For more than a year, leaders with the United Auto Workers Union have been eyeing Chattanooga's Volkswagen plant, and reports this week that the organization has talked with Volkswagen AG executives about a German-style labor board at the local plant have raised a number of questions.
What does a German-style labor board even look like in the United States? Labor organizations in the United States are very different from those in Germany. So, how do officials reconcile those differences?
Why would Volkswagen executives want to team up with the UAW, whose membership has struggled in recent years? Isn't one of the benefits of locating in the South that company leaders can generally avoid union organization?
If the plant does create some sort of hybrid labor organization, will that hinder the potential for local expansion or access to state incentives?
The outcome of this latest twist in the unionization discussion could have larger implications for the auto industry and the South, which has historically been difficult to unionize, industry experts said.
Some answered questions
UAW President Bob King—who is scheduled to leave that post in June 2014—has said that the union doesn't have a future unless it can organize workers in Southern states, such as Mississippi, Georgia, Alabama and Tennessee, according to Automotive News. So it seems obvious why the UAW would want in at Volkswagen.
But it's unclear whether Volkswagen employees want a union.
Volkswagen Chattanooga leaders, such as CEO Frank Fischer and new Vice President of Human Resources Sebastian Patta, have said that the bottom line of this discussion is that the employees will decide on unionization.
And Volkswagen AG leaders want a works council because it would allow them to stay in touch with ideas and thoughts from Chattanooga workers and come to future deals about working conditions, Horst Neumann, VW's board member for human resources, said, according to Automotive News.
Neumann also said he is unclear whether King really wants to try a German-style organization or if he sees the discussion as a way to get into Volkswagen, according to Automotive News.
Some people have questioned whether unionization would impact a potential Volkswagen expansion.
Although there is no official word about when or how the factory would expand, the plant has the capacity to produce more, and Patta recently said that the company needs another product here in order to move toward its 2018 goal of being the nation’s largest manufacturer.
And, at least from the angle of state incentives, unionization wouldn't impact expansion.
"VW has already proven to be an extremely good partner for the state of Tennessee," Clint Brewer, assistant commissioner of communications with the Department of Economic and Community Development, said. "We are obviously very eager to see Volkswagen expand."
Brewer said a union would have no impact on potential incentives for VW and noted that the state has "incentivized General Motors quite a bit over the years."
General Motors has a factory in Spring Hill, Tenn., and that company has a relationship with the UAW.
But the biggest unanswered question remains—what does a German-style labor union look like in the United States?
It can't be done exactly like it is in Germany because federal law forbids that.
Chattanooga attorney Maury Nicely, who specializes in labor and employment, said that there is a section of the National Labor Relations Act that forbids companies to have an internal union.
In Germany, companies typically have work councils, which are similar to unions in the United States, because its members help represent workers’ interests. But in Germany, the representation is from within the company, not a third-party organization.
"If you look at the history of how it has worked at VW, the union has always been a component of the management," Bill Visnic, Edmunds.com senior analyst, said. "[That is] an entirely different relationship than what the unions have represented in this country."
And federal law is written to prevent company leaders from circumventing third-party unions, Nicely said. The idea in the United States is that if company leaders formed an internal union, they could run it and prevent the workers from having any say on important issues, he said.
Historically, after initially organizing to help workers get humane treatment, the auto unions branched out into establishing middle-class earnings and benefits.
But by the ‘70s and ‘80s, auto manufacturing unions began to cramp the ways auto companies worked.
Initially able to shift some power away from the company and give it to employees, many people began to think that union regulations became counterproductive and profit-zapping, according to Nooga.com archives.
Since then, union presence has dwindled in Southern right-to-work states, such as Tennessee, and in large part, federal law protects employees from mistreatment.
"Usually, what we see in the U.S. is employees decide they want to discuss the possibility of having a union, and the employer fights it," Nicely said.
Impact on the South, local auto industry
Though industry experts, such as Visnic and Nicely, said they can't know how people would react to a hybrid union or how it will all play out in Chattanooga, both said that the change has the potential to impact the area.
Nicely wondered if it would impact suppliers, and Visnic said it would represent at least a small, symbolic movement toward more union-friendly thinking.
By and large, Nicely said he expects that suppliers would be more concerned about getting a contract with Volkswagen and not as worried about a union.
"But it's not unfathomable that if VW has this UAW link, there would be some concern [amongst suppliers] because [they] don't want to unionize," he said.
President of the Chattanooga Area Chamber of Commerce Ron Harr also told the Times Free Press that he worried that unionization could make it more difficult to attract suppliers to the area.
And although he said he doesn't know how a hybrid would work here, Visnic said that if it did, that could be representative of a cultural shift.
"If anything, I think it would be a very symbolic moving of the needle," he said. "Here's a pretty big company that has come to the South, and they are starting to take baby steps toward a closer relationship with organized labor ..."