The coming clash between unions and EVs
By: E E News
Tags: Electric Car, Electric Vehicles, Manufacturing, Unions, Volkswagen

by Maxine Joselow and Kristi E. Swartz, E&E News reporters

Keri Menendez opposed efforts this spring to unionize Volkswagen AG’s Chattanooga, Tenn., plant. As for the prospect of increasing electric car sales across the auto industry, she’s optimistic. But her co-workers are skeptics. Francis Chung/E&E News

Originally published in E&E News.

CHATTANOOGA, Tenn. — It was a Monday morning in May, five months after Volkswagen AG declared its plans to build electric cars here, when Tennessee Gov. Bill Lee (R) made a surprise appearance at the VW manufacturing plant.

Workers were filing in through the front gates when word spread that the silver-haired governor was there to address them. For some in the room, the timing was suspicious, with just a few weeks to go before they would vote on whether to unionize with the United Auto Workers.

The stakes of the vote were high. The Chattanooga plant had the dubious distinction of being the only VW plant outside China to lack union representation. As workers continued filing in, they were directed by management toward rows of metal folding chairs. The workers sat and waited. According to people there, the tension in the room was palpable, even electric.

Reporters were barred from entering the plant and covering Lee’s speech. But Labor Notes, a Detroit-based publication, obtained a recording of the remarks. To scattered boos and cheers, the governor hinted that a formal union at the plant would dissuade new businesses from coming to the state.

“There are new companies that all of us would benefit from if they come here,” he said, “because they would bring more high-paying jobs that would elevate the economic activity of our state for everyone.”

Shift work, overtime and wages led worker concerns. The following month, in the shadow of the governor’s speech, VW employees cast their ballots. A total of 776 voted in favor of the union, while 883 voted against.

The campaign to organize workers in Tennessee that left pro-union and anti-union interests seething, even after the vote, may have signaled a much bigger temblor to come. This week, nearly 50,000 General Motors Co. workers walked off their jobs in the UAW’s first national strike since 2007. It’s also the first walkout since the union made major wage and benefit concessions in the aftermath of GM’s financial collapse a decade ago.

The slim margin of defeat for the UAW in Tennessee was the latest episode in a labor struggle that could rise up again here — next time as a political undercurrent in a smooth or rocky transition to electric vehicle manufacturing at the Volkswagen plant. The German automaker’s bid to mass-produce electric cars in North America, intended to help it compete globally and meet rising emissions standards, will affect the workforce in ways that no one yet quite understands.

Electrification could upend the very nature of the jobs that employees here have done for decades, as they learn to navigate a world of batteries rather than internal combustion engines.

According to interviews with VW employees, labor lawyers and other observers, what transpired in Chattanooga was yet another example of Southern politicians lending their weight to union-busting campaigns. Former Sen. Bob Corker (R-Tenn.) had gotten involved in an earlier effort to quash unionization at VW Chattanooga in 2014.

“The whole point was to scare us. And it worked,” said a pro-unionization VW worker, who spoke on the condition of anonymity for fear of retaliation.

“In the South, you hate liberals, you hate unions, you love babies and you love guns,” the worker said. “It’s pretty much that simple.”

Welcome to the Southeastern United States, where the headwinds of organized labor meet the rise of electric cars, spelling big changes for the auto industry and the individual workers who power it.

Industry in transition

Volkswagen AG employs about 2,000 people at its Chattanooga assembly plant. VW plans to spend $800 million to expand the plant for the production of all-electric cars. Francis Chung/E&E News

Inside the pressure cooker of a rapidly changing auto industry, the story of how union backers lost their bid to unionize VW’s Chattanooga plant is fraught with accusations of bad actors and political interference.

It began in 2014, when a group of workers charged that they were receiving lower wages than their unionized counterparts. They were making roughly $19 an hour, while veteran hourly workers in Detroit were earning around $27.

VW, rather than the UAW, filed the first petition to unionize in 2014. “There was a very elaborate agreement that was drawn up between the UAW and VW; it was all done before filing the petition,” said Dan Gilmore, a Chattanooga-based labor lawyer and professor at the University of Tennessee-Chattanooga. “That, I’ve never seen between the union and a company.”

That vote was also close, but it failed with 626 votes for unionizing and 712 against.

The narrow loss set the stage for a renewed effort last spring by UAW. This time around, workers took issue with pay as well as management practices at the company. Tactics and innuendo used by both sides to win over voters left scars.

VW pledged to stay neutral in the unionization fight. But some workers say the company distributed pamphlets targeting the union, an accusation the company denies. “If you don’t pay the UAW, do you really think the UAW will spend member dues for you?” one pamphlet asked. “At VW, you have a voice NOW and don’t have to PAY anyone to speak for you!”

From the vantage point of workers who opposed unionization, the UAW used dirty tactics. A union affiliate took out radio ads and billboards blasting VW for its emissions cheating scandal known as “Dieselgate,” in which VW installed software in 11 million diesel engines that were designed to meet emissions standards during regulatory testing but polluted on the road.

Keri Menendez, a VW worker who opposed unionization, recalled those ads. “They made me feel very angry,” Menendez said in a recent interview at a coffee shop in downtown Chattanooga after her shift.

“I was tired of hearing all of the negative stuff about the company. What about the positives?” said Menendez, who sported a gray T-shirt and baseball cap emblazoned with the VW logo. “For our area, we make pretty good money. And our benefits are great.”

