The UAW can write off organizing Volkswagen’s U.S. plant in Chattanooga. The effort has been damned by German unions. Volkswagen’s works council will explain to Chattanooga workers that there is no pressure from German unions for them to join the United Auto Workers union. With Reuters taking notes, Volkswagen works council chief Bernd Osterloh offered the most lukewarm support he can afford to give as a union brother:

“Of course, we will support the UAW; we’ve said that all along. But there’s one thing we cannot do. We can’t take workers at VW Chattanooga by the hand when it comes to voting on UAW representation. One has to be in favor if one wants union representation.”

In March, the UAW had been handing out signature cards in Chattanooga as a first step to gain representation in Chattanooga. Apparently, this did not produce the expected echo. In April, the UAW backpedaled and said they did not mean it.  Yesterday, Osterloh mentioned that “sentiment in the southern U.S. isn’t exactly in favor of unions.”

Without forceful support from Germany, the union drive in Chattanooga is doomed. Said a source in Tennessee:

“The workers in  Chattanooga were angry when the UAW claimed that it had  the support of the works council in Germany and that turned out not to be true. The workers identify with Volkswagen, not with the union.”

The Volkswagen works council has picked up on that detail and might offer Chattanooga workers representation without the UAW. Said Osterloh:

“Should workers determine they don’t want a union, we would make efforts to bring about some sort of interest lobby. It’s important that this site has a voice on the global works council.”

Not gaining a foothold in the south would be a major setback for a union that is losing money and lives off its savings. The UAW had been betting on support from the German metal workers union IG Metall, and that support just isn’t there. German unions would rather gain a power base of their own in the U.S.

It’s said that people do resemble their dogs. The UAW surely looks more and more like the GM of old. For years, the UAW has spent more than it took, forcing it to live off its savings. Once again, the UAW wants to change this – two years from now. Until then, it will happily go on making losses.

Said Bob King to Reuters:

“We are spending a lot of money, and we’re investing money in organizing. And we’re investing money in rebuilding the ability of the UAW to win good contracts and win good legislation for our membership.”

King told Reuters that in two years, the UAW wants to be cash-flow positive by adding members and managing costs.

In the five years from 2007 to 2011, the UAW sold $264 million in assets. In 2011, the UAW increased its membership by 1 percent. According to Reuters calculations, the union would have to increase its membership by 50 percent to break even, assuming the current rate of spending.

Victor Muller could not save Saab.

Vladimir Antonov could not save Saab

Pang Qinghua could not save Saab.

Rachel Pang could not save Saab.

Now, Barack Obama is supposed to save Saab.

At least that’s how the Swedish metalworker union IF Metall sees it.
The union sent written a letter to president Barack Obama, urging him to use his good offices “to force former Saab owner General Motors to release the technology licenses for any potential buyer for Saab.” At least this is how The Local sees it.

The letter says:

“Our hope is that you will feel that Saab Automobile is worth being saved. We, more than 4,500 car workers in Sweden, look forward to your answer.”

Saab is in bankruptcy proceedings, and the receivers are evaluating bids. Saab is worth very little without the technology licenses held by GM, and, for that matter, without the brand held by defense contractor SAAB AB.

GM has been on record many times that it does not intend to license its technologies to any buyer of Saab in any shape or form.

Workers agreed to a four-year deal that freezes wages for two years, and that allows only moderate rises of around 3 percent for the following two years, Reuters heard from a source. The source also said:

“It’s almost certain that one of GM’s German plants will now be closed, probably the plant in Bochum.”

Currently, some Astra production is at Opel’s Rüsselsheim plant in Germany. Beginning in 2015, this will shift to Ellesmere Port. The Polish plant in Gliwice most likely will continue Astra production. It is expected that production of other cars will be shifted from Bochum to Rüsselsheim, with Bochum to be shuttered.

According to a GM statement, the Ellesmere Port plant will run three-shifts at full capacity. GM committed to a minimum of 160,000 vehicles to be produced each year. The company will invest £125 million into the facility and expects to create circa 700 new direct jobs. The agreement comes into force in 2013 and runs through the life of the next-generation Astra, into the early 2020s. Production of the new Astra will begin in 2015. This is also when the current contracts with European unions run out. Until then, all plants must stay open, and all workers must remain working.

