VW Sticks to Tennessee Works Council Plan After UAW Miss

Daimler CEO Dieter Zetsche
Daimler AG is "neutral" on United Auto Workers union's efforts to organize at the Mercedes-Benz factory in Alabama, Daimler AG chief executive officer Dieter Zetsche said. Photographer: Krisztian Bocsi/Bloomberg

Volkswagen AG plans to pursue labor representation at its Tennessee car factory even after employees voted against joining the United Auto Workers union.

The world’s second-largest carmaker intends to organize a works council at the site in Chattanooga, where 53 percent of workers rejected UAW membership in balloting that ended Feb. 14. The employee groups, which are common throughout Volkswagen’s home country of Germany, deal with workplace issues, such as scheduling and safety, and represent staff in disputes with management.

“Our goal continues to be to determine the best method for establishing a works council” in Chattanooga, Frank Fischer, head of VW’s only U.S. factory, said in an e-mail statement following the vote. “We found great enthusiasm for the idea of an American-style works council both inside and outside our plant.”

The UAW’s narrow loss in Chattanooga could force the union to regroup as it seeks to sign up workers at a Daimler AG factory in Alabama and Nissan Motor Co.’s U.S. workforce. The UAW previously failed to convince workers to join the union at Nissan as well as the U.S. factories of Toyota Motor Corp. and Honda Motor Co.

German carmakers, including Bayerische Motoren Werke AG, which makes sport-utility vehicles in South Carolina, could have been fertile ground for the UAW, which has suffered from a 75 percent drop in membership since 1979 and was linked to Detroit’s woes by anti-union activists.

Painful Loss

“Volkswagen turned out to be painful because it was so close” for the UAW, said Harley Shaiken, a labor economist with the University of California at Berkeley. “This doesn’t prove it can’t be done; it proves how close they came. It laid the basis for future organizing.”

With half the seats on German supervisory boards taken by labor representatives, the country’s manufacturers are accustomed to working with unions. Volkswagen’s deputy chairman is Berthold Huber, the former head of Germany’s IG Metall union, which had supported the Tennessee organizing effort.

“We’ve shown we can cooperate successfully with unions in the U.S.,” Daimler Chief Executive Officer Dieter Zetsche told reporters at a company event near Granada, Spain, last week. Daimler is “neutral” on UAW’s efforts to organize at the Mercedes-Benz factory in Alabama, he said.

Daimler also owns Portland, Oregon-based Freightliner. The truckmaker operates UAW-organized factories in North Carolina and has faced contract disputes there.

Workers’ Choice

VW’s works council plans to begin talks with experts on U.S. employment law in the next two weeks to set up an organization in Chattanooga.

“We have always stressed that the decision over union representation lies in the hands of the workers in Chattanooga,” the German labor group’s secretary general Gunnar Kilian said in a statement. “The result of the election has not changed our goal of creating a works council” at the U.S. assembly plant.

BMW’s works council declined to comment on the UAW vote. A representative for Daimler’s works council wasn’t available.

For Volkswagen, the no vote might end up being a benefit for its struggling U.S. operations. The Wolfsburg-based automaker has been unable to fill capacity at the Chattanooga plant, which makes a U.S. version of the Passat.

Sales of the car in the U.S. fell 6.3 percent last year to 109,652 vehicles. The $1 billion factory, which opened in 2011, can make as many as 150,000 cars a year. The factory is the preferred location for production of a new mid-sized SUV model. VW has said that the union vote would not influence its final decision on where to build the model.

“Volkswagen’s U.S. business is very fragile,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “They need to be able to fluctuate the number of employees. With the UAW in the company, flexibility measures would probably be more difficult to implement.”

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