September 25, 2013 / 11:55 PM / 7 years ago

Analysis: UAW sees VW's German union model as best hope in South

DETROIT (Reuters) - If the United Auto Workers is successful in organizing Volkswagen AG’s (VOWG_p.DE) plant in Tennessee, it will owe a lot to the unique relationship the automaker has with labor in Germany.

Flags of Germany's metalworkers' union IG Metall (IGM) are pictured past the IGM headquarters in Frankfurt May 3, 2012. REUTERS/Ralph Orlowski

The powerful IG Metall union that represents Volkswagen’s German workers is six times the size of the UAW, with 2.26 million members. IG Metall’s outsized influence - labor representatives hold half the 20 seats on VW’s supervisory board - could give the UAW its best chance yet to organize autoworkers at a foreign-owned plant in the South.

But it is not clear if VW’s U.S. management is willing to support the UAW and its push for recognition in Chattanooga without a formal vote among the workers.

UAW President Bob King has, since he took office for a single four-year term in 2010, espoused the need to organize foreign-owned U.S. auto plants, and made known his desire for cooperation beyond national boundaries for his union. IG Metall’s support could help him realize both goals.

After the UAW’s organizing efforts failed to gain traction at South Korean and Japanese plants in the United States, the union now sees VW and its unique labor model as the best chance to expand its influence in the South.

Workers are represented at all of Volkswagen’s fully owned plants, except at the company’s 2-year-old factory in Chattanooga, Tennessee. The UAW is banking on the fact that Chattanooga is an outlier and that the company’s executives in Germany want to bring the plant into the fold.


The UAW believes it has sufficient backing from Chattanooga workers to seek recognition by VW.

In the United States, a company can allow a union at a plant without a formal vote if a majority of the factory workers indicate support.

The UAW says a majority of the 1,567 production and maintenance workers at VW’s Chattanooga plant have signed cards supporting the union. But it is not clear if IG Metall’s leadership fully supports the UAW position or whether it will hold sway at company headquarters in Wolfsburg.

The U.S. union also faces stiff opposition in Tennessee, where politicians, including Gov. Bill Haslam and U.S. Senator Bob Corker, both Republicans, are staunchly anti-UAW.

In order to count VW’s Chattanooga workers as members, the UAW will stray from its traditional model at the three major Detroit automakers, General Motors Co (GM.N), Ford Motor Co (F.N) and Chrysler Group LLC, which is a unit of Italy’s Fiat SpA FIA.MI.

The UAW is seeking an alliance with VW to create a works council at Chattanooga, akin to what the automaker has at 88 its 104 plants worldwide. In addition to Chattanooga, the only VW plants without works councils are in China, where the automaker operates them in partnership with government-owned companies.

In a works council, blue-collar laborers and white-collar workers are represented. The works councils give workers a voice in how the company operates. Elected labor representatives have influence on personnel issues, working methods and production planning. In Germany, IG Metall also negotiates with management for worker wages and benefits.

The works council has become an integral part of VW’s corporate structure with its 12 brands ranging from motorcycle maker Ducati to heavy truck manufacturer Scania. The VW group maintains a wider works council, including brand deputies, led by top labor representative Bernd Osterloh.


U.S. labor law might also help the UAW at Chattanooga. Most labor experts say a VW works council in the United States would be allowed only if it worked in tandem with a U.S. trade union.

Arthur Schwartz, a consultant who used to be a labor negotiator for GM, said that, without the presence of a U.S.-based trade union independent of the company, the works council would be a considered a company union, which is illegal.

The UAW has not been specific about how a works council-union alliance would work at Chattanooga, other than to say it should be as close as possible to the German model used at VW plants in Germany.

In Germany, 90 percent of Volkswagen workers are IG Metall members, but union membership is not mandatory, as it would not be in Tennessee. Tennessee is a right-to-work state where union membership cannot be compulsory.

The UAW is attempting to represent only the blue-collar workers at the plant, but the 2,525 employees in Chattanooga include 761 white-collar office workers and 197 temporary workers.


King wants VW to allow the UAW to represent the workers, avoiding a election by secret ballot. While anti-union forces say such an approach is undemocratic, King has said an election would divide the workforce.

King also wants to skip a formal vote because, in the past, even when a majority of workers signed cards expressing support, labor has lost because of what the UAW claims is misleading advertising directed at workers.

Half of Volkswagen’s 20-member supervisory board are connected to IG Metall, and an influential member of its nine-member board of management, Horst Neumann, head of VW global human resources, is an IG Metall member.

The board of management is made up of high-ranking company executives, including Neumann, and is chaired by VW Chief Executive Martin Winterkorn. The supervisory board is chaired by Ferdinand Piech, a former VW CEO whose family holds a significant stake in the company. Piech has two votes that will break any ties between management and union representatives.

Additional reporting by Andreas Cremer in Berlin, Christiaan Hetzner in Frankfurt and Ben Klayman in Detroit. Editing by Andre Grenon

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