Ellesmere Port had been on GM’s target list, but survived again. This also means a continuation revival of the British car industry, this time with a British brand on German cars. Lately, the island has been a preferred location for production by Asian manufacturers, such as Nissan, Toyota, and Tata. Britain now exports more cars than it imports for the first time since 1976.

According to a report in the London Telegraph, workers at the Vauxhall plant voted on Wednesday on concessions. The results of the ballot are not announced yet, but British media treats it as a done deal.

 Reuters says that Opel presented a catalogue of demands “including wage cuts, more temporary workers and outsourcing.”

The Daily Mail already seems to know that “Ellesmere Port and Gliwice in Poland will now become the only two manufacturing centres of the next generation Vauxhall Astra which hits showrooms from 2015.” The paper also is certain that “Opel’s Bochum plant in Germany, which builds the Zafira, is set for closure.”

A Daily Mail source opined that “The German unions will go bonkers.”

The source is probably right. The German Metal Worker union demands pay hikes from all automakers. There already were widespread warning strikes at Audi, BMW, Daimler and parts suppliers. GM and Opel are contractually precluded from closing any Opel plants in Europe through 2014. Jobs are likewise secure. Once plant closures are announced, it will be very tough working with the doomed workforce.

A while ago, the UAW started passing out signature cards at Volkswagen’s factory in Chattanooga, TN. It looks like most landed in the garbage can.

The UAW needs signatures from at least 30 percent of the workers before a representation election can go ahead. There is no information on how many (or how few) signatures the UAW received. However, Gary Casteel, director of the UAW’s District 8 says now that the UAW wasn’t serious. Casteel told The Tennessean:

“We have not started an official organizing campaign. What got some people up in arms is that we passed out some cards, but they were never about setting up an election. The cards were just gauging the level of support.”

The paper sees older workers at the Volkswagen plant as more supportive of the union than younger employees are. Says the Chattanooga paper:

“Some younger workers fear they could lose some of their current benefits if the union negotiates a contract with Volkswagen.”

Chances are pretty rotten for a union if workers fear that they get less after they sign.  The workforce appeared pretty youthful when we had visited the plant last year.

The comments to the article in the Tennessean reflect the cautious mood in Chattanooga. “The UAW will only protect the drunks, drug addicted, lazy, thieves and those who are chronically absent,” says a Dennis Tucker. “Don’t do it. The UAW is a bunch of self-serving thugs and will be bad for the employees,” a Ron Brown asks.

With membership down to a quarter of the union’s peak size in 1979, dues are not enough to pay the bills at the UAW. The UAW continues to tap into savings to pay for its day-to-day operations, Reuters says.  

According to the UAW’s annual financial filing with the U.S. Labor Department, 16 percent of the UAW’s cash receipts came from investment and asset sales in 2011, while union dues represented 47 percent.

The UAW’s membership increased slightly by 4,107, or 1 percent, to 380,719 last year. The UAW is still America’s richest union, but most of its $1 billion plus wealth is tied up in its strike fund. “As a result, the UAW was forced to sell stocks, bonds and other assets to pay for its day-to-day operations during the most recent U.S. economic downturn as the number of dues-paying members fell,” Reuters says.

Even after adding new members, the UAW is forced to rely on investment sales to pay for day to day operations. Organizing the transplants is key to the UAW’s survival. Failure to do so will result in more money drainage. Already, the balance sheet looks lopsided:

The UAW reported assets of $1.04 billion in 2011 and liabilities of $7.1 billion. Cash receipts and disbursements both fell about 6 percent to roughly $258 million each.

A few days ago, Germany’s motor mouth Ferdinand Dudenhöffer had painted a semi-rosy picture. Sure, paying each employee $200,000 as severance would hurt. But closing Bochum would save around $280 million a year, three years later, the investment would be paid back, Dudenhöffer argued. Payback would not happen until 2018, closures are only possible starting in 2015.

Dudenhöffer and GM management are dreaming, says Einenkel. There are no 3,200 workers, but 5,000. Some 1,800 are loaned to partner companies, but have a contract in Bochum. Workers “won’t go voluntarily,” Einenkel told Reuters, signaling costly fights in the courts. The Bochum plant sits on top of former coalmines, no investor will buy the plant, fearing uncontrollable environmental cleanup costs. Closing Bochum could also severely damage Opel’s brand, Einenkel said.

