Future at Volkswagen Chattanooga eyed amid union loss

Staff photo by Tim Barber Outside Chattanooga's International Brotherhood of Electrical Workers union hall, UAW International spokesman Brian Rothenberg speaks Saturday morning following a 57-vote defeat concerning the acceptance of a union at Volkswagen Chattanooga.
photo Staff photo by Tim Barber Outside Chattanooga's International Brotherhood of Electrical Workers union hall, UAW International spokesman Brian Rothenberg speaks Saturday morning after a 57-vote defeat concerning the acceptance of a union at Volkswagen Chattanooga.

With a second union defeat in the rearview mirror, Volkswagen's Chattanooga plant needs to build on the momentum of its Atlas SUV as VW tries to power up in America, an analyst says.

"I would say the Atlas brought the brand back to life," said Jessica Caldwell, executive director of industry analysis for auto researcher Edmunds, adding that a five-seat version of the popular seven-seat SUV is set for production later this year in Chattanooga.

Caldwell said the union loss Friday, by a margin of 833 to 776, is "a disappointment for sure" for the United Auto Workers.

Volkswagen-UAW tensions

"The precedent was already there of a loss. It's not the first occurrence," she said, citing a 2014 setback by the UAW at the Chattanooga factory.

But, Caldwell said, the union likely will be back for another run at organizing the factory's workers.

"Given the state of the union at this point in time, it will continue to try to grow," she said. The Detroit-based UAW lost more than 35,000 workers last year, down 9% to 395,703 members - only about a fourth of its more than 1.5 million headcount in 1979.

Closest election for UAW in the South

Mitchell Smith, the UAW's regional director, talked about the closeness of the three-day vote that ended Friday - 51.8% against the union versus 48.2% for the UAW.

"You'd try again. That's what I'd expect," said Smith, who complained about interference by plant managers and people associated with a VW law firm who were allowed to walk the factory floor to talk with workers.

UAW International spokesman Brian Rothenberg said the vote count was likely the closest the union has ever come to fully organizing a foreign automaker in the South.

He said a swing of 29 votes by the production and maintenance workers would have changed the election results.

UAW officials said it was too early to know if they'll file an appeal to the National Labor Relations Board. If they don't, by law, pro-union VW Chattanooga workers will have to wait for a year to try again.

Anti-union VW employee Brandi Gengler said she knew she had to take a stand against the UAW organizing campaign and had termed a win "wonderful." She said she's glad the two months of union activity at the plant is over.

"The badgering, division, intimidation, the house visits will be over," Gengler said.

Comekia Mikes, who also was a "no" vote among the 1,609 workers casting a ballot, said the plant is "very divided."

"We've got people who are angry - some about money, some about how lower management treats people," she said.

VW changes at the plant

Shortly after the UAW filed a petition for an election in mid-April, Volkswagen Group of America said it was taking a "neutral" position, but that it had heard concerns that workers had raised in "an open dialogue" with management.

The company said it had responded with improvements in conditions such as adjusting shift work, reducing overtime to have more predictability, and wage increases, including a 50-cent-an-hour raise, effective July 1, to boost the starting pay for VW production workers in Chattanooga to $16 an hour.

VW also brought back well-liked former plant CEO Frank Fischer this spring to replace Antonio Pinto, who took a position in Europe.

Southern Momentum, a grassroots group of VW Chattanooga workers who opposed the UAW, said Saturday it "could not be more excited" about the union's defeat.

"We are happy for our families, for Volkswagen Chattanooga, and for our community," VW plant workers said in a statement from Southern Momentum. "What started as just a handful of us grew into a force of hard-working employees determined to better educate voters about the decision before them. And now all of us have spoken."

Business and political battle

Southern Momentum, funded by business and individual interests and overseen by Chattanooga attorney Maury Nicely, was first formed ahead of the 2014 election at the plant, which the UAW lost by a vote of 712 to 626.

The Center for Union Facts, which took a position against the unionization effort, said the vote "sends a clear message to the UAW that its culture of corruption cannot be ignored," citing a federal investigation in Detroit of the union.

"The UAW is responsible for its bad reputation that has driven away thousands of workers over the last year, including the employees at Volkswagen," said Charlyce Bozzello of the Washington, D.C.-based center.

Tennessee Republicans said Saturday they're glad about the election outcome.

The UAW's political action group has generally favored Democrats. GOP leaders said the presence of a labor union at the VW plant might have made it harder to win political support for state incentives for future VW projects or to recruit other businesses that prefer a non-union work environment.

U.S. Rep. Chuck Fleischmann, R-Tenn., said he was "concerned about the impact of the Michigan-based United Auto Workers making East Tennessee their foothold in the South - most notably being their track record of failure in Detroit."

State Rep. Robin Smith, who said before this week's election it would be harder to win legislative approval for more state incentives for VW if the plant was unionized, also praised workers for voting against the UAW.

"You chose to put your company, its future first, not an outside labor union," the Hixson Republican said in a tweet after the election results were announced. "This global company will grow, excel and take the personality of its great people."

In advance of the election, Tennessee Gov. Bill Lee, Hamilton County Mayor Jim Coppinger and state Sen. Bo Watson all urged VW workers to reject the UAW.

Mary Mancini, chairwoman of the Tennessee Democratic Party, criticized the GOP leaders for trying to inject their views into the workers' election and cause more division between unions and employers.

"Those in powerful positions work to divide us," Mancini said. "In Tennessee, labor unions embody our values of looking out for each other, whether we're white, black or brown, tenth generation or newcomer, blue collar or white."

Investing in electric vehicle future

At Volkswagen's only U.S. assembly plant, work is to start this year on constructing an $800 million expansion to produce an all-electric SUV by 2022. VW has said it would hire 1,000 more employees to add to the 3,500 there now, and the state has pledged $50 million in incentives.

Caldwell said EVs are key to VW not just in the United States but globally as the automaker tries to put the diesel emissions scandal behind it.

"Getting this model out [of the Chattanooga plant] is important not just from a reputation perspective but from a sentiment perspective," Caldwell said. "Employees and customers will get a positive sentiment from the launch of this vehicle."

She said VW appears to be getting its product mix "a little more right for the U.S.," citing the Atlas that in May hit a monthly sales record for the vehicle of 8,273 since it was introduced in mid-2017. Sales of the Atlas are 24 percent higher so far in 2019 than the prior year, according to VW.

Last week's election was the third since 2014 at the plant. In 2015, a smaller unit of just maintenance workers won 108-44, but VW refused to bargain with them. After years before the NLRB and in federal court, the UAW disavowed the smaller unit to clear the way for the new election.

Business editor Dave Flessner contributed to this story.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.