Mike Shedlock
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Efforts by the United Auto Workers to unionize a Tennessee Volkswagen plant failed today in spite of the fact that Volkswagen chose to cooperate closely with the UAW. Volkswagen allowed UAW organizers to campaign inside the factory—a step rarely seen in this or other industries.

Mistrust Sinks Deal

By a vote of 712 to 626 the UAW Suffers Big Loss at Tennessee VW Plant.

The United Auto Workers union suffered a crushing defeat Friday, falling short in an election in which it seemed to have a clear path to organizing workers at Volkswagen AG VOW3.XE +1.10% 's plant in Chattanooga, Tenn.

The setback is a bitter defeat because the union had the cooperation of Volkswagen management and the aid of Germany's powerful IG Metall union, yet it failed to win a majority among the plants 1,550 hourly workers.

"If the union can't win [in Chattanooga], it can't win anywhere," said Steve Silvia, a economics and trade professor at American University who has studied labor unions.

The UAW said that "outside interference" affected the outcome of the vote. "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," Gary Casteel, the union official in charge of the VW campaign, said in a statement.

The Chattanooga workers had been courted steadily for nearly two years by both the UAW and the IG Metall union, which pushed Volkswagen management to open talks with the UAW and to refrain from trying to dissuade American workers from union representation.

The election was also extraordinary because Volkswagen choose to cooperate closely with the UAW. Volkswagen allowed UAW organizers to campaign inside the factory—a step rarely seen in this or other industries.

"This is like an alternate universe where everything is turned upside down," said Cliff Hammond, a labor lawyer at Nemeth Law PC in Detroit, who represents management clients but previously worked at the Service Employees International Union. "Usually, companies fight" union drives, he added.

The union's loss adds to a long list of defeats for organized labor in recent years. States like Wisconsin enacted laws that cut the power of public-employee unions, and other states, including Michigan, home of the UAW, adopted right-to-work laws that allow workers to opt out of union membership if they choose.

The vote was held amid public campaigning against the union by Republican politicians, including Gov. Bill Haslam, and conservative activist groups. Conservative political groups, including one backed by antitax activist Grover Norquist, put up anti-union billboards around Chattanooga. A small but determined group of workers who oppose the UAW also worked to tilt their colleagues against the union, an effort that ultimately proved successful.

"I'm thrilled for the employees and thrilled for the community," Tennessee Republican Sen. Bob Corker said in a telephone interview, adding that he's "sincerely overwhelmed" by the result.

"This vote was essentially gift-wrapped for the union by Volkswagen," Mr. Hammond, the labor lawyer, said.

The chief executive of the plant, Frank Fischer, said in a statement that Volkswagen will continue to search for a method of establishing a works council.

The works council concept also proved a winner for some Chattanooga workers. Jonathan Walden, 39 years old, earns about $19.50 an hour—about $4 an hour more than starting workers at GM, Ford and Chrysler—but he voted for the union because he wants a works council. "I don't know why more companies don't do this," said Mr. Walden, who works in the paint shop.

But more workers were persuaded to vote against the union by the UAW's past of bitter battles with management, costly labor contracts and complex work rules. "If the union comes in, we'll have a divided work force," said Cheryl Hawkins, 44, an assembly line worker with three sons. "It will ruin what we have."

Other UAW opponents said they dislike the union's support of politicians who back causes like abortion rights and gun control that rub against the conservative bent of Southern states like Tennessee. Still others objected to paying dues to a union from Detroit that is aligned with Volkswagen competitors like GM and Ford.

"I just don't trust them," said Danielle Brunner, 23, who has worked at the plant for nearly three years and makes about $20 an hour—about $5 an hour more than new hires at GM, Ford and Chrysler plants.

The no-UAW vote raises questions on how the union proceeds now in separate efforts to organize other foreign-owned plants in the South, and whether international cooperation can provide any additional leverage for labor unions.

Interference Both Ways

Outside interference did not sink the vote. Were it not for inside interference there would not even have been a vote.

Ultimately, the vote failed because of mistrust of unions. That mistrust is certainly well-placed.

I can certainly understand why the company and employees would want a work council. Cooperation from employees can make all kinds of improvements. But why do you need a union to have a work council?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2014/02/mistrust-leads-to-shocking-union-defeat.html#FpfMDF70svvxVKZ6.99

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Mike Shedlock

Mike Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management.