This week-from Wednesday through Friday-employees at Volkswagen's factory in Chattanooga, Tennessee may well make history. Actually, they may make it twice.
If a majority of the roughly 1,500 workers vote to recognize the United Auto Workers as their union, their plant will become the first unionized auto factory in the South. It will also become the first American workplace of any kind to have a works council-a consultative body of employees who regularly meet with management to jointly develop policy on such work-related issues as shifts, the best way to use new machinery, and kindred concerns. Mandated by law in Germany, works councils do not bargain over wages and benefits, but they do provide a way in which workers can have input into policies that affect their lives. They also have led to countless productivity increases in German manufacturing.
The vote at Volkswagen marks the latest stage in the UAW's decades-long campaign to organize auto plants in the South. In recent decades, a host of foreign carmakers-not just Volkswagen but BMW, Nissan, Toyota, and others-have built factories in the right-to-work states of the old Confederacy. For these companies, going South was a two-fer-it enabled them to produce for the American market on American soil, and it ensured that the prospects of unionizing their workers were slim.
The increasing numbers of lower-wage autoworkers eventually took a toll on the wages of unionized workers as well. To stay competitive, the Detroit Three (GM, Ford, and Chrysler) insisted that new hires receive lower pay-no matter how long they worked at the company-than veteran hire, and as the companies' market share declined, the UAW felt compelled to take the deal. (Now that the Detroit Three have returned to profitability, the union is demanding the companies lift that ceiling.) Auto workers' incomes tanked. As Steven Rattner, the former head of the Obama Administration's 2009 task force that restructured GM and Chrysler, has written, wages for all American auto workers have declined by 11 percent since the recovery began in 2009.
For the UAW, organizing the non-union plants in the South understandably became a matter of life or death. With its membership reduced to about 400,000 from a 1979 peak of 1.5 million (and with many of those 400,000 not even working in the auto industry), the UAW began to execute a turnaround in 2010 by electing longtime union officer Bob King as its president. Since he took the union's helm, King has waged a smart and tenacious campaign to bring the union to Dixie.
King, and his predecessors as UAW president, realized how completely out-of-sync the labor practices of German and Japanese corporations in the South were with their labor practices in their respective homelands. All these companies' plants were unionized at home, and management there had never opposed unions' right to represent their workers. Japanese manufacturers had historically offered their employees lifetime guarantees of employment-something they never even mentioned when they opened up shop in the South. The German manufacturers not only consulted with their employees in their works councils, but by law were required to divide their corporate boards evenly between management and worker representatives (though the CEO from the management side could break tie votes).
When German and Japanese automakers opened plants in Alabama, Mississippi, South Carolina, and Tennessee, however, they went native. Their managers ferociously opposed workers' attempts to form unions in the time-honored manner of good-ol'-boy Southern bosses. Workers involved in organizing campaigns were illegally fired, unions were (legally) denied access to workers when they were at the plant and to their addresses so that they'd be harder to locate in their homes. Management practices that would be scandalous in Germany and Japan were everyday occurrences in the companies' American factories.
King realized that this hemispheric exceptionalism provided the union with a wedge-particularly in Germany, where unions have some say over their employers' conduct. In the aftermath of World War II, the UAW had helped rebuild the German auto-, steel- and machinery-workers union, IG Metall. Now, the UAW asked IG Metall to help them conform German auto companies' U.S. labor practices with their practices in Germany. Since BMW, Daimler and Volkswagen had good relations with unions in Germany, why couldn't they in the U.S.?
For years, German management resisted any change. Over the past two years, however, Volkswagen has moved to a stance of welcoming a union presence. That may be because Volkswagen operates under a somewhat different statutory arrangement than the other German companies. Because it was a company created by the Nazis, the West German government, with the backing of the U.S. and as part of its de-Nazification program, mandated that all major corporate decisions would require a two-thirds vote of the company's board-effectively giving IG Metall veto power over company policies.
For the past year, Volkswagen has been telling its Chattanooga workers that it wanted the plant to have a works council. Volkswagen has established such councils not just at its German plants but at every one of its 106 factories worldwide, with just three exceptions-its two plants in China and its one plant in the U.S. (Ponder, for a moment, what that says about workers' rights in the U.S. and China, as distinct from workers' rights in the dozens of other nations where Volkswagen makes cars.) Volkswagen is one of a growing number of European-based corporations that have global works councils, with representatives from all their factories meeting with top corporate executives. Volkswagen's policy-setting council, accordingly, has representatives from everywhere except the U.S. and China.
The argument for establishing works councils is that they help workers assert their interests, management get feedback it wouldn't otherwise get, and companies create practices that are agreed to by both management and labor and that therefore boost productivity. Three years ago, when I was touring a small transportation equipment factory in the German state of Saxony-Anhalt, I asked the plant manager for his take on the plant's works council. A couple of weeks earlier, he answered, the plant suddenly had to add a Saturday shift to complete a rush order. His managers told him that everything had run smoothly. At the next meeting of the works council, however, the workers told him that the day's work had been chaotic; that there had been no planning for turning out such an order on a Saturday. Managers and workers then developed plans for any subsequent such rush jobs. In sum, he said, he found the works council very helpful in getting the plant to run successfully-and even happily.
In the U.S., bodies such as works councils are prohibited by the National Labor Relations Act unless the workers have a union. That's because when the NLRA was drafted in 1935, the nation was only half-a-decade removed from the company-dominated unions of the 1920s, in which workers were enrolled in organizations-much like those in China today-which were labeled unions but which management controlled. The NLRA was drafted to prohibit this from happening henceforth, and most labor-management bodies that had effect over things like work rules were put off limits unless the worker representatives were chosen democratically by the workers themselves-that is, by the workers forming unions and electing their union reps.
Once Volkswagen went on record as desiring a works council in Chattanooga, then, U.S. law stipulated that only by voting in a union could its workers form such a council. The UAW circulated affiliation cards among the plant's workers, and a majority of its workers signed them. Critics of unionization-not, for once, company management, but such leading Tennessee Republicans such as Senators Lamar Alexander and Bob Corker and Governor Bill Haslam, and such institutional union opponents as the National Right to Work Committee-insisted that card-check wasn't sufficient, and the workers will vote in a National Labor Relations Board-supervised election later this week. In the past couple weeks, the Right-to-Work Committee and the state's Republican leaders have repeatedly told workers that a calamity just short of Armageddon awaits if they certify the union and establish a works council.
The Republicans' and the Right-to-Work Committee's fears are understandable. For decades, the Southern economy has grown chiefly because it's been a cheap-labor alternative to the Northeast, Midwest, and West Coast. As American and then foreign companies began their wholesale relocations of plants and businesses to the South in the 1970s, American workers' wages began to stagnate. Eventually, enough of American business had gone South to bring down incomes in the North-a process that has greatly accelerated since the financial panic of 2008. Indeed, from 2008 to 2011, the hourly wage gap between Midwestern and Southern worker shrank from $7 to $3.34.
If unions get a foothold in the South, Americans' wages might just start leveling up instead of down. What's more, if unions grow in the South-a region where the union share of the workforce is scarcely more than 5 percent-then the Southern states might see their political balance of power altered. Southern states might start enrolling their voluminous numbers of the poor in programs like Medicaid and passing minimum-wage statutes of their own. And if the UAW wins in Chattanooga, the United States will be able to see how a works council-one of the institutions that's been key to Germany's enduring economic successes-works on American soil.
That's what's riding on this week's vote.
