Membership in the United Auto Workers has declined dramatically these past few decades. But its officials at last may have found a way to recapture the glory days: Team up with the Germans. Last month, Sen. Bob Corker, R-Tenn., alleged that an activist board member of Volkswagen Group forced the Wolfsburg, Germany-based automaker to disclose that it was negotiating with the UAW to unionize its Chattanooga assembly plant. This factory, like other foreign-owned plants in the South, is nonunion. The powerful German union, IG Metall, and VW management are backing the UAW’s campaign to change that. The UAW recently announced that a majority of workers there had signed cards indicating their desire to join. Unfortunately, any number of those signatures may have been obtained through deception and intimidation. Several workers have filed a complaint to that effect with the National Labor Relations Board.
That the United Auto Workers has seen better times is hard to deny. At the dawn of the Eighties, the Detroit-based UAW had about 1.5 million workers. Today it has a little over 380,000 – a three-fourths drop. Much of this decline has been the union’s own doing. Thanks to its hardball negotiation, with the ever-present threat of a strike, the UAW locked General Motors, Ford and Chrysler into increasingly costly and unsustainable long-term commitments. By the fall of 2007, the Big Three automakers, faced with a double whammy of escalating costs and declining sales, offloaded their retiree health plans onto a proposed (and since instituted) union-managed Voluntary Employee Beneficiary Association (VEBA) tax-exempt trust fund. But even that step wasn’t enough to stave off collapse, at least for GM and Chrysler (sales at Ford had rebounded). In December 2008, following a humbling trip to Washington, D.C., their CEOs received emergency loan commitments from the Bush administration in return for structural reforms. But with a major recession in force during the first several months of 2009, the auto manufacturers requested much larger aid packages to maintain operations.
President Obama saw a rare opportunity to refashion U.S. industrial policy. That spring, the new administration agreed to step up the aid. It provided General Motors with $30 billion in emergency loans on top of the $19.4 billion the federal government already had loaned to the company. It also arranged for Chrysler to receive $8 billion in addition to its earlier $4 billion. The Obama White House now held the cards – and used them. The administration forced the companies into Chapter 11 bankruptcy, in the process replacing senior management in both companies and rewarded the United Auto Workers’ respective VEBAs with a 17.5 percent equity stake in GM and a 55 percent equity stake in Chrysler. The big losers in this arrangement were shareholders and bondholders, who got only cents on the dollar – if even that. As good fortune would have it, sales in the auto industry as a whole have come back these past few years. This has raised employment at assembly plants. This in turn has created union organizing opportunities, especially in Right to Work Southern states, where various European, Japanese and South Korean automakers operate.
UAW organizing campaigns in the South thus far have been unsuccessful. It’s a longstanding pattern. The union overwhelmingly lost representation votes at the Nissan assembly plant in Smyrna, Tenn. in 1989 and again in 2001; it hasn’t gotten a recognition election in the region since, though not for want of trying. But the Auto Workers’ campaign at the Chattanooga plant, where Volkswagen assembles its popular mid-sized Passat sedan, may prove to be a game-changer. The $1 billion state-of-the-art facility, which opened in May 2011, has been delivering on its promise. Already more than 250,000 Passats have rolled off its production lines. Motor Trend magazine last fall even named the Passat its “Car of the Year” for 2012. Headquarters sees this facility as crucial to raising VW Group’s share of North American auto sales from around 3 percent; the worldwide share of VW Group, the world’s third-largest automaker and manufacturer of motor vehicles under a dozen brand names, including Audi, Bentley and Porsche, has been around 11 percent in recent years.
There are roughly 2,500 employees at the nonunion Chattanooga plant of whom nearly two-thirds are hourly production and maintenance workers. The UAW, backed by the German metalworkers-auto assembly workers union IG Metall, which represents more than 2.25 million workers, sees potential members. These past several months it has been stepping up its efforts to gain recognition as a bargaining agent. Significantly, Volkswagen management supports the campaign.
Volkswagen Group, it hardly needs emphasizing, is based in Germany. And in Germany, labor relations operate differently than here. Most importantly, that country requires the establishment of “works councils” at major work sites. These councils reflect the company philosophy of “co-determination.” Management and workers – blue-collar and white-collar alike – have an opportunity through these councils to meet regularly to discuss workplace issues. Of the slightly more than 100 VW-owned production facilities worldwide, nearly 90 have works councils. The Passat plant in Chattanooga is one of the exceptions. Indeed, outside of mainland China, it is the only exception. Volkswagen executives in Germany, where membership in IG Metall is not mandatory, might not be enthusiastic over union representation at the Tennessee plant. But they very much want a works council there. From their standpoint, it’s a successful model for labor-management relations. And given that half of the 20 seats on VW’s executive board consist of union and works council representatives, management accepts labor negotiation as a fact of life.
Here in America, however, what VW and its employees would like to do, however, is constrained by what they can’t do. And what they can’t do is discuss issues at works council meetings unless the union defines the terms. The National Labor Relations Act of 1935 bars private-sector employers from forming so-called “company unions.” This ban rests on the premise that such organizations are mere employer fronts, not real unions. Thus, if employees at a unionized worksite want to air grievances, they must do so through their union, so long as these are issues covered by NLRA. Likewise, if that employer solicits input from employees, or presents a proposal to them, it must go through the union. Works councils in this country are very difficult, though not impossible, to establish. There is room for interpretation as to legality. If the discussions don’t involve specific proposals and counter-proposals, they may be legal – and should be. The issues that get discussed at a works council are typically those that get discussed at any work site, union or nonunion.
