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Loss at Volkswagen plant upends union's plan for U.S. South

Volkswagen employees inspect a VW 2012 Passat in the assembly finish department in Chattanooga Tennessee in this December 1, 2011 file photo
Volkswagen employees inspect a VW 2012 Passat in the assembly finish department in Chattanooga Tennessee in this December 1, 2011 file photo

By Bernie Woodall

CHATTANOOGA, Tennessee (Reuters) - In a stinging defeat that could accelerate the decades-long decline of the United Auto Workers, Volkswagen AG workers voted against union representation at a Chattanooga, Tennessee plant, which had been seen as organized labor's best chance to expand in the U.S. South.

The loss, 712 to 626, capped a sprint finish to a long race and was particularly surprising for UAW supporters, because Volkswagen had allowed the union access to the factory and officially stayed neutral on the vote, while other manufacturers have been hostile to organized labor.

UAW spent more than two years organizing and then called a snap election in an agreement with VW. German union IG Metall worked with the UAW to pressure VW to open its doors to organizers, but anti-union forces dropped a bombshell after the first of three days of voting.

Republican U.S. Senator Bob Corker, the former mayor of Chattanooga who helped win the VW plant, said on Wednesday after the first day of voting that VW would expand the factory if the union was rejected.

"Needless to say, I am thrilled," Corker said in a statement after the results were disclosed.

National Right to Work Foundation President Mark Mix hailed the outcome: "If UAW union officials cannot win when the odds are so stacked in their favor, perhaps they should re-evaluate the product they are selling to workers."

An announcement of whether a new seven-passenger crossover vehicle will be produced in Chattanooga or in Mexico could come as early as next week, VW sources told Reuters.

Despite the indignation of pro-union forces, legal experts earlier had said that any challenge of the outcome, based on Corker's comments, would be difficult, given broad free speech protection for U.S. Senators.

The UAW said it would "evaluate" the conduct in the vote, where 89 percent of eligible workers cast ballots.

"We are outraged at the outside interference in this election. It's never happened in this country before that a U.S. senator, a governor, a leader of the house, a leader of the legislature here threatened the company with those incentives, threatened workers with the loss of product," Bob King, the UAW president who has staked his legacy on expanding into the south, said.

UAW membership has plummeted 75 percent since 1979 and now stands at just under 400,000.

The Tennessee decision is likely to reinforce the widely held notion that the UAW cannot make significant inroads in a region that historically has been steadfastly against organized labor and where all foreign-owned vehicle assembly plants employ nonunion workers.

Before the results were announced, King had said in an interview with Reuters that his group and the German union were already at work organizing a Daimler AG factory in Alabama.

"We will continue our efforts at Daimler. It's not new. We're there. We have a campaign. We have a plan. We are also very involved globally with Nissan, so that will continue," he said. He did not mention the other plants when speaking to reporters late in the evening.

Dennis Cuneo, a partner at Fisher & Phillips, a national labor law firm that represents management, said earlier in the day that a loss would be a big setback for the union movement in the South, showing the UAW was unable to convince rank-and-file workers even with management's cooperation.

Such a loss "makes the UAW's quest to organize southern auto plants all the more difficult," he said.

Local anti-union organizers had protested the UAW from the start, reflecting deep concerns among many workers that a union would strain cordial relations with the company, which pays well by local and U.S. auto industry standards.

Mike Burton, one of the anti-union leaders, cheered the results. "Not on our watch," he exulted, adding, as did VW management, that plans to find a way for a workers council to help set rules for the factory would continue.

Many labor experts have said that a workers council, which is used in Germany, would not be possible at a U.S. VW factory without a union.

"We felt like we were already being treated very well by Volkswagen in terms of pay and benefits and bonuses," said Sean Moss, who voted against the UAW. "We also looked at the track record of the UAW. Why buy a ticket on the Titanic?" he added.

Many workers believed that the union had hurt operations at plants run by General Motors Co, Ford Motor Co and Chrysler, now a part of Fiat Chrysler Automobiles, he said

For VW, the stakes also were high. The German automaker invested $1 billion in the Chattanooga plant, which began building Passat mid-size sedans in April 2011, after being awarded more than $577 million in state and local incentives.

VW executives have said the new crossover vehicle, due in 2016 and known internally as CrossBlue, could be built at either the Chattanooga plant or in Mexico, but Tennessee facility was built with the expectation of a second vehicle line.

The vote has received global attention, and even President Barack Obama waded into the discussion early on Friday, accusing Republican politicians of being more concerned about German shareholders than U.S. workers.

The vote must be certified by the National Labor Relations Board.

(Additional reporting by Paul Lienert in Detroit and Andreas Cremer in Berlin; Editing by Matthew Lewis, Ross Colvin and Ken Wills)

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