HAS UAW REAPED THE WHIRLWIND?

Is this the beginning of the end for Volkswagen in Chattanooga, or simply a new beginning?

We likely won’t know for years, but analysts say the track record for United Auto Workers (UAW) serving as a bargaining representative for foreign automakers in the United States is 100%. As in 100% of the plants are no longer operating. So there’s that.

Unlike the first two votes by workers at Chattanooga’s assembly plant in 2014 and 2019, last week’s secret ballot election wasn’t close. By more than a 3-1 majority, workers voted for the controversial union to be their representative.

Fresh off a hard-won contract with the Big Three automakers in Detroit last fall, the UAW believed the third time might be the charm with VW workers.

That contract came with increased pay for Ford, GM and Stellantis workers, but it also resulted in the layoffs of 5,000-plus workers at the plants and even more at plant suppliers (with the prospects of more to come). We suspect the union emphasized the former and did not mention the latter in attempting to recruit VW workers to their side.

Already, an auto executive analyst has suggested VW likely is analyzing costs and looking at assembling more cars at the other plants, such as its plant in Mexico.

While the auto company is doing its due diligence in assessing the future, the UAW is counting on the VW vote as opening the floodgates for representation at other foreign car companies across the South. The Mercedes assembly plant near Tuscaloosa, Alabama, will be the next test case for the union in May, but efforts are likely to be ramped up at other car makers in the South like Hyundai, Toyota and Tesla.

It must be said the auto plants in the South would not be in existence if the foreign carmakers hadn’t wanted to find territory where people wanted to work, where unions weren’t strong and where the stench of union corruption was relatively nonexistent.

One only needs to look at VW’s previous experience at an assembly plant in the U.S. as an example of why that happened. The carmaker took over an unfinished Chrysler manufacturing plant in Westmoreland County in western Pennsylvania in 1978, its employees engaged the UAW and the plant — with 5,700 workers at one point — began to turn out cars.

In 10 years, the plant closed, and it wasn’t until the company was recruited to Chattanooga in 2008 — 20 years later — that VW sought a new start in the U.S.

To say union troubles were solely the reason the plant closed would be disingenuous, but they were one of the reasons.

Unauthorized walk-outs by workers in the plant’s first two years soured VW executives, according to a Reuters report. In one, workers shouted “No Money, No Bunny” in their refusal to build the VW Rabbit unless they were paid wages equal to UAW workers at carmakers in Detroit.

Hiring managers from UAW-run GM and Chrysler plants, where conflict with the union was routine, also didn’t go over well. Ultimately, the union offered concessions in an attempt to save the plant in 1987, but it was too late.

The changing automobile industry, VW’s intractability in altering its cars to fit American buyers and VW’s belief its U.S. sales managers didn’t know how to market the cars all have been cited as other reasons the plant closed.

As for the UAW and VW in Chattanooga today, in some ways it’s no different than the union with any carmaker since the height of organization in the 1970s. As the demands and tastes of car buyers began to change, union-made cars didn’t change with the times but only became less reliable and more expensive with higher union contracts, and thus less interesting and less affordable to the U.S. buyer.

With the rise of foreign car companies, which were making a more reliable car for less money, unions grew less powerful. And, in time, many of the foreign companies sought a foothold in the U.S., where their market was strong.

If UAW wins a larger contract for VW workers, who already are making sizable family wages, the company is likely to pass those costs on to the car buyer. The higher the cost of the car, the less the average buyer is interested in it, and the fewer the company will be able to sell. The fewer they are able to sell, the fewer workers will be needed. It’s standard economics.

We’ll also be interested in seeing how the UAW works together with VW’s German-style workers council, a very different animal despite the union’s insistence otherwise. When the union first attempted to organize workers here in 2014, it emphasized the desire for that German labor model. In the run-up to the election this year, no such talk was heard. More typical was that of a VW worker, who said “people are assuming” [a contract similar to what the union signed with the Big Three automakers] is “what we’ll get.”

Today, VW workers and the UAW are ecstatic with last week’s vote. In time, we’ll know if they have reaped the whirlwind.