Steven Pearlstein
Steven Pearlstein
Columnist

The autoworkers, Volkswagen and the new, new South

There is delicious irony, along with a generous dollop of hypocrisy, in the desperate efforts of business leaders and free-market conservatives to prevent 1,500 blue-collar workers at a Volkswagen plant in Chattanooga, Tenn., from forming a union.

For decades, these same elites have been busy telling American workers about all the benefits they’ll get from more cross-border trade and investment. But now that Volkswagen has overruled its American executives and decided to export its union-friendly German management style to a state that markets itself as a union-free zone, their enthusiasm for globalization has waned. To Bo Watson, the Republican president pro tempore of the Tennessee state senate, it’s downright “un-American.”

Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.

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United Auto Workers lose Volkswagen election

The loss will make it even harder for unions organize foreign automakers across the south.

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For decades, Southern companies have beat back union organizers by denying them access to plants and forcing workers to sit through daily indoctrination sessions for weeks on end as they are instructed on the evils of union “bosses” and the near-certain prospect of losing their jobs if they chose to bargain collectively. But now that Volkswagen has agreed to remain neutral and let the UAW in to make its pitch, the anti-union forces outside the factory gates are suddenly outraged by the lack of equal access.

And because Volkswagen refused to make the usual corporate threats that the plant will close and its work will be shipped to Mexico if workers vote to unionize, that responsibility has now fallen to the Volunteer State’s Republican politicians. Just as VW workers began voting last week, U.S. Sen. Bob Corker claimed to have been told by an unnamed top company executive that a vote against the union would guarantee that Chattanooga would be chosen as the production site for a new line of SUVs — a claim quickly denied by VW. Then there was the warning from the aforementioned Watson that if the plant were unionized, the Republican legislature would refuse to appropriate an estimated $700 million in state subsidies necessary to win the SUV expansion and the several thousand new jobs it would generate.

When Democratic politicians offer taxpayer subsidies or dare to interfere with private firms and private markets, as President Obama did with the bailout of Chrysler and GM in 2009, Republicans have been quick to criticize it as socialism and crony capitalism. But when Republicans do it, they call it economic development.

Perhaps the most hypocritical argument coming from the business Babbitts in Tennessee is that VW workers should look beyond their own narrow financial interests in deciding whether to vote in a union and consider the best interests of the wider community. When business leaders have been asked to do the same when deciding where to invest and which plants to close, they invariably dismiss such considerations out of hand, claiming they have no choice but to do whatever is necessary to maximize profits and share prices.

The anti-union claque down in Chattanooga, however, hasn’t restricted itself to job threats. On billboards and in radio ads, it has warned that letting in the UAW would turn Chattanooga into Detroit and hand control of the state over to Obama. My favorite bit of cynical propaganda was posted by the Orwellian-monikered Center for Worker Freedom under the headline, “UAW Wants Your Guns, Part 1.”

Bill Haslam, the Republican governor of Tennessee, offered a more nuanced and plausible argument against unionization when I spoke with him last week.

In the competition with Mexico for the new SUV line, he explained, Chattanooga suffers from not having the logistical advantage of a deep supplier network. So over the past year, he’s been trying to convince suppliers to open facilities nearby. Without naming them, he said that more than a few of the non-unionized suppliers have told him in no uncertain terms that they would refuse to come if VW unionizes. This reluctance stems from the curious notion that unionization is like a dangerous virus that is spread by close contact.

While I have no doubt of the rabid anti-union feelings of some auto parts pashas, it’s hard to believe there aren’t sufficient number of other firms, union and non-union, that would jump at the opportunity to become a long-term supplier to one of the world’s largest auto manufacturers. That’s what happened at a UAW-organized General Motors plant in Spring Hill, Tenn. — an old Saturn facility that reopened after the recent bankruptcy — where dozens of union and non-union parts suppliers have now located nearby. Apparently things are going well enough at Spring Hill that GM recently announced it would invest another $350 million and add 1,800 new jobs.

But as Haslam sees it, whatever recent success GM has had in his state, it pales in comparison with the steady growth over the past 20 years that non-union Nissan has had at its much larger plant in Smyrna, Tenn. And it is that history, says the governor, that has led him to conclude that VW would be better off — and the state would get a better return on its investments — without the presence of the UAW.

The UAW’s organizing effort in Chattanooga is the latest challenge to the economic model that has defined the “New South” over the past 50 years — a model based on racial tolerance, low taxes, light regulation and a docile, non-unionized workforce.

The success of this model stoked a rising standard of living across much of the Southeast that has become more cosmopolitan and better educated. Yet despite this business-friendly environment, incomes in the region still lag those of the North and West, while unemployment rates in many states are higher than the national average. And those once-grateful and -docile workers are beginning to notice — even in right-to-work states such as Tennessee, Georgia, Alabama and South Carolina, where union membership grew by 19 percent or more last year — the fastest rates in the country.

The political and economic melodrama playing out in Chattanooga has revealed that a bit of the old plantation mentality lives on among Southern business and political elites. In the faster-growing and more prosperous regional economies of the North and West, companies are trying to boost performance by increasing employee engagement and empowerment, not suppressing it. Their business strategies are based not on assuring a steady supply of cheap labor but on increasing the number of highly paid and highly skilled workers. Rather than trying to nullify federal labor law and crush what remains of the much-diminished union movement, these companies, like VW, are looking at new models of workplace cooperation and collaboration.

Corker and Haslam are right about one thing: Overly restrictive union work rules and overly generous union wages and benefits were significant culprits to the decline of the Big Three automakers. But in focusing only on the UAW’s past excesses, they have become like those infamous French generals who insist on fighting the last war.

Under the skillful leadership of Bob King, a chastened UAW has agreed to deep cuts in wages and benefits that now give UAW plants roughly the same labor costs as non-union foreign transplants. And in the neutrality agreement signed with VW, the UAW has given up its right to bargain over work rules and will hand those decision over to a plant-level “works council” composed of managers and front-line employees, both union and non-union. King’s successors have earned the right to demonstrate that theirs is not your father’s UAW.

The genius of democratic capitalism is its knack for learning from past mistakes and adapting to new realities. That’s what Volkswagen and the United Auto Workers courageously set out to do over the past year in Chattanooga. The question now is whether the South’s business and political elite will have the foresight to hop on that choo-choo or once again get left behind at the station.

 
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