Before that happens, Opel will severely damage GM earnings , for many years.

When AFP reported yesterday that “King was appointed by IG Metall, the German’s metalworkers union, to serve as a labor representative on Opel’s supervisory board,” it sounded like a mistake, something lost in translation between the UAW spokeswoman Michele Martin and the French wire service.

A few phone calls later, it indeed looks like King was nominated by the German metal worker union IG Metall. According to reports, King will take the seat vacated by the union representative of Opel’s Zaragoza plant. Why the German metal workers nominate a major shareholder of GM is anybody’s guess.

Opel’s supervisory board meeting ended with nothing. All the board, which consists of 50 percent labor and 50 percent of what is called “the equity side,” could agree on was that revenue, costs and margins are important. It’s good they have figured that out by now. Plant closures have been tabled. There is no sense in announcing them now anyway – plants cannot be closed before 2015.

It also must have dawned on some people that premature announcements of plant closures are bad psychologic warfare. You want your opponent doubting and hoping at the same time. So yesterday, after the meeting it was leaked that Opel’s plant in Eisenach might be sold. That’s what Reuters says, citing an article in Das Handelsblatt (which can’t be found in the on-line edition.) The Eisenach plant is fairly new. It was built 20 years ago after the wall had come down.  It also was expanded last year with a $252 million investment.

A little later, Opel told Reuters that “this speculation is without base and is wrong. There are no plans to sell the Eisenach plant.”

This will drag on for a long time. It won’t be good for Opel sales, and it won’t be good for the GM stock.

GM has turned its Ellesmere Port plant into “a no-go area for media amid ongoing speculation over its future,” says The Guardian. Staff and suppliers have been told to avoid reporters. “Attempts to photograph Astras awaiting delivery at the site’s distribution centre prompt a visit from security guards who ask the Guardian to desist,” says the paper.

There are 2,800 workers in the plant itself and some 7,000 workers in the supply chain that would lose their jobs when Ellesmere Port closes. No wonder that media attention is high.

Vauxhall does not think that job losses are unsettling, media attention is. A statement by Vauxhall that explains the media shutdown says:

“To be and stay competitive is key in the automotive manufacturing environment, where a plant’s performance is tightly measured. The Ellesmere Port plant is very competitive and we need to make sure our employees are able to focus on the job in hand to maintain this. Negative media speculation perpetuating over the last weeks is far from helpful and we therefore do not welcome media speculating on the plant’s future on our premises.”

Meanwhile in Germany, the meeting of Opel’s supervisory board ended with a virtual lockout of the media. Reporters were fobbed-off with a non-statement that says:

“All involved agree that Opel must work in a profitable manner and must undertake efforts to increase sales, to improve margins and to reduce costs.“

Amen.

Today, the Supervisory Board of GM’s ill-fated Opel division is meeting. For the first time, the unions are in the majority on the board. In addition to half of the seats in the boardroom being occupied by representatives named by labor, UAW boss Bob King is taking part in the meeting. It is unlikely that King’s vote will strengthen the labor side. King comes as an emissary of GM, where the UAW, through VEBA, owns 10 percent of the stock.  Representing the capitalist side of the equation, King will have to vote for job losses and plant closures. If not today, then soon.

Says Reuters:

“The gathering is expected to last into late afternoon. It is not clear whether management will submit a mid-term business plan, which would include plant closures, or focus on less sensitive issues such as the appointment of a new sales chief.

“All signs point towards escalation regardless,” said one source close to the board, who said plant closures would be the elephant in the room even if they weren’t discussed.”

Another UAW sympathizer is the chairman of the supervisory board: Steve Girsky. Girsky came on (the) board at GM as representative of the UAW’s VEBA trust. As the chairman of the supervisory board, his vote counts twice in case the board is deadlocked.

Sending Girksy and King into the battle in Europe was a smart move by Akerson et al.  Forced to vote against labor, Girsky and King will end up as cannon fodder in the intricate European labor dealings, which will weaken the position of the UAW.  German auto executives watch this with great amusement. One anonymous exec said today on the phone:

“With these guys pushing for plant closures, the UAW has become enemy number one with the European unions. They will be treated as traitors. There goes their last chance for IG Metall help in the South.”

