The head of Germany’s metal worker union IG Metall, Berthold Huber, urged workers at Volkswagen’s Chattanooga plant to join the UAW. In a letter distributed to Chattanooga workers, obtained by Reuters, Huber says:

“In Chattanooga, you need union representation.”

“We strongly recommend that the eligible employees at Volkswagen, Chattanooga, decide that the UAW should represent them.”

Last week, Volkswagen’s  HR chief Horst Neumann said Volkswagen is in talks with the UAW about setting up a German-style works council in Chattanooga.

Reuters sees Neumann’s comments  as “about-face for an automaker that has resisted opening the U.S. plant to the UAW.”

However, it should be kept in mind that Neumann is a delegate of IG Metall, one of the strange twists of labor relations at large companies in Germany.  Also however, if the IG Metall wants it, Volkswagen management most likely will not say no.

With Europe in trouble, and a free trade agreement with the U.S. and the EU on the horizon, German unions don’t want plants abroad to be too competitive.

In the meantime, IG Metall has come under strong criticism for its role in cutting a deal with GM over Opel. Workers at three Opel sites in Germany approved a plan that will end car production in Bochum after 2016, but will keep 1,200 jobs there.  Who has not voted on the plan are the Bochum workers. They will vote tomorrow, after their works council chief  Rainer Einenkel complained about  “very strange and not really helpful” deals that would split the workers.

News of Volkswagen being open to establishing a works council at its plant in Chattanooga are widely interpreted as the UAW getting a long-sought nose under the southern tent. It could also be a shrewd move to block the union.

First, the facts: Horst Neumann, VW’s board member in charge of human resources, told reporters on Friday that Volkswagen was “in talks with the UAW about setting up a German-style labor board at the Tennessee plant,” Reuters says.  IAW President Bob King  is all in favor and said that “the UAW is very interested in the specific model that VW wants to present in the months ahead, and we are looking forward to open, fair and respectful dialogue.” Little else is known.

Now, for some background:

• A works council or labor board is not a union. It is a German construct, and acts as the representation of the employees. Members of the works council are elected by the employees. The works council has rights provided by German law.
• Horst Neumann is a member of the German Metal Worker Union IG Metall. The HR-Chief or “Arbeitsdirektor” of a large German company represents the workers and usually the unions on the Board of Management.
• Works councils of large German automakers have spread to Europe, and it is known that they want to spread globally.
• Workers at Volkswagen Chattanooga usually are opposed  to the UAW. Reuters cites a meeting of March last year, where a worker, addressing the crowd in a meeting, said the plant did not need a union, which was met with loud applause and cheers. However, it is also known that workers in Chattanooga would like to have a works council just like in Germany.

Establishing a German-style works council in the U.S. without the protection of German labor laws would basically turn it into a lobbying group of the workers. It does not necessarily mean that the UAW can run or even co-opt it.  Neumann already said that the UAW is not the only option.

Harley Shaiken, a University of California-Berkeley labor studies professor, said that such an agreement could spread to Japanese and South Korean-owned U.S. plants.

Establishing works councils could also be a blocking move: If workers have their elected representation, they will even less need a union.

According to VW USA’s CEO Jonathan Browning, America is missing out on huge investments and new jobs due to our “rising debt and political discord.” In 1999, the U.S. did attract 41 percent of all global foreign direct investment. Now, the number is less than 20 percent. The money is going to places like China where Volkswagen has 12 plants and three more on the way, while there is only one in the U.S. Browning is talking in code about several facts of post-bailout automotive life.

1) Union Trouble

Volkswagen is the last major automaker to build a new plant in the US. The UAW has been targeting it for organization since it opened for business. Neither VW nor its workers want the UAW around, even its German unions want to keep the UAW away, and yet the UAW pushes on. The result: Audi production that was supposed to be added to Chattanooga is going to Mexico. Still, the UAW has continued to push for unionization at Chattanooga, even into this year.

