The topsy-turvy story of unionizing a Volkswagen plant

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

Volkswagen Group of America's plant in Chattanooga, Tenn., has experienced something unusual: a union welcomed by management but faced with resistance from some workers. A combination of outdated labor laws and union intransigence has created this oddity.

German law requires "works councils" in which management and labor groups meet to collaboratively sort out workplace issues. Consequently, there is a works council at every Volkswagen plant — except the one in Chattanooga. Now, under pressure from IG Metall, the German union, Volkswagen AG's headquarters has decided it wants a works council in the U.S., too.

But there's a hitch. U.S. labor laws prohibit companies from discussing working conditions with employee representatives — unless they belong to outside unions. In the 1930s, Congress feared businesses would create bogus "company unions" to keep union organizers at bay, so it banned "management-dominated" labor organizations.

This outlaws even innocuous employee-involvement programs. For example, Webcor Packaging Corp., based in Flint, Michigan, created a council of elected employees and appointed managers to suggest improvements to its work rules, wages and benefits. The company wanted their employees' input, yet the government ordered the council disbanded. If American workers want a voice on the job, they must speak through a union.

This restriction makes little sense today. Few businesses feel the need to ward off organizing drives with company unions. Even without them, private-sector union membership has fallen to below 7 percent. While many companies want their employees' input in workplace decision-making, they can't create works councils unless they also want all-out collective bargaining.

Most companies won't risk the downsides of unionizing to get an employee-involvement program. The pressure from IG Metall has made Volkswagen the exception. The United Auto Workers wants to unionize the Chattanooga plant and create a legal works council. Volkswagen's senior management has welcomed this overture with open arms.

A group of rank-and-file Volkswagen workers in Tennessee has been less enthusiastic. They are aware that almost every job lost in the auto industry over the past three decades has been a union job. With rare exceptions, nonunion auto plants have avoided mass layoffs, while unionized facilities have downsized again and again. Hopping on that bandwagon holds little appeal. These employees have printed and distributed anti-UAW handouts, held meetings and created a website urging their fellow workers to vote "no."

The UAW says it has majority support for union representation based on publicly signed cards. But some workers at the Chattanooga plant claim the UAW misled them about what signing the cards meant, and several have filed charges with the National Labor Relations Board.

For the UAW, whose membership has plummeted to less than 400,000 from 1.5 million in 1979, the stakes are enormous. In announcing a push to organize Southern automakers a few years ago, UAW President Bob King said: "If we don't organize these transnationals, I don't think there's a long-term future for the UAW. I really don't."

While unionizing Volkswagen would obviously benefit the UAW, it is less clear how it would benefit the workers. They already make slightly more than UAW pay scales in Detroit. If the union used its power as a cartel to raise wages too much, it would make Volkswagen's cars less competitive and put their jobs at risk. And in that event, workers for foreign car companies can't hope for a government bailout.

Further, the UAW's reputation for being unreasonable is well earned. The union's contracts foisted a so-called jobs bank on General Motors Co., Ford Motor Co. and Chrysler Group LLC. This provision, which the UAW insisted on until the auto bailout, forced the companies to pay almost full wages to laid- off workers. The automakers spent billions paying ex-employees to fill out crossword puzzles.

The UAW also makes removing poor performers almost impossible, a policy that encourages costly absenteeism. It even got Chrysler workers who were suspended for smoking pot on the job reinstated.

UAW work rules further hamper productivity. Before GM's restructuring, each plant had as many as 15 categories of workers, all strictly prohibited from doing one another's jobs. If one worker's absence stopped the assembly line, a worker of another type could not step up to the plate. In the 2000s, it took GM 6 percent to 17 percent more man-hours to produce a vehicle than it took for Toyota Motor Corp.

The union swears that it has changed, and that its works council will improve productivity. But workers would have to take the UAW's word for it. The law won't stop the union from negotiating a broader collective-bargaining agreement.

Many Volkswagen workers — correctly — look warily at the experience of Volkswagen's only other U.S. plant, in New Stanton, Pennsylvania. The UAW organized the plant in 1978. Almost immediately, the workers went on strike. The plant lurched from strike to strike and shut down 10 years later. All the union members lost their jobs; the plant could not survive profitably as a UAW operation.

This story has repeated itself at many UAW operations. A decade ago, General Motors employed 120,000 union members. Now it has 50,000. Employment at nonunion automakers held steady over that time.

Volkswagen's employees in Tennessee have a good thing going. Some want more say in the workplace, but others fear winding up like New Stanton.

They should not have to make that choice. Congress should reform U.S. labor laws to allow employee participation — without requiring that an outside union get involved. Why should the government prevent companies from giving their workers a voice on the job?

_ James Sherk is the senior policy analyst in labor economics at the Heritage Foundation.