Other moves are not so smart. GM leaked too early that Bochum and Ellesmere port will be closed. 7,000 jobs will be lost. A smart tactician would have known to keep this option open as long as possible. A seasoned source close to Bochum labor leaders told Reuters:

“GM won’t announce any plant closure today anyway, since they’d be crazy to give up their trump card. The moment they say which plants are safe, they can no longer play them off against each other in the hopes of extracting concessions.”

The trouble is: The closures of Bochum and Ellesmere Port have already been leaked, galvanizing the union side into a united front.

PS: 48 hours later, it was announced that Bob King will take the seat for the labor side.

Last week, Opel’s labor representatives complained that GM does not want to negotiate with them. Now it’s the unions that don’t want to talk. Today, labor representatives  of eight countries sent Opel CEO Karl-Friedrich Stracke a letter. The letter consisted of only one sentence, written in eight languages:

“We will not negotiate with you on a local level.”

The tight-lipped missive follows plans by GM management to close the plants in Bochum and Ellesmere Port, and to export jobs to low cost countries. The unions have a different version: GM wants to play the individual sites against each other. According to the Frankfurter Allgemeine Zeitung, Opel’s production chief Peter Thom had confronted each site with a catalog of demands. Sites that do not agree to these demands could find themselves out of work.

Jobs and sites are safe through 2014. The unions are not under time pressure. GM however needs to stop the bleeding of money ASAP.

After a round of psychological warfare with targeted leaks, GM seems to be ready to attack the overcapacity at lossmaking Opel in earnest – eventually.  The German government reportedly has been informed that Opel wants to close Bochum. Jobs will be exported to low cost countries such as Poland, Russia, China, India, Mexico and Brazil. Cars will be imported even from China.

Germany’s WAZ has learned that Opel Chief Karl-Friedrich Stracke informed the head of the Berlin chancellery, Ronald Pofalla, that Opel’s Bochum plant will be closed in 2015. Earlier closures are contractually verboten.

Germany’s Spiegel laid its hands on an internal strategy paper (“Global Assembly Footprint”) that says that Bochum and Ellesmere Port will be closed. The paper also calls for capacity increases in low cost countries. Opel’s plant in Gliwice, Poland, is scheduled to increase capacity by 25 percent. By 2016, GM wants to import up to 300,000 cars to Europe from Mexico, Korea and China.

In addition, GM plans to lower the number of models worldwide by 2018, by reducing the number of platforms to less than 15 from the current 30 and by barely developing models for a specific market such as Europe, Spiegel says.

Opel’s works council is likely to be informed by Monday. The measures may or may not be discussed at Opel’s supervisory board meeting on Wednesday. Labor has half of the board votes and already announced that it will oppose closures.

GM’s biggest enemy is time. To appease the unions, GM had agreed to no plant closures or firings through 2014. This means that GM is looking at at least four years of losses: Three years that continue the status quo, plus one year of golden parachutes  for the fired workers. Closure of one European plant could cost as  much as $2 billion, another internal GM paper says.  What’s more, moral and quality at the redlisted Opel plants is likely to sink, labor relations will get complicated.

Hat tip to Dipl. Ing Duweisstschon

Fiat announced yesterday that it will again temporarily suspend production at two plants in Italy. Fiat blames the stoppage on a strike by Italian car haulers.  According to the Wall Street Journal, the trucker strike “has gone on for about five weeks and in some cases turned violent.”

The national hauler association ANITA (Associazione Nazionale Imprese Trasporti Automobilistici), blames a small minority group of drivers who transport new cars to dealerships from Fiat and other manufacturers located outside Italy. The small group already set fire to a car hauler in Cassino, a town where Fiat has a plant.  If that small group can get Fiat in trouble, wait until restive Fiat workers strike against Marchionne’s capacity reductions plans.

Fiat will shut production at the Cassino plant on March 27-29 and at its Pomigliano plant, where the new Panda is being produced, on March 26-27.

Fiat figures it will lose about 10 percent of its market share in Italy and abroad this month. Fiat already lost market share in Italy and Europe. Some of the strike action might be a welcome cover.

PSA and GM look at expanding their alliance. Unions are not sitting still either. Workers of  PSA and GM look at forming their own strategic alliance.

PSA and GM plan to intensify their alliance, PSA told Reuters. In addition to previously announced plans, the two may share larger vehicles, dual-clutch transmissions and a small car for emerging markets Peugeot says. Ominously, plans to assemble a new compact vehicle at Peugeot’s Madrid plant have been ditched. GM has not announced yet that the car will be built at one of its plants.

