Quick Take

Why an Auto Union Breakthrough in Tennessee Is So Important

Michael Posner

April 24, 2024

Last week autoworkers at a Volkswagen assembly plant in Tennessee voted to join the United Auto Workers (UAW) union. This was the first time that workers voted to join a foreign-owned factory in the American South. Volkswagen did not oppose the unionization effort. In fact, in 2013 company officials informed factory workers that they already were discussing with the UAW to establish a German-style “workers council”, modeled on more cooperative union-management relationships that exist in Europe. Frank Fischer, the plant’s chairman and Sebastian Patta, the vice president for human resources, told employees that they were exploring “the possibility of implementing an innovative model of employee representation for all employees.”

The Volkswagen agreement comes six months after the UAW won major concessions – wage increases, expanded benefits and improved job security – from the three largest U.S. auto manufacturers, General Motors, Ford, and Stellantis. Shortly after the completion of the negotiations and the adoption of a new contract, the UAW’s President Sean Fain announced a campaign to unionize 150,000 auto workers in 13 non-union factories across the South. Next month, workers at a Mercedes-Benz factory in Alabama will vote on whether they also want to be represented by the UAW. In sharp contrast to Volkswagen, Mercedes is opposing the UAWs effort to unionize this factory. The UAW has filed a grievance against the company in Germany, relying on Germany’s new global supply chain law.

While Volkswagen did not oppose the unionization of its plant, Republican politicians and conservative interest groups campaigned actively to prevent the UAW from gaining a foothold in the U.S. South. In the days before the vote, Bill Lee, the Republican governor of Tennessee joined five other Republican governors in opposing the UAW’s unionization campaign.

They were joined in opposing the union’s organizing effort by several groups funded by conservative activist Charles Koch, the Competitive Enterprise Institute, Americans for Tax Reform (ATR) and Americans for Prosperity, all of which actively campaigned to defeat the union’s effort, part of a broader effort to keep unions out of the South.

The U.S. Chamber of Commerce, which also opposed the union’s effort, blamed Volkswagen for not actively working to defeat the union. “The company decided to remain neutral in the campaign, meaning that the union’s story was the only story being heard by workers,” the Chamber’s Glenn Spencer said in a statement.

Perhaps most importantly Volkswagen’s commitment to creating a workers council offers the opportunity to change industrial relations in the United States. A workers council operates on a model in which employees, including both white- and blue-collar workers, meet regularly with management to discuss issues like working conditions and productivity. While some business executives in Europe dislike workers councils because they constrain company decision-making, others see them as a way to build consensus, generate ideas for improving business practices and enhance employee morale.

Bob King, the former UAW President applauded this effort saying, “VW workers in Chattanooga have the unique opportunity to introduce this new model of labor relations to the United States, in partnership with the U.A.W… the U.A.W. believes the role of the union in the 21st century is to create an environment where both the company and workers succeed.”

It will be interesting to see how this more cooperative model plays out in practice in Tennessee and whether it will be replicated in other foreign auto plants throughout the South.