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LABOR UNION USING INNOVATIVE APPROACH TO GET INTO FOREIGN AUTOMAKER IN U.S.

July 26, 2011

Volkswagen AG opened a new automobile production facility in Chattanooga, TN in late May with 1,700 workers already hired. It is already becoming a focal point in union efforts to gain a foothold among foreign auto makers’ U.S. manufacturing operations. An unusual linking of German labor rules and U.S. law is raising union hopes in a region that has long resisted their overtures.

The United Auto Workers (UAW) union and labor officials at Volkswagen in Wolfsburg, Germany last week held talks about VW labor efforts to establish a German-style system of worker representation at the new Chattanooga plant. If this happens, it could open a door to an as-yet undefined relationship between the group and a union whose membership has plummeted dramatically over the past three decades. U.S. law normally allows works councils only if workers are represented by unions.

With 390,000 active members today and down from 1.5 million in 1979, the UAW has failed in many attempts to penetrate the U.S. plants of foreign auto makers such as Toyota and Nissan. The UAW has run into strong opposition at foreign-owned plants in Tennessee and other Southern states, where cultural sentiment against unions runs deep and right-to-work laws allow workers to opt out of unions where they exist. Nissan workers in Tennessee rejected UAW representation by a 2-1 ratio in 2001 and 1989. Volkswagen management has said that it won’t try to block unionization effort at the Chattanooga facility, if workers there support an organizing drive by the UAW. It is obligated under the terms of a charter it signed with the global VW works council to have local works councils in all of its plants around the world. Chattanooga would be the only wholly owned VW plant without a works council.

A works council has more power than a union by virtue of its position on every supervisory board. Under German corporate law, worker representation gets about half the seats on a supervisory board. This means that management needs their help to get through any major initiatives. Because of this, relations are generally better in Germany between labor and management than in the U.S.

With several auto plants now in the South and all non-union, the UAW may have an uphill battle to unionize the Chattanooga plant. However, they are focused on attempting to organize at least one foreign-owned auto plant by the end of 2011. In addition, they are aggressively attempting to build ties with other foreign unions in Germany and Korea with an eye for possible attempts at the Hyundai Motor plant in Alabama, BMW in South Carolina and Daimler AG in Alabama. 07-26-2011. HRM Partners; with excerpts from The Wall Street Journal.