All this triggered a backlash at the unions. Labor leaders of Opel-Vauxhall and PSA will enter talks to form a strategic alliance, designed as a counterweight to plans by GM and PSA. Instead of playing workers against each other, PSA and GM could be faced by a united front.

“Spain is the one country where the competition will likely be the worst, since there are two PSA plants and one Opel plant that can be played off against one another,” Wolf Jaecklein of the European Metalworkers Federation (EMF) told Reuters. Jaecklein continued:

“The current strategy of both carmakers is to play their own respective plants off against one other. By creating this alliance, however, they can increase the size of the pitch and expand the competition to include all production sites. We therefore need to expand our approach beyond the individual companies and jointly defend against this tactic, that’s the key.”

Maybe they should seek advice from their union brothers at the UAW. On second thought, they might not. The union-busting strategy is said to be a brainchild of Stephen Girsky, UAW representative on GM’s board. Girsky has been dispatched to Europe as GM’s designated union-hitter.  Come to think of it, the UAW shouldn’t count too much on IG Metall support either.

Leaked plans of GM doing the math on plant closures at Opel enrage Opel’s labor leaders. They already had been miffed by GM’s unwillingness to come to the negotiating table. Now they feel blindsided by math by math exercises at GM that involve the closure of Opel’s Bochum plant, the plant in Ellesmere Port, or both.

Opel-Vauxhall labor leaders told Reuters that they “demand that management clearly reject the public speculation (over plant closures) and agrees to hold immediate constructive internal talks in order to prevent further damage to Opel/Vauxhall.”

Opel sits on excess capacity equivalent to the output of two plants. Unions want GM vehicles imported to Europe to be built here to ward off plant closures. The unions say it’s a deal. The alternative would be huge legally mandated severance packages. GM’s calculations showed that closure of one plant could cost $2 billion.

In a surprise attack, the UAW has taken the first formal steps to unionize Volkswagen’s U.S. factory in Chattanooga. In what Reuters calls “an escalation of its effort to establish a foothold outside the Detroit automakers,” the UAW started passing out authorization cards for workers to sign. According to U.S. labor laws, the union needs signatures from at least 30 percent of the workers of a plant before a representation election can go ahead. The UAW’s timing could not have been worse.

The UAW’s attack on Volkswagen, which has its U.S. plant at the former site of a World War II munitions factory, is an undercover operation. Its cover has been blown by Bernie Woodall, a crack automotive reporter of Reuters’ Detroit bureau. Woodall was in Chattanooga yesterday to cover the hiring of 800 new workers at the Volkswagen plant. While on the ground in Chattanooga, he learned about the surreptitious passing around of signature cards. “The UAW has not told the German automaker about its effort to collect signatures,” Woodall was told. The UAW has not even approached all hourly workers.

The matter became semi-public during a closed-door meeting between employees and VW executives at the Chattanooga plant yesterday. During the meeting, workers asked VW executives, including VWoA CEO Jonathan Browning, about the UAW’s efforts. Browning gave milquetoast party line, saying that UAW representation is up to the workers. Then, says Reuters, “one worker, addressing the crowd, said the plant did not need a union, which was met with loud applause and cheers.”

“Not too many people around here want a union,” Woodall was told by a worker who was at the meeting.

Last December, the UAW had given up immediate plans to organize the transplants, and said it would shift its efforts to direct talks with German, Japanese and Korean automakers with U.S. factories. The UAW also hoped it would get support from the German metal workers union IG Metall. These talks must not have been fruitful.

The timing of the organizing efforts is horrendous. It’s not that jobs are imperiled in Chattanooga. In January, the Chattanooga plant hired 200 new workers. Yesterday, Volkswagen announced the creation of 800 new jobs in Chattanooga. There is very little the unions can offer the workers in return for their union fee. At Volkswagen, a new hire is paid $14.50 per hour, even during training. Within three years, pay rises to $19.50 per hour. Says Reuters:

“A General Motors Co spokesman said the average pay for entry-level GM workers is $17.50 an hour. Veteran workers at GM make an average of $29 per hour.”