2.) Protectionism

Largely prodded by labor unions, the Obama administration has embarked on a world trade war. This war is financed out of the pockets of consumers, it has not added a single job, and prevented many from being created. OEMs favor Mexico over the U.S., also because Mexico has trade pacts with major export markets, the U.S. has not. The pandering to union interests costs jobs and kills exports.

3) CAFE/EV Credits

Whereas GM’s DC Rep has cheerfully admitted that, for some strange reason, the latest round of CAFE negotiations were notable for their unprecedented cordiality and pulling-togetherishness, Volkswagen has been openly unhappy with the new rules, accusing them of being unfair, favoring truck makers (read: Detroit) and not technology neutral.

Interestingly, VW’s reasonable quibbles with environmental policy in both the US and Europe have earned it a long campaign of attacks from Greenpeace. Nobody has been able to explain why VW has been targeted by Greenpeace, as there’s no objective environmental reason for doing so. Conspiracy theories, anyone?

Upshot: Not only is VW not going to bring new Audi production to the US, it won’t build its next-generation Golf here either… both are going to Mexico. And this isn’t just a business decision: they say capacity in Chattanooga is “exhausted,” but it absolutely is not. I’ve been there, I’ve seen it, they have room to add entire new lines there. No way would they rather use their ancient Puebla plant rather than their shiny-gleaming new Chattanooga plant, all things being equal.

The business climate must be very rotten if a country embroiled in a shooting war with heavily armed gangs and sometimes rogue military elements is favored over a country that used to be proud of its enterprise spirit. The armed gangs seem to scare investors less than union thugs with friends in high places.

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.

With a meeting for Volkswagen’s supervisory board looming on Wednesday, a decision regarding Audi’s newest North American factory will likely be made. Two choices are available, but the key word seems to be North America.

As previously reported, Audi is looking to build a plant in Mexico. Reports say that Volkswagen’s Chattanooga factory was being touted by VW as an ideal solution. But resistance from within Audi led to the Mexico proposal, for a distinct factory that would start off with production of the Q5 in 2015.

No choice has been decided upon, but the scuttlebutt seems to be that Mexico will win out. Chattanooga’s factory is well regarding by VW’s top execs, but Audi likes to do things Audi’s way, and it looks like they’ll succeed yet again.

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.

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.”

For the second time this year, Volkswagen is increasing headcount at its Chattanooga plant. After hiring 200 new workers in January, Volkswagen now created an additional 800 new jobs.

In the beginning of the year, 2,500 people worked at the Chattanooga factory. With this new wave of hirings, Volkswagen will have created 1,000 new jobs in Chattanooga this year. Volkswagen needs to fill the positions to meet customer demand for the new U.S.-produced Passat. The plant has been working daily overtime to keep up with the sales.

According to Edmunds, February 2012 was the biggest month for the Passat (8,189 sales) since August 2003. The Passat’s average days to turn was 55 percent lower than the industry average in the midsize segment last month. A Passat sits only an average of 24 days on dealers’ lots, the industry average in the class is 54 days.

Edmunds Senior Analyst Michelle Krebs encourages Volkswagen to add more cars to the plant:

”For now, at least, this extra production will absorb the Passat’s jump in demand in the US. But further down the line, Volkswagen will need to produce even more vehicles in the US to expand its product offerings — a small crossover, for instance — and meet its lofty sales goals.”

Volkswagen wants to sell 800,000 units annually in the U.S. by 2018. Edmunds says that VW will need to grow an average of 13.8 percent each year through 2018 to reach that goal.

]]> http://www.thetruthaboutcars.com/2012/03/volkswagen-bulks-up-chattanooga-plant/feed/ 49 http://www.thetruthaboutcars.com/2012/01/volkswagen-chattanooga-we-hire/ http://www.thetruthaboutcars.com/2012/01/volkswagen-chattanooga-we-hire/#comments Tue, 31 Jan 2012 21:38:40 +0000 Bertel Schmitt http://www.thetruthaboutcars.com/?p=428845

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.”

 

“I see no need for union representation,” says Adrian Leslie, line worker at Volkswagen’s Chattanooga plant. “We are being treated fairly here.”

