Feb. 11 (Bloomberg) -- Growing up in Tennessee, all Justin King ever heard about labor unions was that they were bad.
This week, after three years working at the Volkswagen AG plant in Chattanooga, King said he will vote to join the United Auto Workers, and the prospect of a union win has officials across the South on edge. Tennessee Governor Bill Haslam has tried to talk Volkswagen out of going along, warning that the vote will discourage other companies from investing in the state where only 6.1 percent of the workforce was in a union in 2013.
“What I’ve told them is our concerns are your long-term objectives,” Haslam told the editorial board of the Tennessean newspaper Feb. 5 about his talks with Volkswagen. “You’ve been saying you need to cut the costs of producing the vehicle and you want a better supply network close to you. And I’m not certain how the UAW helps either one of those.”
For decades, the South has been able to capitalize on its lower wages and lack of labor unions to lure companies and jobs from northern states. The UAW vote, which would make the Volkswagen plant the first foreign-owned car factory in the U.S. with a labor union, threatens to change that, and both sides are working hard to steer the outcome their way.
U.S. Senator Bob Corker, a Tennessee Republican, said talks to bring the UAW into Chattanooga are already affecting other companies decisions to locate in the area.
“I have tremendous concerns about the UAW being part of our community,” Corker said today at a news conference in Chattanooga. “The reason we’re so concerned is we know the impact these discussions are already having on our ability to attract companies. It’s real.”
Outside lobby groups, including one tied to anti-tax crusader Grover Norquist, have entered the fray, using billboard advertising and editorials in local newspapers to build opposition to the UAW. Labor advocates say a victory for the UAW will boost efforts to organize other companies and perhaps begin to reverse a decades-long trend in declining membership.
“It could very well be a game changer,” Robert B. Reich, a professor of public policy at the University of California at Berkeley and former labor secretary under President Bill Clinton, said in an interview.
Under the supervision of the U.S. National Labor Relations Board, about 1,550 hourly employees at the Chattanooga plant will vote Feb. 12-14 on whether to join the UAW after a majority of employees there signed authorization cards. The vote follows an agreement between the UAW and Volkswagen to negotiate the formation of a German-style works council, an employee body common at most large German companies to resolve labor disputes. None exists in the U.S.
The UAW, which has lost 75 percent of its membership since 1979, has pushed to gain recognition at Volkswagen’s Chattanooga plant. The Wolfsburg, Germany-based company has pledged to stay neutral in the campaign and has closed the facility to non-employees ahead of the vote.
“Our plant in Chattanooga has the opportunity to create a uniquely American works council, in which the company would be able to work cooperatively with our employees,” Frank Fischer, chairman and chief executive officer of Volkswagen Chattanooga, said in a statement.
While employees will vote yes or no on a single question -- “Do you wish to be represented for the purposes of collective bargaining” by the UAW -- the implications of the vote are more complicated, according to Samuel Estreicher, an attorney in the employment and employee benefits group at Schulte Roth & Zabel.
In Germany, works councils can’t strike or negotiate wages, Estreicher said. Volkswagen has said details on the “distribution of rights and responsibilities would remain to be negotiated following the vote if the UAW is certified.”
“This union has to carve out a new role for itself because its traditional strength was with the Big Three and they were all in trouble,” Estreicher said in an interview, referring to U.S. automakers Ford Motor Co., General Motors Co. and Chrysler Group LLC. “It’s uncharted territory.”
Union membership in Tennessee grew by 25 percent in 2013, the most of any state with 31,000 new members over 2012, according to the U.S. Bureau of Labor Statistics. Even so, only 6.1 percent of the state’s workforce was in unions in 2013 compared with 11.3 percent nationally.
High unemployment remains a challenge for union organizing in the U.S. South, according to Merle Black, professor of politics at Emory University in Atlanta. Manufacturing work typically pays better than other jobs, making employees reluctant to confront managers wary of union campaigning.
The prospect of forming a German-style works council is unlikely to kick off a wave of union successes in the South, Black said.
“They don’t want to be Germans,” Black said in an interview. “What works in Germany doesn’t carry over here at all. That’d be a hard sell in most of the South.”
Whatever the result, the election will be remembered for the efforts of “well-financed, anti-union groups” to influence the outcome, according to Lowell Turner, director of The Worker Institute at Cornell University in Ithaca, New York.
The Center for Worker Freedom, a project of Norquist’s anti-tax group Americans for Tax Reform, has put up 13 billboards in Chattanooga warning of the evils of unions.
One states that “The UAW spends millions to elect liberal politicians, including Barack Obama.” Another claims that “almost every job lost at U.S. car factories in the last 30 years has occurred at a unionized company.”
Matt Patterson, executive director of the center said the goal is to highlight the UAW’s poor economic legacy and its advocacy for “highly partisan, left-wing” politicians. He declined to say how much the group was spending in Chattanooga.
Politicians such as Republicans Haslam and Corker have also weighed in, warning of negative economic consequences if the plant is unionized. Volkswagen employees aren’t getting enough information about the impacts of joining the UAW, said Corker, a former mayor of Chattanooga who helped negotiate the incentive package that lured Volkswagen to the city.
“This is about survival to” the UAW, Corker said. “When they see a worker out of the UAW they see money, they see dues. That’s what this is about and we all know that.”
State Senate Speaker Pro Tem Bo Watson said at a news conference yesterday that allowing the UAW into the plant would be “un-American” and may affect future financial incentives.
“Should the workers at Volkswagen choose to be represented by the United Auto Workers, any additional incentives from the citizens of the state of Tennessee for expansion or otherwise will have a very tough time passing,” he said.
Lowell said the vote marks a break from union opponents’ longtime contention that, under labor law, the government shouldn’t interfere in the management of a company. “You finally get a case where management actually stays neutral, and here comes this massive, well-funded mobilization from the outside trying to defeat the union drive,” he said.
Under U.S labor law, Volkswagen could have recognized the UAW after a majority of employees signed union authorization cards, Sebastian Patta, Volkswagen vice president for human resources, said in a Feb. 8 statement.
“Outside political groups won’t divert us from the work at hand: innovating, creating jobs, growing, and producing great automobiles,” he said. “Our employees are free to discuss and state their opinions at the plant and to distribute campaign materials, including flyers and other literature, irrespective of whether they are in favor of or against a union.”
When Volkswagen started operations in Chattanooga in 2011, managers from Germany discussed German-style works councils with their U.S. counterparts, King said. Those discussions led to talks among U.S. employees and mark the start of the organizing campaign.
“I grew up down here and I’ve never heard anything but that unions were bad,” said King, a 30-year-old assembly line worker. “It wasn’t until I started doing the research that I came to the conclusion that they are not in fact responsible for every economic disaster that’s happened to this country in the last 100 years.”
John Wright, who test-drives cars before they leave the factory, said his vote may have repercussions.
“There’s a lot of eyes on us trying to figure out what this new system is,” Wright said in an interview. “Maybe it’ll show other corporations that that type of joint venture is actually to their benefit.”
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