A Volkswagen worker receives additional shift pay, there are quarterly performance bonuses, a choice of medical plans, and a host of other benefits. Visits to the on-site doctor are free, a gym is open 24/7. A company lease program is so attractive that half of the cars on the employee parking lot are already Volkswagens, coexisting in harmony with Detroit iron.

Nobody knows how successful the UAW is in collecting signatures. From what we are hearing in Chattanooga, people are not falling over themselves to sign. If the stealth attack fails, it could be the end of the UAW. Says Reuters:

“UAW President Bob King has said organizing U.S. plants run by foreign automakers, known in the industry as transplants, is crucial for the union’s survival. After three decades of declining membership, the UAW faces a financial crunch that has been exacerbated by the U.S. economic downturn. This has forced America’s richest union to sell assets and dip into its strike fund to pay for activities.”

Looking for a way to stop the chronic bleeding of money at it notoriously loss-making Opel division, GM has been crunching numbers to see what it would cost to close one of its European plants. Bad news for GM stockholders: Relief won’t come cheap, and it won’t come soon.

Shuttering one of the plants, along with the legally mandated golden parachutes, will cost €1.5 billion, or $2 billion, Germany’s Handelsblatt learned from sources at GM. Prime candidates for a cull are the usual suspects: Ellesmere Port and Bochum. No decision has been made.

Addressing the capacity glut will not only cost money, it will take time. GM has an agreement with the unions that forbids plant closures or firings until the end of 2014. Opel chief Karl-Friedrich Stracke wants to honor this contract. Breaking it would cost much more than the $2 billion.

The way it looks, Opel will lose money at least through 2015, with a huge loss when the plant will be closed. Until this happens, productivity and moral can be expected to deteriorate.

With GM wanting to have a turn-around plan for its money-losing Opel division in a couple of months by summer, one would think there is at least some sense of urgency. Opel’s workers thought the same – until management rebuffed repeated attempts to sit down and talk. Opel labor leader Wolfgang Schaefer-Klug said management was not being “responsible” by rejecting the repeated efforts for negotiations, Reuters reports.

The European employee forum of General Motors says speculation on the future of GM’s European sites has damaged the image of Opel and Vauxhall:

“It is especially the case that employees in all European sites suffer insecurity from this speculation. Potential customers are furthermore made insecure in the already difficult economic environment.”

Workers’ representatives have asked the boards of GM and Opel for discussions, but talks were rejected, the statement says.

American carmakers cast worried glances on Senators and union groups that want to create a level playing field with China. Senators Debbie Stabenow and Sherrod Brown, alongside union representatives and the labor-backed Economic Policy Institute try to push “the administration to bring a possible case at the World Trade Organization or begin a U.S. Commerce Department investigation that could lead to duties on Chinese-made auto parts,” as Reuters reports.

A study by the EPI alleges that the Chinese auto parts industry has received $27.5 billion in government subsidies since 2001. The study forgets that large parts of the U.S. auto industry would not be here anymore, would it not have been bailed-out by the U.S. government.

Why are carmakers horrified by the surely well-meant suggestion? Several reasons:

• Global parts sourcing, especially in China, has helped carmakers the world over to lower production costs. Slapping a punitive tariff on Chinese parts would raise the price of the parts, and make the car uncompetitive. First customers, then UAW members would pay the price for the folly.
• But wouldn’t it bring jobs back to America? The experience with the tire tariff, enacted on instigation of the United Steelworkers, says otherwise: The production of cheap tires simply moved from China to Thailand. From there, the tires could be imported at a lower tariff than from China, for a while even duty-free. Not a single job was created in America with the tire tariff, but a lot of porcelain was broken.
• As the volcano in Iceland, the tsunami in Japan, and the flood in Thailand have shown, the supply lines of the auto industry are intricate and can be easily damaged. Meddling with parts imports from China could have catastrophic effects on the U.S. car industry. By the time large swaths of the Chinese parts industry have been relocated to even cheaper parts of the world, U.S. manufacturers would be out of business, its people would be out of work.
• Especially GM is inseparably tied to China. More than a quarter of GM’s global production is sold in China, GM’s largest single market. Ford is expanding its presence in China. Chrysler hopes to get back into China on the coattails of Fiat. These companies would be on the receiving end of retaliatory measures by the Chinese government.

It is not that the lawmakers and union officials are utterly naive. They know that most of the Chinese parts production was created if not by, then at the behest of foreign carmakers, U.S. and otherwise. Bob King, president of the United Auto Workers union, acknowledges this by urging “global corporations to refrain from a ‘race to the bottom’ to find workers that they can pay the least.”