If it would be him alone to decide, then any plans of the UAW to unionize Volkswagen Chattanooga are doomed. Leslie is not alone in his opinion, and the plans are doomed.

Leslie had given up a 7 ½ year job at a distribution company in Chattanooga, because “the job I had before was considered a job, but I was actually looking for was a career.” He is 1 ½ year into his career at Volkswagen and thinks that “the working conditions here are excellent. This company is going a long way.”

Colleague Kristy Hill, who is fitting suspensions of the new Passat with Leslie, would be a tough target for union organizers: ”I haven’t heard a lot about the unions, I’d have to make a lot of research before I would make a decision,” says the resolute lady who held part time jobs before she was hired by Volkswagen 1 ½ years ago. “I love it,” Ms. Hill says. “This is it – this will be my last job.”

The two, randomly interviewed at our visit to Volkswagen’s Chattanooga plant, echo the sentiment at the bright, airy and clean Volkswagen plant in a wooded valley in the outskirts of Chattanooga.  When the two signed on 1 ½ years ago, they were paid $14.50 per hour, even during training. Now they are on their way to $19.50 per hour. A Detroit tier two UAW worker makes $15.50 per hour at Ford. After the labor deal with the UAW, the tier two wage will rise to $19.28, the same as at GM.

After 36 months at Volkswagen, the hourly wage does not only exceed the future tier two wage in Detroit. There is 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.

In July, UAW President Bob King said that organizing foreign auto plants is a matter of life and death of the union. Without a union victory in the south, “I don’t think there’s a long-term future for the UAW, I really don’t,” said King.

After touring transplant plants in the south, we predict that any forays by the UAW will get bogged down in the red mud of Dixie. If it indeed is a matter of life and death as advertised, then the UAW is dead.

Southern workers seem to be largely ambivalent towards the UAW. The management of southern transplants usually does not speak out against the UAW as openly as Honda did. It does not have to, the words and actions of the workers speak for themselves.

The few times the UAW tried to unionize a transplant factory in the south ended in a debacle.

In 2001, Nissan workers in Smyrna rejected U.A.W. representation by a 2-to-1 vote, a result branded as a “devastating defeat” by  the World Socialist Website. Back then, the New York Times called the results “no better than in the union’s failed attempt to organize the same plant in 1989.” Now, the entrance to Nissan’s U.S. HQ is guarded by grim polar bears.

The UAW can’t even count on the solidarity of its union brothers in Germany.

A little later after the life and death announcement, the UAW revealed that it had targeted Volkswagen’s Chattanooga plant, and had meetings with the German metal workers union in order to drum up support. Those meetings were not highly successful. Soon thereafter, Bernd Osterloh, head of Volkswagen’s works council who represents labor of VW’s supervisory board, told Reuters he would not actively promote efforts by the United Auto Workers to broaden its membership in Chattanooga.

Don Jackson, manager of Volkswagen’s spanking-new plant in Chattanooga, dispelled rumors that unionization of the VW works is imminent. “No one from the UAW has visited the plant, or asked to visit,” Jackson told Bernie Woodall of Reuters. Jackson said that neither he nor anyone else at the new VW plant has been in contact with UAW representatives, and dismissed talks about the UAW representing workers at the plant as “speculation.”

When Reuters asked Jackson whether he would let UAW reps in, Jackson answered: “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.

“Team” meaning the workers.

What TTAC readers have known for a while already, Germany’s Financial Times has realized: The UAW is trying to get its foot into the door of Volkswagen’s Chattanooga plant. Apparently, the UAW is banking on the fact that the plant is new, that Volkswagen is used to working with the unions, and most of all, that wages in Chattanooga are lower than at Daimler, BMW, Toyota and Honda. Financial Times Deutschland reports that a worker makes $14.50 an hour in Chattanooga, $19.50 after three years. Now the German Metal Workers Union IG Metall wants to help the UAW – by establishing a works council in Chattanooga.

That’s nice of them, but may not help the UAW a lot.

