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UAW Falls 87 Votes Short Of Major Victory In South

Just 87 votes at the Volkswagen plant in Tennessee separated the United Auto Workers union from what would have been its first successful organization of workers at a foreign automaker in the South. Instead of celebrating a potential watershed moment for labor politics in the region, UAW supporters were left crestfallen by the 712-626 vote against union representation in the election that ended Friday night. The result stunned many labor experts who expected a UAW win because Volkswagen tacitly endorsed the union and even allowed organizers into the Chattanooga factory to make sales pitches. The loss is a major setback for the UAW's effort to make inroads in the growing South, where foreign automakers have 14 assembly plants, eight built in the past decade, said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research, an industry think tank in Michigan. "If this was going to work anywhere, this is where it was going to work," she said of the Volkswagen vote. Organizing a Southern plant is so crucial to the union that UAW President Bob King told workers in a speech that the union has no long-term future without it. The loss means the union remains largely quarantined with the Detroit Three in the Midwest and Northeast. Many viewed VW as the union's best chance to gain a crucial foothold in the South because other automakers have not been as welcoming as Volkswagen. Labor interests make up half of the supervisory board at VW in Germany, and they questioned why the Chattanooga plant is the company's only major factory worldwide without formal worker representation. VW wanted a German-style "works council" in Chattanooga to give employees a say over working conditions. The company says U.S. law won't allow it without an independent union. In Chattanooga, the union faced stern opposition from Republican politicians who warned that a UAW victory would chase away other automakers who might come to the region. Sen. Bob Corker of Tennessee was the most vocal opponent, saying that he was told that VW would soon announce plans to build a new SUV in Chattanooga if workers rejected the union. That was later denied by a VW executive, who said the union vote had no bearing on expansion decisions. Other state politicians threatened to cut off state incentives for the plant to expand if the union was approved.

VW to relax ambitious US sales targets?

The Volkswagen brand sold 407,704 cars last year, a 6.95-percent decline compared to 2012, and it's down a further 8.36 percent through the end of April 2014 compared to this time last year. In order to to put the sales football between its Strategy 2018 goal posts, the brand would need to add 100,000 more sales every year to achieve the lofty 800,000-unit target. Coming to grips with how unreasonable that is, VW US CEO Michael Horn has said, "For now, we have to have realistic targets."
The reasons for the brand's slow-down are imprecise, but lots of folks are throwing lots of reasons around. Last November, VW Group Chairman Ferdinand Piech told Bloomberg, "We understand Europe, we understand China and we understand Brazil, [but] we only understand the US to a certain degree so far." Analysts say the brand hasn't had midsize and compact SUV offerings, especially an overdue retail version of the CrossBlue, and the ones it does have are priced too high for their segments. It "didn't introduce enough new engines, or alternative technologies or model variants" for the Passat and Jetta. It devoted so many resources to China that the US market suffered. It was being outspent two-to-one on advertising by competitors. Its J.D. Power dependability ratings aren't high enough to overcome its past. It "has never really taken the US customer seriously." And so on.
There's still no official admission of defeat concerning the target, but reading between the lines there are some VW execs that appear to accept it won't happen short of some deus ex machina. Still,

Chrysler slows minivan production, hasn't built VW Routan this year

Chrysler has slowed production of its Town and Country and Dodge Grand Caravan minivans this week, Automotive News reports. The Windsor, Ontario plant will cut its three shifts from eight hours each to four hours each in an effort "to align production with market demand," a Chrysler spokesperson told AN. Chrysler also builds the closely related Routan minivan for Volkswagen at its Ontario facility, but has not built a single example thus far in 2013.
Sales of Chrysler's minivans fell 15 percent for the first two months of 2013, and a large part of that has to do with the 26-percent drop of the Grand Caravan alone (the T&C was only down by one percent). According to Automotive News data, as of March 1, Chrysler had an unsold inventory of 24,713 Town and Country models and 18,547 Grand Caravans - a 69- and 43-day supply, respectively.
"No sense running full speed now, then have a lot of vehicles sitting around a few months down the line," Chrysler spokeswoman Jodi Tinson told AN. Full production is expected to resume again on March 18.