In a historic vote, Tennessee Volkswagen workers get their first union contract : NPR

Volkswagen workers in Chattanooga, Tennessee voted to ratify their first union contract Thursday, securing pay bumps, job protections and a rare win for the United Auto Workers union in the South.

It’s been a long road to this contract. Workers initially voted twice against joining the union before casting ballots in favor in 2024, making this VW plant one of the few to unionize in the South, and the rare one that’s not a member of the “Big 3” auto companies: Ford, General Motors, and Stellantis. That was nearly two years ago and negotiations have dragged on since, with workers at one point granting the union the ability to call a strike if necessary.

But contract talks were resolved in early February when the UAW and Volkswagen struck a tentative agreement, which the workers have now voted to approve, with 96% of them voting yes.

“Volkswagen workers have moved yet another mountain,” UAW President Shawn Fain said in a press release sent by the union Thursday night. “From having the courage to stand up and form their union, to having the backbone to authorize a strike and hold out for a contract that honors their worth, VW workers are leading the way for the entire labor movement and non-union autoworkers everywhere. Welcome to the UAW family.”

In a statement after the tentative contract was announced, Volkswagen officials wrote, “These benefits recognize and reward the hard work and dedication our team members give every day.”

Workers will immediately get a $6,550 bonus when the contract goes into effect Monday. They will also receive a 20% wage increase across the life of the contract, which ends in February 2030. By then, the top hourly wage for production workers will be $39.41, and $49.86 for skilled workers like machinists and electricians, whose jobs require more education and training. That top wage does not include cost of living adjustments that are also in the contract.

Health care premiums will also be reduced by 20% — even more for some plans — and won’t go up for four years. The contract gives workers two additional days off, and guarantees them some job security benefits. For example, Volkswagen must hold discussions with the union before it can make layoffs. Volkswagen has committed to keeping the plant open for the duration of the contract and to making sure there’s enough production at the facility to keep workers on the line.

The UAW will charge members dues, a minimum of 1.44% of their monthly wages — significantly less than the wage increases negotiated. Workers can also refuse to pay those dues since Tennessee is a right to work state, meaning by law workers can’t be fired for failing to pay dues.

A rare win for the UAW in the South

If the UAW wants to grow, it must look to the South. The unionized automakers in Northern states, such as General Motors and Ford, have seen their share of stateside car manufacturing shrink. Instead, the country’s auto manufacturing growth has been led by foreign auto manufacturers expanding in Southern states. This new contract gives the UAW a new selling point for recruiting those Southern workers.

“They get new momentum out of this agreement,” said Steven Silvia, a professor at American University and author of the book The UAW’s Southern Gamble. “ It gives them more specific concrete things to say to workers in other plants on what you get if you get a union contract.”

Over roughly the last three decades, Nissan, Toyota, and Mercedes joined other overseas companies in opening around a dozen U.S. auto plants. That investment has continued, with Hyundai last year committing to invest $26 billion in the U.S., particularly in Southern states like Georgia, Alabama, and Louisiana.

The carmakers came to the South in exchange for hundreds of millions of dollars in state incentives, which went as high as $2.1 billion in tax breaks for a Hyundai plant in Georgia. In exchange, Southern states received tens of thousands of jobs that pay wages well above those of other occupations in the region.

Keeping wages competitive with unionized plants has long been part of a strategy to keep workers from wanting to unionize in the South. For example, Hyundai, which is not unionized, announced in 2023 it would raise wages 25% by 2028 — by then, production workers will be making $36.02 an hour as the top rate, seven cents less than what the Volkswagen production workers will be making that year under the new contract.