Volkswagen headquarters very much wants a works council. However ambivalent the company is about having to deal with the UAW as a bargaining agent, it’s willing to go that route to get a council. But certain workers at the Tennessee plant, aware that nonunion plants are the ones that have managed to avert mass layoffs and downsizing, have a major problem with that. Calling themselves “No to Uninformed Auto Workers,” these workers have printed and distributed handbills, held meetings, and created a website in opposition to union organizers. The group alleges that the union more than once used illegal methods to get workers to sign pledge cards indicating a willingness to join. UAW President Bob King last month announced that this “card check” campaign yielded majority support. And while that alone does not compel VW to recognize the union as a bargaining agent (it would have, in fact, had Congress passed the highly misnamed and union-backed Employee Free Choice Act of several years ago), it does give the union enormous leverage. Majority card checks, especially those that generate more than 60 percent majority support, often lead to employer recognition. Beyond this threshold, employers are prone to seeing a union secret ballot victory as inevitable.
But the dissenting workers and their allies insist the campaign was dishonest. And eight of them a few weeks ago filed a complaint with the National Labor Relations Board, citing what they see as illegal UAW tactics. Represented by attorneys from the Springfield, Va.-based National Right to Work Legal Defense Foundation, the employees assert they were tricked, bribed or persuaded under duress into signing pledge cards. According to the foundation, UAW organizers knowingly failed to tell workers that a signature constituted a vote for representation. “They (the eight workers) also allege other improprieties, including using cards that were signed too long ago to be legally valid,” said the foundation. In addition, any number of workers had second thoughts about signing after the fact, but encountered resistance from the union in attempting to reclaim their cards. NRTW Legal Defense Foundation President Mark Mix states: “Despite making it so easy to sign union ‘cards’ at the workplace, UAW officials are now demanding that workers go to the union office to exercise their right to reclaim their cards. This case underscores how card check unionization schemes make it easy to check in, but impossible to check out.” The complaint also states that the union bribed workers with things of value if they agreed to sign. The foundation wants the union to cease and desist indefinitely from demanding union recognition.
Prominent Tennessee elected officials have come out against the United Auto Workers campaign. This June, Republican Governor Bill Haslam stated that investors have indicated that a UAW victory at the Chattanooga plant would be “a negative” for his state’s business climate. Republican U.S. Senator Bob Corker is opposed to the UAW effort as well. He recently remarked that UAW representation at the plant was “job-destroying,” adding that it was a union activist board VW member who “forced” Volkswagen to reveal that it had been talking to the UAW. “There was a lot of discussion within the company,” said Corker, himself a native of Chattanooga who served as its mayor during 2001-05. “Candidly, one board member got very involved and forced this letter to go out.” While the company recently acknowledged the existence of these talks in a letter signed by Frank Fischer, plant chief operating officer and manager, and Sebastian Patta, plant human resources manager, it denies that this amounts to succumbing to pressure. “The letter to the Chattanooga workforce was drafted, written and signed by Frank Fischer and Sebastian Patta to avoid further speculation from outside the company, without being forced by anyone,” said Guenther Scherelis, plant spokesman. That said, when a company admits to being in the midst of union negotiations, it’s usually a sign of outside pressure.
Gary Casteel, Southeast regional director for UAW, counters that Sen. Corker’s views are “spoken from a position of ignorance.” He adds that works councils are a major reason why VW is a successful company. Yet the U.S. subsidiary of the German-based Mercedes-Benz, for more than 15 years has operated an assembly plant near Tuscaloosa, Ala., without the benefit of a works council. And it’s been highly profitable. The UAW these past several months has been stepping up its organizing drive at that plant as well.
The Auto Workers’ campaign might well succeed because VW works council officials are committed to creating a council in Chattanooga. Bernd Osterloh, head of the VW global works council, asserts he will continue talks with the UAW along this line. He emphasizes that creating a council is non-negotiable. He wants to secure support from leaders from both major parties, in Tennessee and elsewhere in the U.S., once all legal issues are resolved. Horst Neumann, a member of IG Metall and a member of the VW executive board for some eight years, put it this way: “I find it very depressing how deeply divided the country is on the issue of labor unions. Had they been here to listen to the roundtable discussion (which took place in September between German auto industry and IG Metall officials) they would have seen that we work together – it’s a model for success.”
The key to breaking the impasse ultimately lies with Congress. Lawmakers need to amend the National Labor Relations Act to repeal the ban on “company unions.” In this way, Volkswagen management and works councils can establish a works council in Chattanooga, and at the same time, individual employees can avoid being dragooned into union membership. But such a move likely would take many months, if not years. And it would meet with ferocious opposition – and not just from the United Auto Workers. Organized labor officials in this country for decades have resisted “company unions” as a way of discussing and adjudicating workplace issues. They view allowing such organizations on premises at unionized workplaces as an act of war. The thunder from AFL-CIO President Richard Trumka alone might cause Congress to abandon any attempt to amend the NLRA in this manner.
The United Auto Workers’ VW campaign should be put in the larger economic context. Membership is only a fourth of what it was back in 1979. And the decline has been precipitous in recent years, too. Union employment at General Motors, for example, declined over the past decade from around 120,000 to 50,000 members. The UAW is intent on maintaining a high profile in the industry. But that’s going to take more than simply controlling retiree health plans, especially given their combined underfunding of $20 billion. A successful organizing drive at the VW Tennessee plant would send a strong signal to foreign automakers that collective bargaining is unavoidable, even in the Right to Work South. It also would generate a windfall of dues for union coffers that could facilitate future organizing. “If we don’t organize these transnationals, I don’t think there’s a long-term future for the UAW,” says union President Bob King. He might be right. But a much more important issue is the long-term future of the auto industry itself. The last thing anyone wants is another round of bankruptcies – and bailouts.