A works council is no union. A German works council is given substantial powers – in Germany. It must be consulted for hirings and firings. The works council represents workers vis a vis the management. However, to be effective, a works council must be rooted in law – in Tennessee, not in Wolfsburg. Without such a law, a Chattanooga works council would be nothing more than a social club.

Volkswagen is thinking about moving production of its Tiguan trucklet to North America. Plans for the move are being discussed by Wolfsburg management, the German magazine Wirtschaftswoche reports.

“North America” could be Puebla in Mexico (Jetta) or Chattanooga in the Volunteer State (Passat.) Currently, the Tiguan is produced in Wolfsburg only.

There are two reasons for moving production across the Atlantic:

• Production would be cheaper and more profitable. Currently, Volkswagen is losing money stateside.
• The Tiguan is in high demand and German capacities are maxed out. There are long waits for the small SUV.

Yesterday, Volkswagen finally inaugurated its new plant in Chattanooga, Tennessee and ended the 23 year hiatus since its New Stanton, Pennsylvania factory was closed in 1988. At the Chattanooga plant, more than 2,000 employees will be able to produce up to 150,000 vehicles per year.

According to a Volkswagen statement, “the manufacturing depth for the Passat produced here will be at 85 percent” – meaning that 85 percent of the car will be produced at the plant itself. This is an unusually high number, especially considering that the statement goes on to say that “10,000 additional jobs will be created in the U.S. component supply industry.”

Volkswagen reiterates that it wants to boost “Group sales in the United States to more than a million vehicles per year by 2018 at the same time as winning a market share of about six percent for the Volkswagen Group.” To reach that lofty goal will need more than a new plant.

Meet the Volkswagen value meal, designed for Americans: Bigger, beefier, cheaper.

Well, first of all, it’s designed for new U.S. fuel standards that are more lenient for bigger cars. You want bigger, you got bigger: The US Passat is a bit longer and wider than its willowy European sibling.

From their dazzling array of engines, Volkswagen picked three: The base version comes with a 168bhp 2.5-litre five-cylinder gasoline engine (31 mpg highway, non-EPA). For more oomph, there will be a 276bhp 3.6-litre six-cylinder gasoline mill, paired with a dual clutch transmission (DSG). That one is promised to deliver 28 mpg highway, non-EPA. For the oil burning aficionados, there is a 138bhp 2.0-litre TDI diesel (43 mpg highway, non-EPA). If you thought you will get one of  VW’s small capacity TSI engines, no dice.

The car will come with the usual whiz-bang gadgetry one can expect from Volkswagen. The base version has tire pressure monitoring, ESP, ABS, Hill Climb Assist, six airbags, a radio-CD system (MP3-capable, do people still have CDs?) and a Bluetooth hands-free mobile phone system.

Oh, and there will be a “distinctive analogue clock in the center of the instrument panel.”

Volkswagen engineers studied their target group and pander to the odd American behavior.

• Americans have valet parking. Ach du mein Lieber! The new Passat has what my 70s era Cadillac had: A valet parking key! Just don’t give the valet parking key to the valet:  Hit the valet parking button in the glove compartment to lock trunk and glove compartment. Give the REGULAR key to the kid. Your special valet parking key will open trunk and glove box. Verstanden?
• Americans either live in brutally cold or blistering hot climes. They like to start their car in the morning, have another cup of coffee and then enter the cozy or cool car. If you get the automatic or DSG variants, you can remote start the Passat, and the A/C will prepare it to your liking. Can’t do it with a stick, VW wants to avoid unintended driver-less acceleration.

And what will this beaut cost you? The Volkswagen press release (titled “Born in the U,S.A.” – born maybe, conceived in Wolfsburg) says: “With its entry-level price, the Passat is now in the 20,000 US dollar range (final prices to be announced in March).”

Some 150,000 new U.S. Passats can be built in the new Tennessee plant, and Volkswagen needs to sell each one of their new Chattanooga choo-choo to reach their ambitious goal of selling 300,000 VWs this year in the U.S.A. Market launch of the U.S.A. Passat begins mid August, so there are only 4 months in which the car can help.