Debbie Stabenow creates communal cringes on Detroit`s executive floors when she says:

“We need to stand up to the bully on the block. The bully on the block continues to take our lunch money and we need to stop that.”

Her solution seems to be to create empty pockets: Nobody can steal your lunch money, if you don’t have any.

Meanwhile, carmakers take cover and hope that the matter is over when the circus moves out of town in November.

GM’s Washington, DC, spokesman Greg Martin asks me to understand that he won’t say anything else than a prepared statement. It arrives a few minutes later by email.

“GM’s success in China, which is now the company’s largest market, illustrates the benefits of trade and good economic relations to both countries. Because China represents tremendous growth potential for American companies, we hope that both countries continue to work through their differences constructively.”

Well said. Let’s hope the prayers will find an open ear.

The line at Volkswagen’s Chattanooga plant will run a little faster. It will produce 35 cars instead of 31 per hour. That also produces new jobs. In an emailed statement, VWoA announced today that 200 new permanent jobs will be created at its Tennessee plant.

The increased production is needed to keep up with the demand. Volkswagen’s new car sales were up 23 percent for 2011, and a whopping 31 percent in December. The market grew 10 percent for the year, and 9 percent for December. The Passat, which is built in Chattanooga, is a brisk seller. “Each car that we make is sold on the spot,” says Volkswagen spokesman Guenther Scherelis. He did not want to speculate on January sales, which will be announced tomorrow.

This should create smiles all-around.  Ryan Rose, head of HR in Chattanooga, explains:

“These 200 new positions are all full-time Volkswagen jobs. We will use this opportunity to hire many of our current Aerotek contract employees. So, Aerotek will be recruiting to fill full-time contract production positions that will open up as a result. We will also be hiring additional supervisors and engineers – so there are a lot of opportunities.”

Aerotek provides contract employees to VW. The new full-time jobs will be integrated into Volkswagen’s current two-shift operation. Volkswagen gains experienced team-members, and new openings for contract workers are created. Who will be in-line for full-time jobs when the line will make a few more cars per hour down the road. ..

Currently, the Volkswagen plant in Chattanooga employs more than 2,500 people, about 2,000 by Volkswagen, and an additional 500 by Aerotek. This number will now rise to 2,700.

It’s good that the UAW had hoisted the white flag and gave up on unionizing the South. The UAW already was not welcome in Chattanooga. With 200 new jobs created, the question would even more be:

“1,2,3,4 – what are we paying for?”

In other big news, Volkswagen now is doing something for it’s image when seen from above. Says Bloomberg:

“Volkswagen’s Chattanooga plant will add a big, flat-mounted rooftop sign that can be seen from the air and is so large the plant’s chief executive said it will be visible online on Google Earth.”

 

The website for midwives the voice of union activists Labornotes reports that a South Korean Hyundai Motor worker set himself afire Sunday after management refused his request to slow down the line. The 44-year-old unionist, Shin Sung-hun, is in critical condition. According to the site, Shin poured paint thinner over and set fire to himself .

As a result, union members at the plant refused to work overtime, which crippled production of sport utility vehicles at Hyundai and Kia. Management agreed to make a public apology and to reprimand some supervisors.

That done, Hyundai said it would seek damages caused by the union’s action.

Rough crowd.

A good month after our trek to the South where we checked on the (un-) willingness of transplant workers to join the UAW, the hard-hitting team at the Reuters Detroit bureau did the same.  In a special report, Reuters comes to the same conclusion as we did: It won’t be easy. Bernie Woodall and  Ben Klayman of Reuters did more thorough digging. And they unearthed the secret strategy of the UAW: With the help of the German metalworkers union, they want to talk themselves into Volkswagen and Daimler:

“By appealing to German unions for help and by calling on the companies to do the right thing, King hopes to get VW and Daimler to surrender without a fight and let the union make its case directly to workers.”

If that strategy won’t work, and it is highly unlikely that it will, it could be the end of the UAW:

“It’s a battle the UAW cannot afford to lose. By failing to organize factories run by foreign automakers, the union has been a spectator to the only growth in the U.S. auto industry in the last 30 years. That failure to win new members has compounded a crunch on the UAW’s finances, forcing it to sell assets and dip into its strike fund to pay for its activities.”

