Two weeks ago, workers at Volkswagen’s Chattanooga, Tennessee, plant voted to represent the United Auto Workers union. Much has been written about how “historic” this decision is. With the construction of the Chattanooga plant, VW became the first foreign automaker to unionize in the South.
What’s not discussed: How big government and big labor colluded to sway the vote, and why VW employees are likely to regret it.
Labor unions successfully organized Volkswagen’s Pennsylvania plant in 1978. Years of labor disputes followed, and eventually VW closed the factory in 1987.
Crucial to the UAW’s campaign was the fact that VW workers won the same hefty $108,000-a-year salary the union won against the blue-collar workers of the Detroit Three last fall (on top of the salaries of Silicon Valley software developers). The promise was that he would receive a reasonable amount.
But there were also sticks that should be used with carrots. In a not-so-subtle threat to all 13 non-union auto companies targeted by the UAW, 33 Democratic senators sent a letter earlier this year demanding they remain neutral in union campaigning.
Before getting into the meat of the matter, the senators wrote, “We believe the Neutrality Agreement is the minimum standard that manufacturers must meet to respect workers’ rights.” “Companies in particular are receiving and benefiting from federal funding related to the transition to electric vehicles.”
Translation: Form a union or pay the consequences.
All part of (5 year) plan
It’s been a dramatically different era for the U.S. auto industry since the UAW last attempted to organize the VW Chattanooga plant in 2019. Today’s auto industry is being forced by the US government at both the federal and state levels to produce electric vehicles to solve the man-made climate crisis. .
Failure to meet government sales obligations will result in huge fines that will increase exponentially from 2026 onwards. For example, California, the nation’s largest auto market, will require automakers to make 35% of their sales from battery-powered vehicles by 2026.
Failure to meet this number will result in a cost of $20,000 per vehicle that falls below the threshold. Sales of gasoline-powered cars are scheduled to be outlawed in 2035, and this proportion will jump to 43% in 2027, 51% in 2028, 59% in 2029, and 68% in 2030. Federal penalties are equally severe.
Aside from Tesla (which as an EV-only seller is not only exempt from penalties, but also receives generous subsidies), only 5% of sales are currently electric vehicles, and 50% of EV buyers are on the market. When I returned, it was back to a gasoline car. .
To help automakers meet arbitrary sales targets, the U.S. government has cushioned the “EV transition” with billions of dollars in federal aid under the Inflation Control Act, built battery factories and We are offering preferential treatment of $7,500. To win subsidies, the Biden administration wants EVs to be produced domestically, preferably using the UAW workforce that will eventually fill Democratic campaign coffers. .
Energy Secretary Jennifer Granholm, who supports communist China’s industrial policies, is determined to follow in China’s EV footsteps. “China…adopted 14 five-year plans focused on dominating the supply chain and manufacturing products that our country used to excel at. China is producing large quantities of solar panels and electric vehicles,” he said. He spoke to media personnel in a national newspaper. February club. “But we are fighting back.”
stuck in neutral
VW got the message. In 2019, the company actively discouraged unionization, created a website touting the benefits of non-union shops, and linked to anti-UAW editorials and articles about UAW corruption, while offering overpriced labor to replace He helped the union lose by a narrow margin by warning that it could be defeated. By automation.
VW has been particularly neutral in its response to the UAW movement this year, and will pay the price for union victories. VW’s non-union labor costs in the popular VW Atlas SUV and VW ID.4 electric vehicle are 30% lower than those of its U.S. competitors.
By setting up UAW stores, VW loses its cost advantage over the Detroit automaker (a big reason the company located its sprawling 350,000-square-foot factory in right-to-work Tennessee in 2011). ), would be forced to follow inefficient UAW labor regulations.
However, the cost equation may change as governments dictate product planning.
Ford lost more than $4 billion in its EV business last year, and VW’s EV sales plummeted in Europe, where EVs are also mandated.
VW has been working with unions in Europe for many years. Companies may feel that the cost of unionizing is a necessary price to pay to continue benefiting from the Democratic Party’s control over subsidy payments. “VW is used to the German union environment,” said Doron Levin, a veteran industry analyst and Seeking Alpha columnist. “However, the UAW is likely to be more hostile and combative than the German metalworkers’ unions.”
This is the second time VW’s U.S. facility has opened its doors to the UAW. A labor union he successfully organized at Volkswagen’s Pennsylvania plant in 1978. Years of labor disputes followed, and eventually VW closed the factory in 1987. Look at what’s happening in Tennessee.
giant leap backwards
UAW President Sean Fein responded to the senators’ February letter, saying, “Every auto worker in this country, whether in the Big Three or the non-union Thirteen, deserves to be part of the auto industry’s record profits. They are entitled to their fair share.” “It’s time for auto companies, whether Volkswagen, Toyota, Tesla, or any other company doing business in this country, to stop breaking the law and take the boot off the necks of American autoworkers.”
Mr. Fein said he plans to unionize all non-union auto plants. His next target? Mercedes-Benz Alabama factory.
What is missing from Mr. Fein’s triumphant rallying cry is any sense that unionizing could have serious downsides for workers.
The Big Three automakers are accelerating robotic automation in factories to replace high-paying labor jobs. Meanwhile, in union-heavy Europe, thousands of people were laid off last year due to high costs and low demand for EVs, as automakers and their suppliers struggle to meet the government’s socialist EV vision. Ta.
EV mandates should be reminiscent of the 1990s, when government power forced bankers to give mortgages to borrowers with bad credit. It worked, didn’t it? Now the government wants to control the auto industry. Britain tried this decades ago. It ended up selling off domestic car manufacturers, more or less destroying Britain’s once proud car industry.
If Granholm really wants to beat China, he should consider the impact that top-down labor cost increases will have on America’s ability to compete. In the short term, consumers will have to bear higher prices. In the long run, workers are likely to endure reduced job security. Sounds like a big leap to us.
