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“Mitbestimmung” in Tennessee

A showdown between the United Auto Workers and Volkswagen at VW’s $1-billion assembly plant in Chattanooga, TN could have profound implications for the future of the union, the plant and labor relations in the U.S.

The UAW, in decline for decades as foreign automakers populated the South with non-union plants, kept itself alive during the Recession by agreeing to a contract that pays its newer members $15 per hour. This steep cutback in wages–veteran UAW members earn $28/hr–helped make U.S. auto plants cost-competitive with Japanese transplants for the first time.

Now, buoyed by a brisk recovery in the U.S. auto industry that has swelled its ranks, the autoworkers union has embarked on a bold foray into “enemy” territory: The UAW gambled that the German owners of Volkswagen–imbued with a European sensibility that unions are a permanent part of the business equation–would be inclined to negotiate if an attempt was made to unionize the workforce at VW’s Chattanooga plant in right-to-work Tennessee.

It looks like the UAW’s aggressive drive to organize at a foreign transplant in the solid right-to-work South (see map) may be paying off–VW signaled this month it’s willing to meet the union halfway. Last week came word that a senior labor representative at VW’s headquarters in Frankfurt, Germany, is planning to come to the U.S. to offer a compromise to the autoworkers union. The deal can be summed up in one word: “mitbestimmung.” Loosely translated from the German, that means “worker participation in co-management.”

According to reports, VW senior labor rep Bernd Osterloh will travel from Frankfurt to Chattanooga bearing an offer to create a German-style works council at the assembly plant in Tennessee (every other VW plant in the world has one). In advance of his trip, Osterloh is dangling a sweetener for the upcoming talks with the UAW: he reportedly hinted the Chattanooga plant will have a better chance at landing production of a new sport utility vehicle if it has a works council (the plant currently produces VW Passat sedans).

Germany has a long tradition of integrating works councils–which give workers a seat at the table with management as corporate decisions are considered–into the governance of its manufacturing facilities.

While German works councils do not have the right to bargain collectively over contracts–the raison d’etre of American unions–the works council committee (comprised of hourly as well as salaried employees, with council members elected by employees) are given the right to be consulted about jobs cuts and working conditions. At large companies in Germany, worker reps sometimes sit on supervisory boards that choose the chief executive and approve corporate decisions. If a company has at least 200 workers, the company also is required to pay the salary of a full-time worker representative.

The works councils are seen in Europe as an effective way to avoid labor disputes and increase productivity. Before you raise your eyebrows and bring up the 12-week vacations enjoyed by not-so-productive French and Dutch workers (and the traditional three-hour afternoon siestas in Spain), consider this: Germany has solidified its position as Europe’s industrial powerhouse and kept unemployment hovering at an enviable 5.2 percent while the rest of the continent has barely crawled out of its financial crater. The consensus in Germany is that giving workers a seat at the management table has been a significant part of this success story.

The impending works council proposal in Chattanooga is by no means a sure thing: resistance to (or confusion about) the concept and potential legal challenges loom large. For example, it’s yet to be decided whether the 1,600 hourly workers at the VW plant would need to belong to a union to be eligible to participate in a works council at the facility. Labor relations specialists also have pointed out that a works council set up by a company in lieu of union representative may violate American labor law.

Perhaps the biggest hurdles are lang-standing traditions on both sides of the dispute: Tennessee’s state representatives may view a works council as a Trojan horse designed to weaken the Volunteer State’s status as a right-to-work bastion; UAW members may have trouble getting around the assumption that a seat at the table without contractual bargaining power is nothing more than an empty chair.

TN Gov. Bill Haslam appears to be drawing a line in the sand against any move towards unionizing the Chattanooga assembly plant. In a statement issued earlier this month, the governor said: “One of the things that makes Tennessee great is that it is a right-to-work state. Volkswagen is an outstanding employer that puts a lot of focus on employee satisfaction, and the company has been incredibly successful with the current structure in Chattanooga.”

While Herr Osterloh has been trying to set a positive tone for the upcoming talks with his hints of new models flowing into the Chattanooga plant, the UAW is making its own predictions: the autoworkers union says it’s confident it has the workers’ signatures it needs to force a union-certification vote at the VW plant.

[According to a report in The New York Times, an anti-union foundation says it will mount a National Labor Relations Board challenge to any certification vote in Chattanooga, claiming several plant workers have changed their minds since signing cards calling for a vote; also, plant workers opposed to the UAW are said to be circulating their own petition against unionization, claiming they have the support of 30 percent of the plant workers].

So the battle lines are drawn and the stakes are high. If the UAW succeeds in getting a foothold in Chattanooga, two other German auto facilities in the South–BMW in South Carolina and Mercedes-Benz in Alabama–probably can expect a knock on the door from the autoworkers’ organizers.

We’ll be watching the developments in Tennessee with interest and we’ll keep you posted.

 

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