Detroit — Volkswagen workers’ vote for United Auto Workers representation last week was driven by the union’s promise of the same rich $108,000 annual pay package (equivalent to a Silicon Valley software developer’s income) that the union won for Detroit Three blue-collar workers last fall.
But VW’s surrender to the highly partisan union played a factor as well.
In a not-so-subtle threat to all 13 nonunion auto companies being targeted by the UAW, 33 Democratic Party senators sent a letter earlier this year demanding that they remain neutral in the union’s campaign.
“We believe a neutrality agreement is the bare minimum standard manufacturers should meet in respecting workers’ rights,” wrote the senators, before getting to the point. “Especially as companies receive and benefit from federal funds related to the electric vehicle transition.”
Unionize, or pay the consequences.
These are dramatically different times in the U.S. auto industry since the UAW last tried to organize VW’s Chattanooga plant in 2019. Today’s industry is being forced by U.S. governments — at both the federal and state levels — to manufacture electric vehicles to solve the manufactured climate crisis.
Failure to meet government sales mandates will be met with massive fines that increase by leaps and bounds after 2026. California, the nation’s biggest auto market, will, for example, require that 35 percent of automaker sales be of battery-powered vehicles by 2026. Failure to meet that number will cost them $20,000 per vehicle for every vehicle below the threshold. The percentage jumps to 43 percent in 2027, 51 percent in 2028, 59 percent in 2029, and 68 percent in 2030 on the way to outlawing the sales of gasoline cars in 2035. Federal penalties are similarly harsh.
Tesla aside (as an EV-only seller, it is not only exempt from penalties, but also receives generous subsidies), just 5 percent of sales today are electric, with 50 percent of EV buyers returning to a gas car when they go back to market.
To help automakers meet their arbitrary sales goals, the U.S. government is greasing the “EV transition” skids with billions in federal aid under the Inflation Reduction Act to construct battery plants and sweeten each EV purchase with $7,500. To gain that subsidy, the Biden administration prefers that EVs be domestically produced — preferably with UAW labor that ultimately benefits Democratic election coffers.
An admirer of Communist Chinese industrial policy, Energy secretary Jennifer Granholm is determined to follow in their EV footsteps.
“China . . . has adopted 14 five-year plans that are focused on dominating supply chains and manufacturing products that we used to excel in. They’re producing huge volumes of solar panels and EVs,” she told media allies at the National Press Club in February. “But we are fighting back.”
VW got the message. It was notably neutral in its handling of this year’s UAW campaign, in contrast to the union’s narrow 2019 defeat when the German transplant actively discouraged unionization — creating a website detailing the benefits of a non-union shop as well as links to anti-UAW editorials and UAW corruption.
With a UAW shop, VW will lose its competitive cost advantage over Detroit automakers — a big reason it located its sprawling 350,000-square-foot facility in right-to-work Tennessee in 2011. VW’s nonunion labor costs are 30 percent less than those of U.S. competitors on the popular VW Atlas SUV and VW ID.4 electric vehicle, and the plant hasn’t been shackled by inefficient UAW work rules.
But the cost equation may be changing as governments dictate product planning.
Ford lost over $4 billion on its EV operations last year, and VW EV sales have cratered in Europe, where EVs are also mandated. VW has dealt with unions for years in Europe and may feel the cost of unionization is a necessary price to stay in the good graces of Democrats who control the subsidy spigot.
“VW is accustomed to a union environment in Germany,” said veteran industry analyst and Seeking Alpha columnist Doron Levin. “But the UAW is likely to be more adversarial and militant than Germany’s metal workers union.”
It’s the second time VW’s U.S. facilities have opened their doors to the UAW. The union successfully organized Volkswagen’s Pennsylvania facility in 1978. Years of labor unrest followed, with VW eventually shuttering the plant in 1987.
“Every autoworker in this country deserves their fair share of the auto industry’s record profits, whether at the Big Three or the Non-Union Thirteen,” UAW president Shawn Fain said in response to the senators’ February letter. “It’s time for the auto companies to stop breaking the law and take their boot off the neck of the American autoworker, whether they’re at Volkswagen, Toyota, Tesla, or any other corporation doing business in this country.”
In Chattanooga, Fain got his wish and will next target Mercedes’ Alabama plant. But as unionization takes hold, workers may regret its consequences. Detroit Three automakers are accelerating robotic automation in their plants to replace expensive worker jobs. In union-heavy Europe, meanwhile, the high costs and low demand for EVs have led to thousands of layoffs in the last year as carmakers and their suppliers struggle to meet governments’ socialist EV vision.