(Updates with statement from Volkswagen’s works council in Germany from seventh paragraph.)
Feb. 16 (Bloomberg) -- The United Auto Workers could be forced to reconsider its efforts to organize at foreign-owned factories in the U.S., a labor expert said, as the union vowed to keep fighting after losing a closely watched vote at Volkswagen AG’s Tennessee plant.
Workers in Chattanooga voted 712-626 on Feb. 14 against joining the UAW after three days of balloting that drew intense opposition from elected officials. The company didn’t fight the UAW campaign, which may have cost as much as $5 million and lasted more than two years, said Gary Chaison, a labor law professor at Clark University in Worcester, Massachusetts.
A victory would have added momentum as the UAW seeks to sign up workers at a Daimler AG factory in Vance, Alabama, and other foreign automakers, known as transplants, that settled in the U.S. South to take advantage of tax breaks, non-union labor and easy access to market. Now the UAW must regroup, he said.
“This is a time for soul-searching at the UAW and within the American labor movement,” Chaison said yesterday in an interview. “This was the ideal situation and they know that. They might just give up on transplants.”
UAW membership has fallen 75 percent since 1979 and stands at under 400,000. The total of U.S. workers who are union members fell to 11.3 percent in 2013, the Bureau of Labor Statistics reported.
“Most people see Volkswagen as slamming the door shut on the transplants,” Chaison said, referring to the vote result.
Representatives of Volkswagen’s works council in Germany said they would still press to establish a council at the Tennessee facility.
The German labor group said in a statement that its secretary general Gunnar Kilian would begin strategic talks with experts on U.S. employment law in next 2 weeks.
“We have always stressed that the decision over union representation lies in the hands of the workers in Chattanooga,” Kilian said in the statement. “The result of the election has not changed our goal of creating a works council in Chattanooga.”
While Volkswagen executives didn’t oppose the effort, the UAW may have misjudged the intensity of an anti-union drive by groups and Tennessee leaders such as Governor Bill Haslam and Senator Bob Corker, both Republicans, said Joseph Farelli, a lawyer with the New York firm of Pitta & Giblin LLP who represents labor unions.
“You had a lot of third-party organizations really campaigning hard against the union,” Farelli said in an interview. The union “underestimated the ferocity and the hard campaigning that was going to be done by these outside entities.”
On Feb. 12, the first day of balloting at the plant, Corker said a vote against the UAW would guarantee that Volkswagen would assemble a new seven-passenger crossover vehicle in Chattanooga. Corker was contradicted by Frank Fischer, chairman and chief executive officer of Volkswagen Chattanooga, who said the vote had no bearing on where the new SUV is built.
“Needless to say, I am thrilled for the employees at Volkswagen and for our community and its future,” Corker, a former mayor of Chattanooga who helped negotiate the incentive package that lured Volkswagen to the city, said in a statement after the results were announced.
The $1 billion plant opened in 2011.
Outside groups, including one tied to anti-tax advocate Grover Norquist, used billboard advertising and columns in local newspapers to build opposition to the UAW.
The vote supervised by the U.S. National Labor Relations Board, which has yet to certify the results, was set after a majority of the workers signed registration cards in favor of joining the union.
“Unfortunately, politically motivated third parties threatened the economic future of this facility and the opportunity for workers to create a successful operating model that that would grow jobs in Tennessee,” UAW Region 8 Director Gary Casteel, who directs the union’s Southern organizing, said in a statement.
The stage was set for the vote after Volkswagen and the UAW agreed to negotiate forming a works council, an employee- management body found at most large German companies that resolves disputes. None exists in the U.S., and such a council can only operate where a union is in place.
A UAW official involved with the Chattanooga effort remained optimistic after the vote.
“I pray that the Volkswagen workers in Chattanooga will remain vigilant and eventually get the workplace democracy that many of them desire and free from the threats, intimidation and misinformation of their senator,” Mike Herron, the top UAW official at General Motors Co.’s Spring Hill, Tennessee, plant, said in a text message. “The UAW is in Chattanooga to stay.”
AFL-CIO President Richard Trumka, leader of the nation’s biggest labor federation, said the Chattanooga vote became “an experiment in new forms of right-wing zealotry” unrelated to issues at the plant.
“The closeness of the results and the courage and tenacity of union supporters prove that this election is a minor setback, and not a permanent defeat,” Trumka said. “The ferocity of the anti-union forces only reinforces the fact that there is a powerful new form of organizing emerging.”
The concept of a works council may have confused some Volkswagen employees in Chattanooga, Chaison said.
“Are they going for collective bargaining or are they going for a works council arrangement,” Chaison said. “I don’t think they really clarified that.”
In a Feb. 12 interview on MSNBC, UAW President Bob King said the union’s “campaign was built on workers in the Chattanooga plant” and he accused Tennessee Republicans of trying to intimidate employees.
Corker said that voting for the UAW would bring the sort of economic malaise that crippled Detroit. Such comments might appeal to workers who distrust unions and are fearful of losing their jobs, Chaison said.
Detroit, the 18th-largest U.S. city, filed the largest-ever U.S. municipal bankruptcy in July, saying it didn’t have enough money to cover $18 billion in liabilities while also providing adequate police, fire and other services to the city’s 700,000 residents. Unemployment in Detroit’s metropolitan area was 8 percent in December, compared with 6.7 percent that month nationwide.
Union membership in Tennessee grew by 25 percent in 2013, the most of any state, over 2012, according to the U.S. Bureau of Labor Statistics. Even so, only 6.1 percent of the state’s workforce was unionized in 2013.
The loss may prompt the UAW to look for new members among hotel workers, university teaching assistants or others outside the automobile industry, Chaison said.
“Publicly, they’re going to talk about large amounts of money being spent by right-wing organizations that came in, and Corker’s influence,” Chaison said. “Privately it’s ‘what do we do now.’”
--With assistance from Eva von Schaper in Munich. Editors: David Ellis, Gregory Mott