Union dispute may curb Volkswagen's expansion in southern US

Union members of VW's supervisory board say a future plant may not be built in the American South after anti-union vote

A series of completed 2012 Volkswagen Passats sit in the assembly building at the automaker's factory in Chattanooga, Tenn., on June 1, 2011.
Mark Elias/Bloomberg via Getty Images

Volkswagen's top labor representative threatened on Wednesday to try to block further investments by the German automaker in the southern United States if its workers there were not unionized.

Workers at VW's factory in Chattanooga, Tenn., last Friday voted against representation by the United Auto Workers union (UAW), rejecting efforts by VW representatives to set up a German-style works council at the plant.

German workers enjoy considerable influence over company decisions under the legally enshrined "co-determination" principle. The 20-member council — evenly split between labor and management — has to approve any decision on closing plants or building new ones. Chattanooga is VW's only factory in the U.S. and one of the company's few in the world without a works council.

"I can imagine fairly well that another VW factory in the United States, provided that one more should still be set up there, does not necessarily have to be assigned to the South again," said Bernd Osterloh, head of VW's works council.

"If co-determination isn't guaranteed in the first place, we as workers will hardly be able to vote in favor" of potentially building another plant in the South, Osterloh, who is also on VW's supervisory board, said.

Osterloh's comments were published on Wednesday in German newspaper Sueddeutsche Zeitung. A spokesman at the Wolfsburg-based works council confirmed the remarks.

Osterloh blamed the results of last Friday’s vote on conservatives, saying they “stirred up massive, anti-union sentiments,” before adding that it’s likely their “interference amounted to unfair labor praxis."

Many U.S. politicians see organized labor as a threat to profits and job growth.

Sen. Bob Corker, R-Tenn., a staunch opponent of unionization, said last Wednesday after the first day of voting that VW would award the factory another model if the UAW was rejected.

The comments even prompted President Barack Obama to intervene, accusing Republicans of trying to block the Chattanooga workforce's efforts.

Undeterred by the vote’s outcome, VW's works council said it will press on with efforts to set up labor representation at the Chattanooga plant, which builds the Passat sedan.

While VW declared its neutrality on the UAW vote, it has been a proponent of creating a works council at the plant. The company has said U.S. law would require the establishment of an independent union in order to create a council.

The automaker's CEO, Martin Winterkorn, announced at the Detroit auto show last month that a new seven-passenger SUV will go on sale in the U.S. in 2016. Production of the new model will either be in Chattanooga or at a plant in Mexico.

Winterkorn said the new model will be part of a five-year, $7 billion investment in North America.

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