cost per hour for an employee is much higher than most people realize.
      • 1 Year Ago
      I advise the VW executives to watch "I'm All Right Jack." The are asking for British Leyland redux.
      • 1 Year Ago
      Seems like a truely bad move on the part of VW. My guess is they want to expand production in the states or at this plant and the Union thugs back home are getting their panties in a wad and threatening. Don't bow down to this intimidation. Look what has happened to GM and Chrysler. Unions are the only ones that benefitted through the bankruptcy and the stock holders and American public suffered and still haven't been given all their money back. It also bought us a rockstar without common sense in the whitehouse.
      • 1 Year Ago
      i thought the GOP (goofy old pri**s) was all for government staying out of private busnisses and let them do their thing as they see fit for their own business model....are they afraid the workers will make too much money for their work? are they just lying hypocrites or just anti-worker? repukelicans, HA,HA,HA....vote them all out of office
        • 1 Year Ago
        Bob, obviously you cannot speel detroit or other areas run by pure dem administrations. Keep on tooting the horn as loud as you like, its off key and full of false notes.
      Mojavegreen Nln
      • 1 Year Ago
      VW needs to add a new version of their camper. Like they did for the VW Bug.
      • 1 Year Ago
      VW will soon realize that inviting a union is like asking a forest fire over to see your new tree. Sad.
        Mojavegreen Nln
        • 1 Year Ago
        The union members need to say good by to 30% of their pay too. For the union dues. I m in a union. Only because I am forced to pay either way. It's like I have to pay to be employed.
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