VW Workers Escape from Detroit

Assembly line at Volkswagen's Chattanooga plant.



Workers at Volkswagen’s sedan factory in Chattanooga, Tenn., soundly rejected a bid by the United Automobile Workers (UAW) to subsume them. In this the workers were considerably wiser than VW management, which took an officially neutral stance on the unionization effort but is in general kindly disposed to efforts to transplant the “workers’ council” model, with which it has enjoyed success at home, from Germany to its American operations. German automakers maintain a largely cooperative relationship with IG Metall, the main autoworkers’ union. But the UAW is a very different sort of beast, a fact not lost on the Chattanooga workers who handed it an enormously important defeat.

Competitive wages are part of the calculation, but they are far from a ruling consideration. The partisans of organized labor point out that German marques such as VW and Mercedes-Benz sell a great many cars and make healthy profits despite paying their comprehensively unionized work forces about two-thirds more than what the average American autoworker earns: roughly $67 an hour in wages and benefits for the Germans versus $40 an hour for a General Motors employee. (The frequently cited figure of $73 an hour for GM includes heavy retiree costs and does not reflect the compensation of active workers.) The U.S. labor camp takes precisely the wrong lesson from this situation: “Germany builds twice as many cars as the U.S. while paying its workers twice as much,” as one columnist put it. Another way of putting it: GM managed to go bankrupt while paying its workers just over half of what Daimler pays its own.

Inflating paychecks is not the only way to hobble a car company. Beyond wages and benefits, the UAW afflicted the domestic automobile industry with ridiculous and cumbrous work rules — a recent volume of which weighed in at 22 pounds — and, perhaps more important, with a poisonous, us-and-them attitude regarding the firms that employed its members. The combination of UAW micromanagement and adversarial culture, not wages per se, is what helped to do in GM. One young female manager tells the story of having an exotic dancer/prostitute making an appearance at her facility in the middle of the work day to transact business with UAW employees; when she complained, the union representative demanded to know which work rule the men in question were breaking. “Who wrote work rules to cover prostitution at lunch?” she asked. Another UAW member urinated on a supervisor to protest a disciplinary action, and the union protected his job. That is the problem with the UAW.

Worse, the UAW is corrupt, as dozens of headlines in recent years regarding fraud, embezzlement, and the like on the part of its officers document. And that corruption is one of the unacknowledged reasons why some managers do not mind doing business with the UAW. Consider the case of the UAW members who filed a complaint “that full-time reps log in hours of company-paid overtime not spent on the job, potentially increasing annual income by $50,000, while the company looks the other way. This is a longstanding practice at many Big Three plants. In return, according to members interviewed, reps soft-pedal grievances and health and safety complaints.” The popular narrative of organized labor — that unions are a necessary counterbalance to managements that care little or nothing about workers — rests on the assumption that unions such as the UAW are honest stewards of their members’ interests. They are no such thing. Even if VW workers wanted a union, it is far from obvious that getting into bed with the UAW would be the right course of action.

The UAW spent millions of dollars trying to influence the Chattanooga vote. It has given away some $45 million of its members’ money in political donations, largely to Democrats, since 1990, and it has spent some $31 million on lobbyists since 1998. It spent $15.5 million on campaign donations in the 2012 cycle alone. For that kind of money, it could have become a major shareholder in one of the companies it seeks to influence — probably a better investment of its members’ dues.

The UAW is a moribund organization, having lost three-quarters of its members in recent decades, but the power and profit its bosses enjoy is a strong incentive to fight for every last penny, a project in which it can count upon the support of Barack Obama and other Democratic pooh-bahs who benefit from its financial support and manpower. The “transplant” automakers, which operate as a rule in right-to-work states, are an important economic success story, one of the major bastions of high-paying manufacturing jobs. The ladies and gentlemen in Tennessee are backing the right horse.