February 7, 2014, is another signpost leading to the end of unions in the US. On this day, workers at the Volkswagen Chattanooga (TN) plant voted down union representation by the UAW 53% to 47%. Fox News and The Hill report the results.
Unionizing this plant was important for the UAW because all of the new automobile plants in America were built in the South. BMW (South Carolina), Mercedes-Benz (Alabama), Nissan (Tennessee), Kia (West Point, Georgia), Hyundai (Montgomery, Alabama), Subaru, and Toyota (San Antonio, Texas) all have operations in right-to-work states. While Ford and GM make cars in Canada and Mexico, all of the new plants are foreign makes.
What is in common with all of these plants is that these are foreign car manufacturers, all located in the South, and the people want jobs. Unions by their very nature limit the labor market thus forcing higher labor prices. Could this be a reason why these foreign makes chose the South instead of using skilled workers in other states like Michigan? In this case, VW gave the plant UAW representation on a silver platter. The workers may have seen what happened in places like Detroit (and a billboard featuring an abandoned Packard plant) and did not want that to happen in their home.
In Germany and Japan, company-sponsored unions exist. Unlike American unions where an adversarial atmosphere is normal, company-sponsored unions actively work with management to solve business issues. The problem is that company-sponsored unions are illegal in America. VW wanted to create a worker’s council similar to the worker’s councils Volkswagen has in Germany. The only way this could be accomplished was via union representation. Now that union representation was voted down, the worker’s council can’t be formed.
Unions like UAW need to grow their membership. Unfortunately, the new growth the UAW needs is in places where unions have been restrained. In right-to-work states, collective bargaining is outlawed. Therefore, unions have a diminished capacity and cannot strike in right-to-work states. When employers are encouraged to employ individuals in an “at-will” arrangement, the unions cannot bully employers for higher wages and benefits.
Now that the UAW was voted down in Tennessee, the union has two choices. The first choice is to try an unionize another Southern plant. I don’t think this will happen based on the Volkswagen vote. The UAW will be up against unfriendly political forces with the objective of preserving hard-won jobs from the foreign auto manufacturers. The second and more likely choice is to give up on unionizing a Southern automobile plant. Since a lot of resources were expended by the UAW and there was no return on investment because of the vote, the UAW will have to stay in its current places and not expand into the Southern states. Pursuing a “southern strategy” will consume UAW resources needed by its existing membership and will guarantee a quicker demise.
Other unions may look at the vote and see a glimmer of hope. However, a lot of workers at the auto plants saw the UAW as a possible interloper and a reason jobs could be lost. History seldom repeats but it often rhymes. Now, unions will stay in their current strongholds of the Northeast, Midwest, and the rust belt. Unions may not have the resources to expand into Dixie, Texas, or the West.
I knew after 1975 unions would start fading into the sunset. I didn’t think I would see this happen this year.