Can labor unions return to the South?

Volkswagen wants to bring its works council to its plant in Tennessee, but Republicans are opposed. A key vote wraps up Friday.

By MSN Money staff Feb 14, 2014 2:38PM

Line inspection workers check out a Volkswagen Passat at the company's factory in Chattanooga, Tenn. © Mark Elias/Bloomberg via Getty ImagesBy Darrell Delamaide, MarketWatch

MarketWatch on MSN MoneyWASHINGTON — Can a German company lead a revolution in the United States?

Volkswagen (VLKAY) is breaking new ground in the famously anti-union South with its plan to bring the works council it has in most of its other factories to the assembly plant in Chattanooga, Tenn.

Workers at the plant -- which currently produces the VW Passat but is vying to get the midsized SUV the German auto maker is planning for the U.S. market -- are voting this week on accepting union representation from the United Auto Workers.

The vote is being held through Friday and the measure faces virulent opposition from Republican lawmakers and outside forces such as Grover Norquist's anti-tax coalition, but union officials are optimistic after a majority of workers signed cards in favor of the union.

Unionization is the necessary precondition under U.S. labor law for VW to bring the works council concept — which gives workers a voice in decisions regarding the plant — to its U.S. factory. Though it remains officially neutral regarding union affiliation, the company has made it clear it wants the works council.

Worker participation, from the co-determination of worker representatives on the board of directors to works councils at individual factories, is an important factor in Germany's enduring success as an exporter.

It was cooperation from unions that enabled Germany to implement painful labor-market reforms under former Chancellor Gerhard Schroeder in the early 2000s — reforms that restored German competitiveness and are now touted as the model for the rest of Europe.

The plan to bring this enlightened form of worker-management cooperation to the South has drawn the ire of Republican politicians, from U.S. Sen. Bob Corker — a former mayor of Chattanooga — to the speaker pro tem of the state Senate, Bo Watson, who finds the whole undertaking somehow "un-American."

Foreign auto makers, so these politicians claim, have located factories in the South precisely because they can avoid unions and pay workers less.

They worry that if the VW workers do in fact vote in favor of the union, it will have a domino effect on other assembly plants and auto suppliers in the region, discouraging further investment.

Union representatives counter that this is obsolete thinking. The UAW has played an important role in the resurgence of Detroit auto makers — including in a (unionized) General Motors (GM) factory in Spring Hill, Tenn.

Watson threatened that a vote in favor of the union would mean Tennessee may deny tax incentives to any further VW investment in the state, while Corker cited unnamed sources at VW who assured him that a negative vote would guarantee the new SUV line coming to the state.

The head of the VW unit, Frank Fischer, quickly contradicted Corker, reaffirming the company's previous statements that the vote would not affect the car maker's decision about the SUV production, regardless of the outcome.

As for Watson's threat, the current mayor of Chattanooga, Andy Berke, expressed consternation that politics could lead state lawmakers to undermine efforts to bring new investment and jobs to the state. He called the attacks against Volkswagen "reckless" and "unprecedented."

The strength of unions in Germany comes after decades of sometimes-bitter struggle due to strong leadership at the unions and political clout through the Social Democratic Party.

German managers may grouse at the restrictions put on them by unions, but they have come to see the merits of keeping a skilled workforce happy and the ability to co-opt labor into difficult downsizing or restructuring decisions.

This German sensibility has been honed by the country's dependence on exports in the absence of large domestic market like that in the U.S.

It is about as far removed from the anti-union, anti-labor South as the 1983 version of "Chattanooga Choo Choo" by German pop singer Udo Lindenberg is from the 1941 original. 

In the German version, "Special Train to Pankow," the harmless ditty becomes a political tract expressing Lindenberg's desire to bring Western pop music to East Germany (Pankow is a neighborhood in the former East Berlin).

The UAW is happy to have an ally as potent as VW as it tries to engineer a turnaround in union fortunes in this country. Membership in the UAW today at 383,000 members is only one-fourth of the 1979 peak of 1.5 million.

Opponents of the union efforts in Chattanooga may well be right — a vote in favor of the union there could mark a turning point for the whole country.

More from MarketWatch

Feb 14, 2014 3:39PM
I've lived and worked in Germany for a Swiss company, I currently work for a Swiss company in the US, trust me it's much better than working for 90% of American companies. Good healthcare, liberal sick  leave, 5 weeks of vacation and oh yes large bonuses to all not just management.
Feb 14, 2014 4:32PM
It's a right to work state. Even if they vote for the union, they can't by law make everyone join. Those who choose not to join may experience some on the job harassment, but they can't be terminated for not joining. Fact is, they'll get all the benefits the union workers get and won't have to pay any dues for them.
Feb 14, 2014 3:22PM

Should you be forced to join a union? No way in hell.
If you are forced for some reason to join a union, should you be forced to pay dues? No way in hell.

