Similar effort may be planned for Mercedes, report says

UAW creates union local for VW workers in Tennessee

Similar effort may be planned for Mercedes, report says

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The UAW is forming a union local to represent workers at Volkswagen AG’s assembly plant in Chattanooga.

Membership in Local 42 will be voluntary, and the unit will not have power to bargain on behalf of all employees at the plant. VW will not formally recognize the union until a majority of the plant’s workers join the local, UAW officials said today.

“Earlier this year, the UAW was gratified to earn the confidence and support of many Volkswagen team members,” UAW President Dennis Williams said in a statement. “At that time, we said we would not give up on these committed and hard-working employees. We’re keeping our promise.”

The UAW appears to be planning a similar move for workers at the Mercedes assembly plant in Vance, Ala.

The Wall Street Journal, quoting a union flyer, reported on Thursday that the UAW and German union IG Metall and the Daimler World Employee Committee pledged "ultimate support in the immediate formation of a UAW local union at MBUSI." 

The union is granting full membership rights to the workers, but no dues are being required until a contract is ratified, the Journal reported.

The unconventional move shows the UAW is setting aside no options in its drive to represent workers at the Chattanooga plant, seen as its best shot at organizing a foreign-owned assembly plant in the U.S. South.

“We’ve had ongoing discussions with Volkswagen and have arrived at a consensus with the company,” UAW Secretary-Treasurer Gary Casteel said. “Upon Local 42 signing up a meaningful portion of Volkswagen’s Chattanooga workforce, we’re confident the company will recognize Local 42 by dealing with it as a members’ union that represents those employees who join the local."

He stressed that “Local 42 will be run by, and for, the employees at Volkswagen.”

As part of an agreement with VW, Casteel said the UAW would continue joint efforts with Volkswagen to ensure the company’s expansion and growth in Chattanooga.

"Just like anywhere else in the world, the establishment of a local organization is a matter for the trade union concerned," VW spokesman Scott Neal Wilson said in statement to Reuters. "There is no contract or other formal agreement with UAW on this matter."

Dave Smith, a spokesman for Tennessee Gov. Bill Haslam, deferred to VW. “Our understanding is that there is no agreement between the company and the UAW,” he said.

Kristin Dziczek, director of the industry and labor group Center for Automotive Research in Ann Arbor, Mich., said setting an outpost near the plant in Chattanooga is a way to “bring some kind of critical mass” to the UAW's organizing effort, following the loss in the February vote.

If enough workers decide to join, the carmaker may ultimately decide to negotiate with the group, Dziczek said.

Second chance

The creation of the members-only local represents the second organizing attempt by the UAW, which lost a representation vote at the plant in February, 712-626. The UAW originally appealed the vote, claiming that politicians and outside groups interfered with the election, but the union dropped its challenge in April.

The creation of the union local could also prolong tension over labor relations at the Chattanooga plant, which opened in 2011 to build the Passat mid-sized sedan. With a production capacity of 150,000 units per year, it is VW’s only U.S. assembly plant and one of two Volkswagen Group assembly plants running in North America.

“Just the fact that you have a local doesn’t change anything,” said Larry Drapkin, a labor attorney in the Los Angeles office of Mitchell Silberberg & Knupp. “It is indicative that they aren’t going away.”

The UAW could next seek voluntary recognition from Volkswagen or ask for a new vote next year, Drapkin said.

The UAW's move comes as VW decides where to build a large crossover based on the CrossBlue concept from the 2013 Detroit auto show.

Chattanooga is widely believed to be the preferred assembly site and VW executives have said that a decision must be made by mid-2014 to have the vehicle on sale in 2016, as planned.

State politics

But state incentives have been tied up in politics over the union vote.

UAW officials, in a statement today, pressed Tennessee officials again to extend incentives necessary for VW to add the new product line at the Chattanooga plant. The union said it will continue advocating for increased investment.

VW has taken a position of neutrality on UAW representation, but Tennessee politicians such as Haslam and U.S. Sen. Bob Corker, both Republicans, have warned that an increased union presence would harm the state’s business climate.

After the UAW’s defeat, they offered VW about $300 million worth of tax breaks and other incentives to build the new crossover in Chattanooga, Germany’s Frankfurter Allgemeine Zeitung newspaper reported in June, citing company sources. Any cooperation with the UAW by VW could again call those incentives into question.

VW’s ultimate goal is to set up a German-style works council in Chattanooga -- something that would not be legal under U.S. law without a third-party union.

Each of Volkswagen’s works councils gets a say in how its plant is run, and representation on a global council that has influence over which products VW makes and where they are assembled. Trying a new model like this holds appeal for the UAW, which has long struggled to organize assembly plants in the U.S. South.

“We’re not leaving Chattanooga,” UAW President Dennis Williams told reporters in February on the eve of the UAW’s defeat. Williams was formally elected president of the union in June, succeeding Bob King at the helm.

He said: "It took seven years to organize Ford, and I will be around for at least another five."

Bloomberg contributed to this report.

You can reach Gabe Nelson at gnelson@crain.com.


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