Dean Barber

The Night the Union Died

In Site Selection on February 15, 2014 at 10:48 pm

When I read the news Friday night of Volkswagen workers in Chattanooga rejecting the United Auto Workers, for some reason, I was reminded of Don McLean’s “American Pie,” an anthem to a changing America.

It featured this rather sad refrain:

And they were singing, bye bye Miss American Pie 
Drove my Chevy to the levee, but the levee was dry 
Them good ol’ boys were drinking whiskey and rye, singing… 
This’ll be the day that I die.

I was in high school when American Pie was released. The year was 1972 and an arrogant Detroit, largely dismissive of any Japanese inroads into the market, was turning out what I thought at the time were some very cool muscle cars. (Remember Mopar and Pontiac GTO and the like?).

The United Auto Workers, too, was a power to be reckoned with. Membership would peak in 1979 when it represented 1.5 million workers. Today, it is but a shell of that — about 400,000 members – and Friday night’s vote illustrated just how far the once mighty industrial union had sunk.

In Cahoots

Know this – that the UAW could not even win an election where it had the tacit support of management. And make no mistake about it, VW management, despite its outward statements of neutrality, wanted a European-style “works council” and was in cahoots with the UAW to get one, much to the disbelief and ire of local and national Republican officeholders.

Mind you, VW had a different kind of model in mind with its works council, one largely foreign to corporate America (and to the UAW), which would have differed from traditional U.S. industrial unions in that it could not call for strikes. But the stumbling block was and continues to be that under U.S. law, a works council can only be legal if the workers were represented by a union.

Also, the National Labor Relations Act forbids management from “assisting” labor unions, hence the postured neutrality stance from VW management. Reading between the lines, I believe the company wanted the UAW because the union represented a means and a way for a works council to happen. There were probably some “you don’t rock my boat and I won’t rock your boat” discussions in Germany.

Now I will admit that this is conjecture on my part, but I can tell you it’s based on some firsthand knowledge and experience with working with German automotive suppliers in the Southeast on site selection projects. They have a different culture when it comes to manufacturing.

A Different History

Back home in Deutschland, where apprenticeship programs are still commonplace on factory floors, companies don’t have the historical adversarial relationship with labor unions that we do in this country. In Germany, it has been more of a collaborative nature, with the goal of solving problems and making better product without the adversarial drama.

I think that was what Volkswagen had in mind for Chattanooga, as the works council model has worked very well for the company not just in Germany but worldwide. Indeed, the Chattanooga plant is the only plant that doesn’t have such arrangement. And, ironically, that is now what might cost it the long run.

It’s no great secret that Chattanooga will be vying against the VW plant in Puebla, Mexico, for production of a long-awaited SUV. Despite assertions from U.S. Sen. Bob Corker that he was privy to inside information that a yea-vote for the union would have hurt Chattanooga’s chances for that expanded production, the company released a rather revealing statement the day before the election that contradicted the Republican senator from Tennessee and a former mayor of Chattanooga.

Volkswagen Chattanooga CEO and Chairman Frank Fischer said, “There is no connection between our Chattanooga employees’ decision about whether to be represented by a union and the decision about where to build a new product for the U.S. market.”

Unintended Consequences?

It would not surprise me if Friday’s election results may now give the edge to Puebla as management’s plans for Chattanooga have at least for now been thwarted. I guess we will find out soon enough, but this could be a classic case of unintended consequences.

Despite the difficulties posed by U.S. law, if Volkswagen Chattanooga could have pursued its works council agenda without turning to the UAW, maybe it should have. Hindsight is always 20-20.

And there still might be ways for the company to reach that goal, as alluded to by Fischer who said in a statement that Friday night’s vote in rejecting the UAW was not a vote against a works council, and that he still hopes to develop one that is in accord with American labor law.

I suspect it will take some fence-mending on the part of the company with the GOP and the hiring of some high-priced Washington lobbyists and labor lawyers for that to happen. And while the UAW has been emasculated, the company will also likely still need the Obama administration and the Dems to agree not oppose a future works council arrangement, even if it takes a little bending of the law to make it happen.

In short, Volkswagen misplayed its hand big time. It alienated the Republican party by playing footsy with the UAW and probably never seriously pursued another way of forming a works council. With Friday’s vote, it’s back to the drawing board and Plan B, if there is a Plan B. There very well might not be one.

Their Last Best Chance

For the UAW, really for all industrial unions (I am not speaking about public-sector unions), Friday night might have been their last best chance to make any meaningful mark in hopes of a comeback. It would be hard to imagine that they will ever have this kind of chance again. The Chattanooga vote was teed up for them and they still blew it. If they can’t win one like this, what can they win?

This latest defeat comes on what can only be described as a long trail of tears for not just the UAW, but for industrial unions in general. Looking back, this may very well be seen as a pivotal night, the night the union died.

Oh sure, the UAW will continue to exist and still represent workers at Ford, GM and Chrysler plants across the country (and at a Mitsubishi plant in Illinois), but its dream of making inroads into the foreign-based automakers in the South, well, that’s over. It’s not going to happen. Kaput as they say in German.

