Why Volkswagen is helping a union organize its own plant

The UAW's messaging around the works council idea. (UAW.org)

This week at Volkswagen's plant in Chattanooga, Tenn., 1,570 workers will vote on whether to join the United Auto Workers. It's a big deal: While the big three American carmakers are all unionized, so far the foreign companies have avoided it by locating in Southern states with strong Right to Work laws. From their perspective, unions usually just mean work stoppages, expensive benefit plans, and the inability to fire people at will.

That's what's weird about the VW vote: The German company is campaigning for the UAW, not against it, in a kind of employer-union partnership America has seldom seen. What gives?

Well, VW is kind of different, as automakers go. It understands how having a union can boost productivity and allow it greater flexibility in adjusting to downturns. It should know: The rest of its plants are unionized too.

This would also be something new for the United Auto Workers. They wouldn't have the same relationship with VW as they do with Chrysler, General Motors, and Ford. Rather, the idea is to create something called a "works council," which are widespread across Europe and enjoy tremendous influence over how plants are run. In America, that kind of body can't be established without a union vote -- but crucially, the works council would be independent of the union, meaning the UAW would give up some control as soon as it gained it.

While the details of the arrangement would be ironed out after the election, works councils -- which are elected by all workers in a factory, both blue and white collar, whether or not they belong to the union -- usually help decide things like staffing schedules and working conditions, while the union bargains on wages and benefits. They have the right to review certain types of information about how the company is doing financially, which often means that they're more sympathetic towards management's desire to make cutbacks when times are tough. During the recession, for example, German works councils helped the company reduce hours across the board rather than laying people off, containing unemployment until the economy recovered.

In the early 1990s, Harvard labor law expert Paul C. Weiler interviewed managers about why they valued works councils. One representative executive told him:

• There are three major advantages of councils. You're forced to consider in your decision making process the effect on the employees in advance…this avoids costly mistakes. Second, works councils will in the final run support the company. They will take into account the pressing needs of the company more than a trade union can, on the outside. And third, works councils explain and defend certain decisions of the company towards the employees. Once decisions are made, they are easier to implement.

In that way, works councils can be an ally of management in keeping the business strong for the sake of keeping workers employed over the long term. Weiler was given this example:

• [The parent company made] an agreement with the works council to introduce a flexible work-time system, around-the-clock operation through Saturday, starting again Sunday night. They were under tremendous pressure from the union not to do this, but let us go ahead. We couldn't have gotten that out of the union.… Our works council people are not hostile to rationalization of automation. On the contrary, they ask us to automate, to modernize our machinery so that our operations can be competitive. They say, 'We know that we lose jobs by this, but we agree that this is a good thing.'

Works councils are also typically not allowed to call strikes, but they also don't usually need to, because their authority is baked into their agreements with the company (and, in Europe, usually enforced by law). If the UAW wants to strike over wages and benefits, it's still able to do so, but the likelihood of arriving at a mutually agreeable solution without one is much higher.

That's why VW wants its plant to go union. According to VW's global works council leader, Bernard Osterloh, the company even sees its culture of worker codetermination as a "competitive advantage."

That doesn't mean, however, that the vote is unopposed. National anti-union groups and the state's Republican leaders are campaigning against the UAW, saying unionization will spread like a contagion through Tennessee's other auto plants. “Then it’s BMW, then it’s Mercedes, then it’s Nissan, hurting the entire Southeast if they get the momentum," said Sen. Bob Corker (R.-Tenn.).

BMW likes its works councils too, though. Apparently, some politicians think they know what's good for auto makers better than the companies do themselves.

Source: Washington Post