Almost two years after winning a representation election at Volkswagen’s (VW) plant in Chattanooga, Tennessee, the United Auto Workers (UAW) late last month ratified a contract with the company.The contract is a milestone for the UAW’s leadership—most notably its current president, Shawn Fain—which has sought for years to organize foreign-owned auto plants in the South, mostly unsuccessfully.
The new, nearly 250-page contract covers approximately 3,200 VW employees and reportedly includes the following terms, among others:
- A 20% wage increase up to $34/hour over four years
- An initial bonus equaling $6,550 per worker upon ratification and additional annual bonuses of $2,550 for the life of the agreement
- Guaranteed paid leave for up to five weeks per year based on tenure at the plant
- Improved healthcare plans with a minimum 20% reduction in premiums.
- Enhanced job security language
On the surface, the new contract appears to offer some tangible gains for employees, who voted overwhelmingly (96% in favor) to accept the deal. But, the contract also binds them for four years and requires those who choose to join the UAW (Tennessee is a right-to-work state, at least) to fork over a portion of their wage gains to the union. Presumably, that is to help pay for the 34 union representatives who will be at the plant, not building cars, but working full time for the UAW. It also goes without saying those dues will be subsidizing the union’s political agenda, which based on past history is unlikely to align with the Tennesseans working at VW.
During the organizing campaign, it’s also important to note that the company decided to remain neutral, meaning that the union’s story was the only one being heard by workers.
As a result, they may have missed the part about how having a union could have some drawbacks for VW itself, such as reducing the plant’s efficiency with onerous, byzantine work rules. They may also not have been informed about the union’s past role in organizing a VW plant in Westmoreland, PA in the 1970s. That plant experienced significant labor unrest under the UAW, which ultimately led to its closure after just ten years.
Considering the contract, they may also not have realized that other foreign manufacturers, such as Mercedes and Hyundai, already had higher wage rates without the need for a union contract.
In any event, time will tell what impact the UAW’s win in Chattanooga will have on VW’s operations there, but one could be forgiven for wondering if there won’t be a bit of buyer’s remorse when all is said and done.
About the author
Sean P. Redmond
Sean P. Redmond is Vice President, Labor Policy at the U.S. Chamber of Commerce.
