Legislators to weigh VW incentives; OK not a given in light of UAW gains

Legislators to weigh VW incentives; OK not a given in light of UAW gains

January 7th, 2015 by Mike Pare in Business Around the Region

State legislators from Hamilton County stopped short Tuesday of predicting that the General Assembly will approve incentives for Volkswagen's Chattanooga plant expansion in the wake of United Auto Workers gains at the factory.

"I start with a jaundiced view," said state Rep. Mike Carter about the incentives estimated at nearly $300 million, a large chunk of which is to come from the state.

Action on the VW incentives, negotiated last year by Gov. Bill Haslam and state economic development officials, is expected to come during the upcoming legislative session and with a backdrop of UAW activity at the plant.

POLL: Should legislators approve VW incentives?

"There will be discussions about additional incentives to Volkswagen," said state Senate Speaker Pro Tempore Bo Watson, R-Hixson, in a meeting with Times Free Press reporters and editors. "Whatever is playing out locally will be part of that discussion."

When pressed on an outcome, Watson said, "I didn't say they should pass the incentives. I didn't say they were going to pass. At the end of the day, we'll settle on what is in the best interests of the citizens. Each individual legislator will take a position that best represents his district."

Last year, Watson was among state legislative leaders who sharply criticized VW for supporting the UAW ahead of a February union vote by VW employees. He said then that VW conducted a labor campaign that's "unfair, unbalanced and, quite frankly, un-American."

The UAW lost, 712 to 626.

But the UAW alleged interference by Republican state politicians and formed a nondues-paying local. Since then, VW created a new policy to interact with labor groups based on membership and granted the UAW access to the plant and regular meetings with management.

A rival labor group, the American Council of Employees, has alleged that VW favors the UAW and is not offering "a level playing field."

VW denies preference for one group over another and says its policy is "fair and equal treatment of all groups."

"If ACE wishes to utilize the ... policy to engage with the company, we welcome it and have invited them to do so. So far, they have chosen not to participate," said plant spokesman Scott Wilson.

Todd Gardenhire holds and speaks about a Chattanooga Chamber of Commerce e-mail he received during the Times Free Press sponsored Legislative Roundtable Tuesday at the newspaper on Tuesday. Rep JoAnne Favors listens at left.

Todd Gardenhire holds and speaks about a Chattanooga...

Photo by Tim Barber /Times Free Press.

Economic and Community Development Commissioner Bill Hagerty said the VW project must be evaluated for its long-term economic impact.

"The return on our investment in Volkswagen will really come as we attract more and more of their suppliers here," Hagerty said.

He said the state already had a considerable investment in the VW site and added, "We were very anxious to get a second line there to make sure that that facility is a long-term, solid contributor to the state's economy."

Sen. Todd Gardenhire said VW officials are "in your face. It's their way or no way. They've decided by-golly they want the UAW here. They're not listening to the community."

But state Rep. JoAnne Favors, D-Chattanooga, believes VW supports the UAW because in Germany, working with unions has helped stabilize the economy and labor pool.

Still, Favors said, with other budgetary needs in the state, such as education, VW may not need the full incentive package.

She said that if VW then comes back and says it's not putting the expansion in Chattanooga, "they can do that anyway."

"If they decided, 'We're not going to make vehicles anymore,' that's their decision," she said.

Rep. Marc Gravitt, R-East Ridge, said his grandfathers, uncle and father once were union members but have changed their minds.

"All of them are adamantly opposed to the union," he said, believing unions have become top-heavy with administrators.

VW has said UAW Local 42 has signed up at least 45 percent of the plant's rank-and-file work force, a number verified by an independent auditor hired by the automaker. The next step is to have VW officially recognize the UAW, said Gary Casteel, the union's secretary-treasurer.

"In the initial conversations, the local union will remind human resources and the Chattanooga Executive Committee of the mutually agreed-upon commitments that were made by Volkswagen and the UAW last spring in Germany. Among those commitments -- Volkswagen will recognize the UAW as the representative of our members," he said.

Business editor Dave Flessner contributed to this story.

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


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