Maury Nicely, a Chattanooga labor lawyer who represented anti-union workers, said he tried to remind everyone that it was VW who put food on their table. “The UAW attacked Volkswagen as a corrupt organization,” Nicely said. “But whatever side you’re on, if we’re going to have a union, you would hope that it’s working hand in hand with the company to try and create a better enterprise.”

As for the governor’s speech at the plant, that, too, remains a point of contention. Pro-union workers charge that VW colluded with Lee’s staff. The company denies this charge. “We invited [Lee] to see the factory,” said Amanda Plecas, a spokesman for VW Chattanooga, in an email.

The campaign for union recognition in Tennessee went on as other major automakers set in motion layoffs and plant closures tied to flagging sedan sales. Despite raking in $8.1 billion in profits in 2018, GM said in November it would idle four U.S. factories. Ford Motor Co. announced in May it would lay off 7,000 nonunion workers, the start of what analysts expect to be a period of major corporate restructuring. Some of the restructuring at both companies is tied to a planned large-scale shift to electric car production.

VW’s big plan

The day shift comes to a close at Volkswagen AG’s Chattanooga plant. Francis Chung/E&E News

The union drama prefaced bigger changes coming to VW Chattanooga.

In January, VW announced that it had selected Chattanooga as the site of its first electric vehicle facility in North America. The company said it expected the $800 million project to be operational in about two years and to create 1,000 additional jobs.

The project comes as VW chases an ambitious plan to sell 1 million EVs annually by 2025. The company made waves at the Frankfurt Motor Show this month by debuting the ID.3, the first model in its new all-electric brand.

Analysts in the auto industry reacted with excitement to the announcement. They said it could position VW and the state of Tennessee as leaders in EV production.

Volkswagen’s decision to vastly expand production of low- and zero-emissions cars comes after its emissions-cheating scandal landed it in deep legal jeopardy in the U.S. and Europe in 2016 and 2017. Under a consent decree with the U.S. Justice Department, VW is required to invest billions of dollars in charging infrastructure in the U.S. The automaker is also responding to emissions controls in Europe and China’s targets for electric cars.

“Volkswagen is very aggressively pursuing the electric vehicle alternative to gasoline engines,” said Karl Brauer, executive publisher of Kelley Blue Book. “They’ve been encouraged by the federal government after their diesel issue. So there’s plenty of reason for them to want to build an EV-dedicated plant.”

VW won’t be the only automaker producing electric cars in Tennessee. Nissan Motor Co. already has a plant in Smyrna, Tenn., where it manufactures its electric Leaf.

“From 2010 on, Tennessee has sort of climbed its way up to the third state when it comes to electric vehicle manufacturing,” said Drew Frye, a senior power utilization engineer at the Tennessee Valley Authority. “So you have California with Tesla, and you have Michigan with all the traditional [auto companies]. And then you have Tennessee with Nissan and Volkswagen.”

He added, “So with a little bit of luck and a few years to get up and running, Tennessee could easily be the №2 state in the country when it comes to making electric vehicles.”

Hope and fear

Maury Nicely, a Chattanooga lawyer who represented anti-union workers, urged Volkswagen AG wage earners to work hand-in-hand with the company. Francis Chung/E&E News

Despite this optimism, some workers worry they could lose their jobs once the new plant is running in 2022.

Their fears are not unfounded.

The Congressional Research Service concluded in a recent report that the shift to EVs could lead to fewer mechanical jobs. The report noted that electric powertrains have as few as 20 moving parts, while internal combustion engine powertrains have as many as 2,000.

“Should electric powertrains displace those used by gasoline over the next decade and beyond, it is likely that both production and engineering jobs will be affected,” Bill Canis, an auto analyst, wrote in the report to Congress.

The United Auto Workers took note of these findings. In a white paper last year, the group warned that the rise of electrification could lead to job losses in the manufacturing of parts for internal combustion engines, transmissions, exhaust systems and fuel systems.

“EV powertrains are mechanically simple compared to ICE powertrains,” the white paper said. “This simplicity could reduce the amount of labor, and thus jobs, associated with vehicle production.”

But policymaker concerns about the long arc of job gains and losses are at odds with the enthusiasm and curiosity expressed by auto plant workers who will assemble those parts into new cars and trucks.

“People are skeptical of the whole electric thing and, you know, the environment. They think it won’t do that well,” said Menendez, the VW worker. “But I think it will.”

She added: “Chattanooga is a very green area. As the technology gets better and the batteries charge longer and we get more charging stations, I think it’ll take off. So I’m excited. I’m looking forward to it.”

The Tennessee River runs through the middle of Chattanooga. For nearly a century, starting in the late 1800s, the city was a center of industrial activity. Ironworks and steam boilers were made here. And the valley trapped air pollution.

When factories started to die off in the 1970s, the city began a transition. City officials rallied around clean air initiatives. Today, some residents see those initiatives carrying over to Chattanooga’s role as a new epicenter of EV manufacturing.

One worker noted that electric cars could slash greenhouse gas emissions from the transportation sector, which is fast-emerging as a bigger concern than power plant emissions.

“We can only put so much of this crap in the air,” he said. “I have a granddaughter now, and I worry about what we’re leaving for her.”