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Detroit's Big Three May Gain as UAW Sets Sights on VW in Tennessee

Stocks in this article: F GM

"That's one reason that there might be more interest in a union,'' McAlinden said. "It's very rare to see layoffs at the transplants. We really hadn't ever seen them at the transplants until the crisis of 2009."

Yet wages are not the only issue defining the organizing drive at Chattanooga. In fact, the Chattanooga effort may reflect more about Volkswagen than about worker compensation, says Shaiken.

VW, as opposed to other automakers, has been successful at working with labor unions in ways that might seem unusual for U.S. manufacturers, especially those in the South. VW, the world's second-largest automaker to Toyota, posted $248 billion in global sales in 2012 with 13% profits.

"Volkswagen's whole approach globally to building cars relies on certain ways of organizing work and involving workers," Shaiken said in a phone interview from Berkeley. "VW feels very comfortable dealing with unions. It has turned that into a competitive advantage, and achieved stellar results with 'work councils' in many places."

UAW referred questions to a Sept. 6 statement on talks with Volkswagen management in Germany, which said that "the UAW is committed to engaging with VW in open, fair and respectful dialogue to create an environment where Tennessee workers can participate in VW's global work council system."

Further north, the Detroit Three are doing better than they have in decades thanks to the federally-led reorganization that eliminated excess capacity at its factories, allowing the domestic automakers to match the tight production controls long employed by the transplants.

GM's shares have surged 58% over the past 12 months, bolstered by redesigned full-size pick-ups and success at lowering employee health care costs. Ford's shares have jumped 70% in the past year. As for Chrysler, its majority owner Fiat Spa may agree to an initial public offering for the smallest of the three Detroit automakers though that will likely depend on ongoing negotiation with the UAW's retiree trust, which owns 41.5% of the company not owned by Fiat.

For the UAW, the stakes are huge. The UAW's membership among auto workers and parts manufacturers is about 165,000, far below its membership in 1985 when the union counted 465,000 members at General Motors alone, another 170,000 at Ford and Chrysler and still 200,000 more at suppliers, according to the Center for Automotive Research in Ann Arbor.

What goes on at Chattanooga may influence not only the future survival of the UAW, but the prospects for GM, Ford and Chrysler.

"We are now at a point where instead of the negotiations in Detroit setting the standard for the transplants, the transplants are going to set the standard for Detroit," Shaiken said. "That's why Chattanooga is so very important."

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>News stories and columns by Leon Lazaroff LeonLazaroff.

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