The UAW will have a hard time convincing workers. Where the UAW reigns, it’s a killing field for jobs:

“Since 2001, the Detroit Three have slashed over 200,000 jobs, eliminating more than 60 percent of their hourly work force. In the same period, Japanese, South Korean and German automakers have opened eight assembly plants in the United States, creating almost 20,000 factory jobs.”

Money-wise, it does not make a lot of sense to join:

“Newly hired workers earn $14.50 an hour at VW in Chattanooga. That is just below the $14.78 that a new hire would make at a unionized GM plant in Spring Hill, Tennessee. Adjusted for monthly dues at Spring Hill, the VW worker is behind by only about $15 per month.”

Hopes that the German unions will do the heavy lifting for the UAW likely are misplaced. “We will support the UAW, but we will not do the UAW’s work,” said Peter Donath, an IG Metall official. The German unions are interested in themselves. Of course, German makers with troubles in the U.S. could be discouraged to move more work to a unionized plant in the U.S. Wait, what’s wrong with that picture?

Please read the detailed report at Reuters. It will be an eye-opener.

Ever since Steve Girsky an his “merry band of hatchet men” touched down in Rüsselsheim, Bertel has been warning that GM’s European division was about to embark on a serious cutting binge. But our worst fears, namely that Opel could go away entirely, have yet to be realized. Instead it seems that self-destructive mutilation will be attempted first, in order to stem the gushing red ink at Opel where at least €1b in losses are expected next year. Automotive News Europe [sub] reports that the first round of cuts will hit Opel’s Internationalen Technischen Entwicklungszentrum (ITEZ, “International Technical Development Center), as an IG Metall union document foresees some 1,420 product development position cuts (from a staff of some 6,000).

Opel’s spokesfolks insist that the union’s numbers are “factually wrong and excessively high,” but only, in the words of ANE, because they “include people who are not on Opel’s payroll – like employees of service providers and supplier employees.” Furthermore, the automaker has not offered an alternative number for the expected cuts, and given the close cooperation between unions and OEMs in Germany, not to mention the detail of the IG Metall leak (200 employees will be offered severance payments when 550 positions are transferred to the manufacturing engineering department from product engineering), it’s tough not to conclude that the number is fairly close to GM’s actual plans.

And the cuts aren’t limited to workers: a battery-powered version of Opel’s forthcoming “Junior”/”Allegra” city car, as well as a long-rumored Insignia-based Coupe are said to be on the chopping block as well… so let go of any plans to wait for a reborn Buick Riviera. Oh, and don’t hold out any hope for the “production potential” Opel recently touted for its strange, low-cost RAK e Concept. Meanwhile, here are the other measures that Opel admits are coming down the pike:

• Stronger concentration on the carmaker’s core development mission and a reduction in project coordination tasks

• Increased use of modules and construction kits. “For example, we still have too many steering and seating systems. We have to improve significantly here,” the spokesman said.

• Deeper and earlier integration of suppliers. “There are no plans to put a stranglehold on our suppliers — we need to increasingly rely on suppliers’ innovative strengths,” the spokesman said.

In short, it seems that in order to save Opel, GM has to kill off much of what made Opel so valuable to it, namely its ability to develop premium global vehicles for the parent company. Instead it seems Opel will be forced to concentrate on selling into a brutal European market that seems set to contract as the Euro crisis drags on. Perhaps there is some truth to the rumors that Chevrolet will slowly replace Opel after all.

After all, cutting engineer positions is certainly the low-hanging fruit in Opel’s restructuring, but GM will likely have to go after assembly capacity (likely at Bochum and Port Ellesmere) in order to address the overcapacity issues that are at the heart of its (and many European automakers’) woes. That could create problems though, as this latest union leak confirms that Opel’s labor councils are prepared to fight. Opel’s outgoing union leader Klaus Franz has gone so far as to ask GM to sell Opel to its Chinese partner SAIC, a move widely considered a sign that Franz was trying to move back in touch with an increasingly militant union rank-and-file in the face of his own legal problems. While Franz portrays himself as the victim of a media smear campaign and threatens legal action against the Frankfurter Allgemeine Zeitung, his union appears prepared to fight the seemingly inevitable production cuts. And all this as Opel celebrates its 150th birthday.