How Volkswagen’s Tennessee Plant Could End Up Organized Without the UAW – Businessweek

Posted: Wednesday, February 19, 2014

The United Auto Workers’ defeat in a union vote at a Volkswagen (VOW:GR) plant in Chattanooga has been described as crushing, brutal, and devastating. While the result underscores the severe troubles facing U.S. labor organizers, it might not change much at the VW facility in question. The automaker, which didn’t oppose the union drive, could well proceed with the creation of a “works council,” though without UAW participation.

Common across German industry, works councils represent workers in planning discussions with management. Every other VW plant in the world, aside from those in China and the U.S., has such a council, and the automaker was actively seeking to create one at its Chattanooga plant through the union vote. Following the UAW’s defeat, two German members of VW’s works council disclosed plans to continue pursuing a council in Tennessee.

Part of Volkswagen’s keen interest in this topic is spurred by financial urgency. Last month a company leader called VW’s U.S. operation a “disaster,” owing to its dismal sales record, with little opportunity to improve the situation soon. VW plans to build a small SUV for the North American market, probably in Tennessee, although that model’s future home was tossed into the rhetorical stew of threats by Republican U.S. Senator Bob Corker of that state, a leading opponent of the UAW’s organizing effort.

The company is eager to use a management model it knows well, but it will need to tread carefully at the Tennessee plant in assembling a council that doesn’t violate U.S. labor laws, says Thomas Kochan, co-director of the Institute for Work and Employment Research at Massachusetts Institute of Technology’s Sloan School of Management. Workers at the plant could form their own union—if it were independent of Volkswagen—and then propose a works council at the facility. “The company has to be careful not to be viewed as favoring or providing support for an employee organization,” Kochan says. “It’s kind of a crazy law.”

In Europe, however, a council cannot go on strike against an employer—that’s the role of large industrial unions such as IG Metall and Ver.di, which organize strikes at multiple employers simultaneously (and which also represent management employees). That’s one reason it’s unclear how a works council might be formed without a union in the U.S. If such a group can’t strike, what leverage would it have?

“Can they strike? It’s not clear,” says Samuel Estreicher, director of the Center for Labor and Employment Law and a labor attorney at Schulte Roth & Zabel. But the company’s continued pursuit of a works council is clear: “VW is under a lot of pressure from its own home union in Germany,” he says.


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