Would union cost Tennessee VW plant a new line? Senator and automaker at odds.

German automaker Volkswagen is finding itself in the unusual position of having to answer to critics who say the company should oppose efforts by the United Auto Workers to unionize its Chattanooga, Tenn., assembly plant. If successful, it would be the first unionized automotive assembly plant in the South.

Conservative activists led by Sen. Bob Corker (R) of Tennessee are trying to convince workers that unionizing could cost the plant the opportunity to be the North American manufacturer of VW’s new crossover utility vehicle, a claim the automaker denies.

Workers in the Chattanooga plant are voting by Friday on whether or not to join the UAW. The decision is key to the labor organization’s ongoing struggle to remain relevant in a globalized automotive industry. The majority of UAW membership is concentrated in “Detroit 3” plants located in the upper Midwest in states like Ohio, Michigan, Indiana, and Illinois.

Unionizing the Tennessee plant “would be absolutely historic and, I would argue, critical for the UAW,” says Mike Smith, a labor historian specializing in the history of the UAW at Wayne State University in Detroit.

If the Volkswagen plant workers vote to unionize, that would not only boost membership dues – 1,500 hourly workers are at stake – but it would give the UAW more control in its negotiations with General Motors, Ford, and Chrysler scheduled for 2015.

The situation in Tennessee is “do or die” for the UAW because it will give the organization an upper hand over setting wages and benefits in those negotiations, says Sean McAlinden, executive vice president of research and chief economist at the Center For Automotive Research in Ann Arbor, Mich.

“If they don’t organize these assembly plants [in the South], those plants will continue to offer different work plans and set a competitive benefit rate. So it comes down to who’s setting wages and benefits, the [foreign-owned companies] or the UAW and Detroit 3,” says Mr. McAlinden.

The issue became politicized following comments by Senator Corker, who told reporters Tuesday that he had insider knowledge that, if the plant organized, the automaker would cancel plans to manufacture a new crossover utility vehicle designed exclusively for the US market because it would then be too expensive.

Corker further characterized the UAW as “a Detroit-based organization” and suggested that the labor organization is directly responsible for that city’s current bankruptcy, despite substantial evidence to the contrary. Other top Republicans in Tennessee including Gov. Bill Haslam, publicly share his position.

Corker would not disclose his source. His comments were in line with a media campaign launched by Americans for Tax Reform, an advocacy group in Washington operated by conservative tax activist Grover Norquist.

A radio ad, posted to the organization’s website and running on seven local stations this week, states that the UAW is “the same union that bankrupted GM and Detroit. The truth is, workers don't need the UAW to form a works council, and VW doesn't need a works council to make cars. Chattanooga isn't Germany, or Detroit. At least, not yet.”

The group has also erected billboards that state, among other messages, “the UAW spends millions to elect liberal politicans (sic), including Barack Obama.”

Volkswagen has remained neutral about the possibility of a unionized workforce, but has released statements reaffirming that it not only has not spoken to Corker on the issue, but that the decision would not affect the location of the new vehicle’s assembly. Besides Chattanooga, the other possible location is Puebla, Mexico.

“There is no connection between our Chattanooga employees’ decision about whether to be represented by a union and the decision about where to build a new product for the US market,” Chattanooga plant chief Frank Fischer said in a statement Wednesday.

On Thursday, Corker released a rebuttal, saying Mr. Fischer “is having to use old talking points when he responds to press inquires.” Corker still refused to disclose his sources, but said that the decisions regarding the crossover production “are not being made by anyone” in Chattanooga and he would not have made such a claim “without being confident it was true and factual.”

Analysts, meanwhile, say the push for unionization will not necessarily create an immediate spike in wages and benefits because those at foreign-owned automakers are more or less comparable to those in Detroit. “Pay rates have adjusted to where they are pretty much all in the ballpark,” Smith says.

The UAW, he says, is more invested in getting the workers active in a local works council – the German labor model that is already in play at all of its assembly plants across the world except in Chattanooga. The council consists of both elected workers and managers, both hourly and full-time, who vote on issues related to safety, technology, and job security.

If established in Tennessee, it would also give the plant workers access to the company’s global council, which would help in sharing information related to technology and floor efficiency. That is becoming increasingly important in the globalized era in which vehicle platforms and other components are manufactured in different locations before reaching the assembly line.

IG Metall, the labor organization working with Volkswagen in Germany, is backing the vote, saying it will create a smoother relationship with its US counterparts and not create competition for wages and benefits.

Under US labor law, the Chattanooga workers were barred from creating a local work council because it required unionization.

The works council access is critical for sharing knowledge, says Chattanooga worker David Gleeson, who works on the door line.

“I’m more concerned about the works council. Most people I know care very little about wages or benefits. That’s not why we’re doing this,” Mr. Gleeson says. He credits the company for not dictating a particular direction for their vote, and said he was confident that unionizing would not put the plant expansion in jeopardy.

“If [Volkswagen] wanted to [cancel the expansion], they would have already done it. I don’t think they’re really that much swayed by one senator,” he says.

Questions are also being raised by labor experts who say Corker’s comments constitute outside intimidation, which is illegal. He is also vulnerable to an inquiry by the National Labor Relations Board that is supervising this week’s election, although it is unlikely, Smith says, that the board will challenge a sitting senator.