UPDATE 1-VW Tennessee plant manager says no UAW contact

Mon Aug 1, 2011 11:39am EDT

* New plant has 1,250 production workers

* Passat for North American market made at plant

* Production can ramp up to 220,000 vehicles/year (Adds quote, background, byline)

By Bernie Woodall

TRAVERSE CITY, Mich., Aug 1 (Reuters) - The manager of Volkswagen AG's (VOWG_p.DE) new Tennessee plant said neither he nor anyone else at the facility has been in contact with United Auto Workers union representatives.

Reports that the German automaker has been in talks about the UAW representing workers at the plant are "speculation," the manager, Don Jackson, said.

The Chattanooga, Tennessee, plant opened several months ago and makes a Passat sedan for the North American market.

"No one from the UAW has visited the plant or asked to visit," Jackson told reporters on Monday on the sidelines of an industry conference in Northern Michigan.

Asked if he would allow such a visit, Jackson said, "Probably not, unless the team members really want them to come in. It's up to the team members to decide" if they want to be unionized.

Jackson said he was not aware if there has been talks between the union and VW management in Germany.

"I'm not aware of that personally. I really haven't been given that information. I haven't really talked to our union leaders in Germany. I know that I visit Germany quite a lot. We discuss several things but I haven't really discussed that issue," he said.

There are about 1,250 production auto workers at the Chattanooga plant, which has 2,000 workers overall.

The UAW has seen its membership drop steadily since its peak in 1979, when it had almost 1.5 million members. Membership has fallen 42 percent since 2004 to about 377,000 at the end of last year.

UAW President Bob King has said the future of the union depends on its ability to unionize workers at U.S. plants owned by Asian and European automakers.

The union has not been successful in getting any of the non-U.S. automakers to agree to allow organizers into plants. A renewed effort to organize plants owned by foreign automakers was announced a year ago at the same Traverse City conference put on by the Center for Automotive Research.

LOWEST LABOR COSTS

Jackson said the Chattanooga plant has had low attrition rates among the workers, who start at a wage of $14.50 per hour. Its all-in labor costs for production workers is the lowest for U.S. plants, estimated by the Center for Automotive Research at $30 per hour.

Jackson would not comment on such all-in labor costs, which are measured as a way to show cost competitiveness among automakers and is a key issue in the ongoing talks between the three major U.S. automakers and the UAW.

Volkswagen's estimated all-in labor costs are about half of Ford Motor Co's (F.N) $58 per hour and General Motors Co's (GM.N) $57 per hour.

The UAW in the past has repeatedly failed to organize workers at the U.S plants of such automaker as Japan's Toyota Motor Corp (7203.T), Honda Motor Co (7267.T) and Nissan Motor Co (7201.T), South Korea's Hyundai Motor Co (005380.KS) and Kia Motors (000270.KS), and Germany's VW, BMW (BMWG.DE) and Daimler AG's (DAIGn.DE) Mercedes-Benz.

Second-shift regular production at Chattanooga will begin in late August or early September, Jackson said.

Passat production at the plant will reach 150,000 annually and can ramp up to 200,000 to 220,000 if demand for Passat and a possible second model to be made at the plant warrants it, he said. Jackson said he did not know when a second product might be made there.

VW is the world's third-largest automaker but is only ninth in the U.S. market through June, according to Autodata Corp. Sales of Volkswagen brand and its luxury brand Audi in the first half of 2011 totaled 38,495 vehicles, up about 20 percent. That was only about a third of the sales of Toyota, the leading foreign automaker in U.S. sales.

Volkswagen, back when a now-defunct version of its Beetle compact car was a top import sold in the United States, had a production plant in Pennsylvania. But by 1988, sales had slowed and the plant was shut down.

Volkswagen has aggressive sales goals for the U.S. market. By 2018 it wants to sell 1 million vehicles annually in the United States -- 800,000 of the Volkswagen brand and 200,000 of the Audi brand. (Reporting by Bernie Woodall, editing by Dave Zimmerman and John Wallace)

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