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VW USA -Time for detente?

February 19, 2014

In a story reported by Reuters on Wednesday, Feb. 19, in what sounds like a not-so-thinly veiled threat, Volkswagen’s top labor representative Bernd Osterloh, head of VW’s works council, reportedly said “I can imagine fairly well that another VW factory in the United States, provided that one more should still be set up there, does not necessarily have to be assigned to the south again,” Wouldn’t you love to know what the backroom deal behind that comment includes? 

When the workers at the South Carolina VW plant voted against accepting the two-year long overtures of the United Auto Workers, one of the reasons given was that they already felt that they had excellent labor-management  representation and cooperation at the plant.

The German version of union  bargaining at VW is the works council, and like unions here they have a very strong influence on  operations at the plants in Germany. Herr Osterloh is also on the company’s supervisory board. A “sympathetic” work stoppage in European plants wouldn’t be a huge surprise. Given that the Obama administration hasn’t been exactly racking up PR brownie points in Germany, it might have some sympathetic support elsewhere.

The UAW had two years to hard-sell plant workers on the idea that union membership was a good idea. Apparently, they couldn’t close the deal. That’s a tribute to the apparently congenial labor-management relations at the plant. In a rare secret ballot, the workforce at the plant made its choice based on those current conditions.

History has and will record that unions have driven many beneficial reforms for workers that go far beyond wages. It will also record that in at least some respects, they have become anachronisms.

Hardly a year goes by that some segment of the American economy doesn’t stop due to union strikes. From auto parts to buses to foodstuffs, the flow of goods and services is subject to interruption by union strikes. Strike funds aside, it can take years for workers involved in those strikes to recoup their lost wages. Members have no control over how their dues are spent, and many don’t necessarily support the political applications of those funds. There is a reason why membership has fallen by 75%.

It is almost universally accepted that high labor costs make the U.S. an unattractive place to open manufacturing plants, so it is interesting to contemplate why the carmaker would want to increase the production costs of its U.S. unit.

As a mechanism to prevent or at least expose abuses, particularly in working conditions, unions may still have a place at the table both here and abroad. There is no evidence that the South Carolina workers felt exploited by Volkswagen management  prior to the vote. It will be interesting, in view of the comments about racism and undue government influence since the vote, to see if that idyllic relationship continues.


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