An ultimatum for VW Chattanooga?

CHATTANOOGA -- When workers try to unionize, they often hear that their factory will lose business if they do. Here at Volkswagen AG's only U.S. assembly plant, they are hearing exactly the opposite.

Last week, a high-ranking labor leader who sits on VW's supervisory board told a German news agency that the board wouldn't authorize the addition of a second assembly line at the $1 billion Chattanooga plant or any new product until the plant joins the works council that represents all of VW's other assembly plants.

VW has long talked about bringing a large SUV to the plant, which has built the mid-sized Passat sedan since 2011.

"We will only agree to an expansion of the site or any other model contract when it is clear how to proceed with the employees' representatives in the United States," a report published Tuesday, June 18, by the news agency dba quoted the labor leader, Stephan Wolf, as saying.

The remarks raised the stakes of the politically sensitive organizing campaign already under way here and delivered a ready-to-serve talking point to the UAW, which is in talks with VW about how to make a German-style labor model work at the Chattanooga plant.

During an exclusive interview Wednesday with Automotive News, UAW President Bob King was quick to seize on Wolf's remarks to tout the benefits of organizing the Chattanooga plant, the only VW assembly plant absent from the works council.

"If I was a worker, if I was a member of the Chattanooga community, and I wanted to have the best chance of getting new investment and new product, I would want a voice on the world employee council," King said. "I would want somebody there representing the interests of Chattanooga. I wouldn't want a decision made where every other plant in the world has representation there, and I don't have somebody speaking up for me."

Wolf's comments also pose a pointed challenge to Tennessee Gov. Bill Haslam and other critics of organized labor, highlighting the delicate labor politics that VW must navigate in both Tennessee and Germany.

Haslam and other Republican officials from the state have spoken out against the UAW's organizing effort, seeing the campaign as an economic threat to a state that has successfully lured manufacturing plants and jobs with "right to work" laws that make it more difficult to unionize. UAW opponents say the Chattanooga plant doesn't need a union because workers there have comparable pay, benefits and working conditions to their counterparts at unionized plants.

"This subject has never come up in any discussions between the state and VW," David Smith, a Haslam spokesman, said of Wolf's remarks. "The governor has spoken with a number of employees in Chattanooga, and they are very comfortable with the way things are now. Volkswagen continues to be very successful with the current structure."

Haslam's stance has frustrated labor leaders in Germany, who see the nonunion plant potentially undermining labor rights back home.

"We work with strong unions back home," said Horst Mund, head of the international department at IG Metall, the industrial union that represents about 90 percent of VW workers in Germany. "And if we allow union-free zones elsewhere, that will sooner or later fall back on us."

By law, plants in Germany operate under a so-called codetermination system, in which labor leaders get as many as half the seats on a company's supervisory board, with influence over the hiring and firing of top executives.

Employee representatives at VW also get a say in new products and investments through the company's global works council, which includes representatives from all of its organized plants.

That may give labor leaders at VW enough power to follow through on the threat made by Wolf, the deputy chairman on the global works council.

"Investment decisions are made on a number of criteria," IG Metall's Mund told Automotive News last week. "

Of course, it's in our interest that the issue of representation is one of the criteria."

Horst Neumann, VW's board member for human resources, told American reporters in March that the company cannot start a local works council at the Chattanooga plant unless the workers vote for representation by the UAW or another union. That is because U.S. law bars employers from starting their own union.

Under federal law, if more than half the 2,700 employees at the Chattanooga plant were to sign cards for union representation, VW could recognize the union -- opening the door for a works council -- or insist on a vote.

Organizers at the plant have been collecting cards for more than a year.

King wouldn't speculate on the level of support for the union among Chattanooga employees or the timetable for a vote or recognition decision. But when asked whether the Chattanooga plant or another nonunion assembly plant in the South could be organized by June 2014, when King is scheduled to step down, he replied: "I'm an optimist."