Chattanooga plant awaits VW decisions on SUV, UAW

Chattanooga plant awaits VW decisions on SUV, UAW

November 12th, 2013 by Mike Pare in Business Around the Region

Chanee Baker installs a brake line onto the chasis of a Volkswagen Passat on the production line at the Chattanooga plant.

Photo by Tim Barber/Times Free Press.

POLL: Should VW unionize in Chattanooga?

With scores of new jobs and hundreds of millions of dollars in investment at stake, Chattanoogans are anxiously waiting a green light from Volkswagen by year's end on whether the city will land assembly of a sport utility vehicle.

At the same time, pro- and anti-union forces are trying to sway VW and plant employees to support or turn back the United Auto Workers and a German-style works council labor board at the factory. A top German labor leader at VW is to visit Tennessee soon, as early as this week, to talk with plant workers and state political leaders.

The looming decisions come as VW's sales in the U.S. plateau, with auto analysts and dealers seeing keen demand for the new SUV amid falling gasoline prices.

Hamilton County Mayor Jim Coppinger said last week he's "optimistic" about Chattanooga's chances of landing SUV production as it competes with VW operations in Mexico.

He said government officials are ready to back the project with financial incentives, though he declined to get specific.

"There are a number of things involved in the incentives package," Coppinger said.

To gain the assembly plant in 2008, local, state and federal incentives to VW were estimated at $577.4 million over 30 years, an all-time high for an auto factory.

State Sen. Todd Gardenhire, R-Chattanooga, said that capturing SUV production is good for VW and Hamilton and Bradley counties. Not only will VW add more jobs, but suppliers would increase hiring as well, he said.

"The state will do whatever within reason," Gardenhire said.

Meanwhile, Bernd Osterloh, who heads VW's global works council, is to visit Tennessee for conversations with the automaker's workers as well as with Gov. Bill Haslam and possibly U.S. Sen. Bob Corker, R-Tenn.

Osterloh, who also sits on VW's powerful supervisory board, had scheduled such a visit in October, but plane trouble out of Germany postponed the meeting.

Both Haslam and Corker have criticized the possibility the UAW could gain a foothold at the Chattanooga plant. Haslam has said he has heard from other companies the state is recruiting that UAW representation would put a damper on their enthusiasm for Tennessee.

Ron Harr, the Chattanooga Area Chamber of Commerce's chief executive, said the factory is caught in a battle involving a German labor union and its efforts to protect VW's employees there. He cited a Wall Street Journal story last week in which some see lower costs at nonunion plants in the U.S. as a threat to German jobs at unionized car plants.

"The international situation is having an impact on VW [in Chattanooga]," Harr said.

The new SUV is seen as key to helping VW grow its sales as if tries to double them in the U.S. by 2018.

"I think it's a well-needed addition to our lineup," said Ron Kwiatkowski, sales manager at Village Volkswagen of Chattanooga.

He said VW doesn't have a seven-seat SUV, likely based on the CrossBlue vehicle that VW debuted at the North American International Auto Show in Detroit last January.

Jesse Toprak, senior analyst for Truecar.com, said overall U.S. sales of large SUVs last month were greater than those of small cars.

"History shows us...buyers would rather buy bigger vehicles if given a choice," he said. "It can only help [VW]."

Karl Brauer, senior industry analyst for Kelley Blue Book, said the SUV segment is an active and growing one.

SUVs also are achieving lower gas mileage, and people like the flexibility they offer as well as the image, he said.

A VW of America official in September termed Chattanooga the front-runner to produce the SUV.

But, Marc Trahan, VW of America's executive vice president of quality, called the decision to buit the vehicle in Chattanooga or Mexico a complicated one as officials weigh cost and return per vehicle.

The UAW has said they've garnered signatures of a majority of the plant's production and skilled maintenance workers on cards calling for the union to represent them.

The union is in talks with VW about the potential set-up of a works council, in which a panel of plant employees would negotiate with management over items such as work rules and training. Officials are weighing whether to recognize the UAW based on the cards, or have the union conduct a secret-ballot election.

However, another group of employees has said they've attracted the signatures of more than 600 workers on petitions against the union.

Also, eight workers represented by the National Right to Work Legal Defense Foundation brought charges against the UAW with the National Labor Relations Board. The workers said UAW coerced and misled them. The UAW has denied the charges.

The UAW has said the auto companies with which it has contracts and their employees represented by the union are prospering.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.