An upcoming policy change by Volkswagen would clear the way for the United Auto Workers to become the first union to bargain on behalf of employees at a foreign automaker in the South, the UAW said Monday.
Volkswagen and the union reached an agreement last spring, according to a letter to members of Local 42 in Chattanooga obtained by The Associated Press. The UAW said that it would cooperate with efforts to win production of a new SUV in Chattanooga, and that it would drop its National Labor Relations Board challenge of a February union vote.
In return, Volkswagen committed to recognizing the UAW, which would give it the authority to bargain on behalf of both members and non-members, according to the letter signed by Mike Cantrell and Steve Cochran, the president and vice president of Local 42. Tennessee’s right-to-work laws mean that no worker can be forced to join a union, though the UAW says more than half of eligible workers have signed up.
The UAW in February lost a contentious union election at the Volkswagen plant by a 712-626 vote, amid warnings from Republican politicians – including U.S. Sen. Bob Corker and Gov. Bill Haslam – that $300 million in incentives for expansion could be imperiled if the union won. Workers who oppose the UAW have formed a chapter of what they call the American Council of Employees, in hopes of preventing the union from being recognized by Volkswagen.
Corker drew the ire of the UAW for repeatedly suggesting before the February union vote that he had inside information that the rejection of the union would result in the company deciding to expand the plant within two weeks.
It was later revealed that the state’s $300 million incentive package offered to Volkswagen had contained the caveat that the money was subject to labor talks “being concluded to the satisfaction” of the state. Haslam declined to specify which scenarios would have met the state’s satisfaction.
Volkswagen ultimately announced in July that it will invest $600 million to expand the factory to build a new seven-seater SUV, as it seeks to reverse flagging U.S. sales. The company did not immediately respond to requests for comment.
The automaker wants to create a German-style works council at the Chattanooga plant to represent both salaried and blue-collar workers. But the company’s interpretation of U.S. law indicates that it must work with an independent union to operate a works council.
The UAW’s case at the Tennessee plant has been bolstered by support from labor representatives who control half the seats on the Wolfsburg, Germany-based automaker’s supervisory board. The UAW, its German counterpart IG Metall and the Volkswagen Global Group Works Council in September signed an agreement outlining their joint efforts to gain labor representation at the Chattanooga plant.
Organizing foreign-owned auto plants has been seen as key for the UAW to revive its fortunes. Union membership stood at about 391,000 at the start of this year – a far cry from its 1979 peak of 1.5 million.
And even though the Detroit Three have hired thousands in the past four years as auto sales have recovered, the new hires are paid only two-thirds of what veteran workers get, keeping dues revenues down. The union agreed to the lower wages and became more cooperative seven years ago to help the companies survive the recession.