So let’s continue to put this in a little historical context. In 2012, Indiana, still a bastion of Midwest manufacturing with a history of organized labor activity, became a right to work state. It was followed by Michigan, which also became a right to work state in 2013. Michigan, the birthplace of the UAW. Michigan of all places.

Not Your Father’s Country

Now I am of the age where I should not be surprised by much of anything, but when Michigan became a right to work state, well, I started hearing strains of  American Pie in my head. This is not your father’s country and it never will be.

Now let me tell you what happened last month in Youngstown, Ohio, a city with a long tradition of labor union activism. Workers there voted two-to-one against forming a union at two Vallourec Star pipe mills.

Representatives of the United Electrical Workers Union make noise that they will renew their fight to organize and represent workers, but they always say that after a loss. They had their heads handed to them in Youngstown, Ohio, of all places. Watch for Ohio to fall in line with Indiana and Michigan and become a right-to-work state, just as their southern counterparts have been for many years.

In the world of corporate site selection, my bailiwick, I have now come to the belief that many companies continue to have an inflated fear of labor unions. That fear is largely misplaced. The once mighty lion of organized labor, at least on the industrial side, is now virtually toothless wherever I go, whether it be a right-to-work state or not.

That’s just the way it is, and that’s the way it’s going to be for the foreseeable future. The time of the industrial union in this country has come and gone. They are mostly relics of an industrial past, and we have been witnessing their slow demise for some time now.

To some of you, probably Democrats, this historical unraveling is a sad fact which gives corporations an inordinate amount of power to essentially take advantage of workers in a whole host of ways and will keep the middle class under assault. To others of you, mostly Republicans, it is good riddance as unions were nothing more than an irritating and sometimes corrupt hindrance preventing efficient work to be done.

Me, well, I just call it like I see it. And the way I see it is that there will be no comeback for industrial unions in this country. Their day is done. A Friday night in Chattanooga sealed the deal.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

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  1. Great article dean.

    • Yes indeed the great canard that unions diminish future economic activity. Who will buy products if wages are depressed? Interesting that almost all the Right To Work (for less) states are below the national per-capita income… It is my experience that the attitude of the state legislature in more important than unions.

  2. Well written. Objective and subjective combined. Interesting to watch the fall-out and next steps. Loved the tie-in to American Pie. Very creative.

  3. I agree that the major unions will continue to have challenges winning elections but one fact remains, if management does not treat their people well, there is a greater probability of a union win regardless of the right to work status of the state. One bad supervisor or operations manager can really reek havoc on the moral of the workforce and open the door for the organizers.

  4. Thanks for the post Dean. From a ground zero perspective, there is a lot that happed that will never be reported – like the fact that VW gave the UAW full access to their plant including providing them with offices. But regardless of which side of the vote you are on I view the discussion in a different light. As we watch the talent war coming you have to ask yourself why a union is necessary when talent is mobile, and soon to be in short demand – including manufacturing talent.

    The days are over when you get a job and keep it for thirty years – most x-ers wouldn’t want that and millennials certainly don’t fit that bill. So, when you have employees that understand job security is a limited concept at best based on a broad economic environment, laws around safety and other workplace issues and now a national healthcare solution (at least that’s the sales pitch) it becomes very clear that unions are a 20th century solution in the 21st century.

    Unions (and us as economic developers too) have to learn how to stay relevant. If they cannot deliver new value in what has become a very different world they will be as useless as my pile of floppy discs and that old typewriter in the closet.

  5. […] blog by a Dean Barber, a former Alabama newspaper editor who covered Mercedes Benz’s entry and build up in that state, […]

  6. Great article. Thanks for the insight.

  7. Dean, among your many posts, I especially enjoyed this one. I wouldn’t suggest a fear of unions is necessarily misplaced however. To paraphrase George Santayana, “those who cannot remember the past are condemned to repeat it.”

    My folks used to tell me the reason for unions is poor management. I agree. But history also taught us that labor unions evolved in an unfortunate way that took an incredible toll on the competitiveness of US business (the UAW is a poignant example). Growing up in a “big union” family in the Northeast, I heard appalling stories about the irrational misbehavior of union thugs and laymen alike. There was little recourse for the companies who employed them, or the many hard-working laborers they often misrepresented and intimidated.

    While a German-style works council is probably not a bad idea in Germany, it is easy to see how many consider it a “wolf in sheep’s clothing” in the US, particularly when the UAW is involved and antiquated labor laws are the context.

  8. I agree that the time of the union has come and gone. I say that as one who’s father and father-in-law benefited greatly from the intervention of their unions in their behalf with their employers. Unions today have become victims of their own success and of a struggle to find relevancy in an age when the reforms they fought hard for in the last century are now taken for granted as natural parts of the employment landscape. I hope that the work council concept can rise out of the ashes of the unions in the US. There is much to be gained from management and labor treating each other as valued partners rather than adversaries.

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