Feb 14, 2014 4:04PM
The UAW has played an important role in the resurgence of Detroit auto makers

The only thing the UAW did was to inflate the wages and benefits of it's members far beyond the skill level they brought to the company. There were lifelong assembly line people making more than Doctors. If someone can be taught to do your job in a couple of months then you are not worth $25/hr. Pay and benefits should be commensurate to the skills you bring to the company. 
Feb 14, 2014 4:46PM
Not here in these Right-To-Work States and thank God for that. To be forced to pay union dues for nothing just so you can work is criminal.
Feb 14, 2014 5:12PM
WOW! - does the word "Union" ever bring up the eyelids. I have dealt with Unions for the past decade and have been subject to their extortion, lies and manipulations. They're like a secret  society , so sneaky and heartless and don't care about anyone except their own agendas.... money. 
Union were a good and necessary entity back in the 40' and 50's. Power corrupted them, they just wanted more and more and more until our manufacturing industry moved out of the country. It's just old fashion "Greed".    
Feb 14, 2014 4:47PM
Will labor unions rise in the South?  Well, let's see, they have destroyed countless numbers of industries and cities by their greed and businesses have moved to the southern states away from the unions to get rid of the unions.....Hey, is this a trick question?
Feb 14, 2014 5:06PM
If the Unions rise in the south, they will do to the industry there what they did in the north... BANKRUPTCY! Unions are nothing more than a protection racket for the lazy and inept! That is why the Democrats love them so much.
Feb 14, 2014 5:14PM

The UNIONS are the cause of the downfall of manufacturing in this country. They gave lazy **** workers the right to high pay and job security at the cost of the companies. For all of the good they did for the workers in the beginning, they lost by all of the high demands they made on manufacturing companies.

I worked in UNION shops in New England and know first hand the damage they have done to many great companies.

With all of the federal labor laws now in place there is no need for anyone to join a union unless you like giving part of your hard earned wages to someone that will waste it just like your TAXES are wasted by politicians.

Feb 14, 2014 5:01PM
they destroyed Detroit like a caner with their leftie democrat buddies promising things that other people have to pay for. they will destroy all us auto production if their disease is allowed to spread. the german unions are behind this effort to screw US VW.
Feb 14, 2014 4:56PM
The title says it all. Can they make a return and kill their economies like before? You bet ya....enough about Springhill already they killed an entire carline with strikes a BS. And now the negotiated away the young peoples right to a decent wage with the two tiered wage. Commmon people wake up. The war is over or is it?
Feb 14, 2014 3:21PM
There is no sane reason VW cant establish WORKS COUNCIL  without the UAW. The UAW is not constructive.
Feb 14, 2014 5:24PM
If I'm VW I would remind the rank and file that they have a plant in Puebla, Mexico and they can just as easily move production down there. 
Feb 14, 2014 5:22PM
Feb 14, 2014 5:11PM
This article is not biased at all...
Feb 14, 2014 5:01PM

The main page of MSN asks, "Will labor unions rise again in the South?"


Yes, because $/h/i/t floats.

Feb 14, 2014 5:07PM
Unions are a BAD BAD thing People wake up... Motto in the South should be Save America  Shot the UNIONS.
Feb 14, 2014 5:38PM
I doubt it will influence any others to form unions..... In Texas anyways there is enough work to go around and if you are worth your salt you can make good money.
I deal with unions in the NE a lot and the corruption and lack of young skilled workforce in the construction trades is a joke. They served a great purpose in their time but now days it is how much can I make for doing the least amount of actual work.... drive along any highway work zone up there and see how many are actually doing work
Feb 14, 2014 5:19PM
HELL NO!!!!! And I will be willing to bet that rest of the people here in South Carolina will say the same. The had it's place at one time and thanks to them the workers of today have a fair deal. But like with any well meaning organization, i.e. the federal government, the boy and girl scouts, etc. they have been infiltrated by leftist shitebags who are intent on imposing their brand of psuedo-communist, fascist tyranny on the rest of us. The union is nothing more than a group of victimhood agenda pushing, radical leftist commies, and cowards who have become like a parasitic virus, killing industries, cities, states, and even nations. The best thing we all can do is to dismantle these groups and prosecute their leaders for treason!!!!
Feb 14, 2014 5:34PM

Not all, but most unions are like a toxic fungus.  They keep spreading until they finally kill the host organism. 

But even regular mold doesn't have the audacity to then run to their allies in DC and beg to be bailed out, like Obama & cohorts did for the putrid United Auto Workers union.

Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.



Quotes delayed at least 15 min


There’s a problem getting this information right now. Please try again later.
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market began the new trading week on the defensive note with small-cap stocks pacing the retreat. The Russell 2000 (-1.4%) and Nasdaq Composite (-1.1%) displayed relative weakness, while the S&P 500 lost 0.8% with all ten sectors ending in the red.

Global equities began showing some cracks overnight after China's Finance Minister Lou Jiwei poured cold water on hopes for new stimulus measures. Specifically, Mr. Lou said the government has no plans to change ... More


There’s a problem getting this information right now. Please try again later.