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TN Will Likely Keep Pledge to Grant VW $300M Incentives Package

Despite some Tennessee lawmakers displeasure with the growing influence of the United Auto Worker’s union at the Volkswagen plant in Chattanooga, the Legislature appears likely to approve a $300 million incentives package for the automaker.

A few members of the General Assembly’s Hamilton County legislative delegation grumbled to the Chattanooga Times Free Press editorial board last week that VW’s continued acceptance of the labor union was causing them some consternation about whether or not to approve the proposed incentives in this year’s legislative session.

Sen. Todd Gardenhire, a Chattanooga Republican, told TNReport Wednesday he was upset with the automaker and labor union for “not honoring” the outcome of the unionization vote last year. “They voted in a fair election not to be represented by UAW, and then they turn around and ignore that,” he said. But Gardenhire added that if a promise was made by the state’s governors, the Legislature would “honor that” because they didn’t want to “embarrass the state.”

Likewise, Senate Speaker Pro Tem Bo Watson said while the incentives could probably come up  during the greater budget discussion, the Volunteer State has “a long history of honoring its commitments, and none of us collectively are going to allow that not to happen.”

Additionally, House Majority Leader Gerald McCormick, R-Chattanooga, told reporters Wednesday that while he didn’t want the UAW to “slip in the back door because of a secret deal with Volkswagen,” he expected the Legislature to approve the incentives because “Tennessee will keep its promises.”

And despite the skepticism of Hamilton County legislators, the head of Volkswagen Group for the Americas said he is “very confident” the incentive package will be approved.

Gov. Bill Haslam said last week he understood the lawmakers unease, and he had “expressed” similar concerns as well, but he hoped the local lawmakers would support the incentives package because their votes — as the hometown gang — would be “very important” to its passage. The package was offered to the German company last summer to encourage expanded production at the Southeast Tennessee location. The automaker announced in July Chattanooga would be home to production lines for the new CrossBlue and Cross Coupe GTE.

“We’ll have those discussions about where we think Volkswagen is and why we think this is the right proposal for the state,” Haslam said.

Haslam added future efforts by Tennessee to recruit businesses could be harmed if the legislation fails. “We always put that as a caveat to the deal, that the Legislature has to approve, but historically, that has always happened in Tennessee,” he said.

Last February, the UAW failed an attempt to unionize the plant — 712 to 626 — leading them to file a complaint against several Tennessee politicians who suggested the unionization could interfere with the incentives. The UAW later dropped the case, citing the time it would have taken to settle.

Haslam said this Spring he hadn’t intended withholding incentives from the company as a threat — he was just making “a statement of reality.”

The UAW has since established a chapter at the plant, and currently claims to represent about 45 percent of VW employees, giving the labor group the right to meet with top managers every two weeks, as well as regular plant access. Because of the closeness of the labor vote Volkswagen adopted a new policy to allow multiple unions to represent workers, with representation rights depending on the number of employees the union speaks for.

A rival labor group — the American Council of Employees — has complained that VW is showing favor to the UAW. ACE has also been working to sign up members in what they call an effort to offer the plant’s employees a choice in representation.

The UAW announced in December that Chattanooga’s Local 42 had been invited to participate in an executive committee meeting of the Volkswagen Group Global Works Council in Germany this month. The ACE interim president has disputed the UAW’s numbers, and said a number of the signatures the autoworkers union claims are invalid.

The free-market Nashville-based Beacon Center of Tennessee awarded its 2014 Yuletide season “Lump of Coal” jointly to UAW and VW. The Beacon Center bestowed the “dubious distinction” on UAW and VW for having “seemingly worked together to bilk the taxpayers of the state out of hundreds of millions of dollars,” a Beacon Center blog post declared. The center also alleged that despite being “firmly rejected” by employees at the plant, “UAW has continued trying to bully its way into the plant, and VW has seemingly been more than happy to comply.”

Volkswagen Announces New SUV Line for Chattanooga

Volkswagen has announced that Tennessee will be home to its new SUV production line, representing a $600 million investment in the Volunteer State that’s expected to generate 2,000 more jobs at the company’s Chattanooga plant.

The automaker’s decision, which includes plans to establish a new strategic marketing and research facility in Tennessee, comes on the heels of an announcement by the United Auto Workers union that it would be opening an office for a voluntary chapter at the Southeast Tennessee VW plant.

“The impact of this announcement goes far beyond the 2,000 new jobs because of the large multiplier effect of the automotive industry,” said Tennessee Gov. Bill Haslam, in a press release, “and adding an additional manufacturing line and the National Research & Development and Planning Center sends a clear signal that Tennessee can compete with anyone in the global marketplace.”

The press release from the Governor’s office also notes that the state is providing a $165.8 million grant for site development, infrastructure, equipment acquisition and construction costs, as well as a $12 million grant for new employee training.

Volkswagen Group of America has agreed to waive certain tax credits related to its expansion as part of the incentive package.

And some other leaders in Tennessee auto manufacturing supplies — such as Kim Ketchum, Magneti Marelli’s corporate director of business development  or James Adams with eSpin Technologies, Inc. — echoed the Governor’s point that VW’s decision to increase production could create more demand for vehicle parts and positively impact other areas of auto manufacturing across the state.

Others have expressed hope that the expansion will lead to more emphasis on STEM education in the Chattanooga region.

Volkswagen has also named global works council chairman Bernd Osterloh to the board of directors for it’s American auto group.

Political leaders and industry groups lauded the German automotive group’s decision to expand.

U.S. Senator Bob Corker, formerly Chattanooga’s mayor, reminisced about the day, “six years ago,” that he received a call from the Volkswagen board that Chattanooga was where they had decided to locate.

“Today’s announcement is a similar high point,” Corker said in a press release, “as VW’s significantly expanded presence means that thousands of more families will benefit from the good paying jobs being created at the plant.”

Tennessee Democratic Party Chairman Roy Herron praised former state senate colleague and current Chattanooga Mayor Andy Berke, as well as other city leaders and VW employees, for bringing the expansion and jobs to the state.

“We commend the management and workers at Volkswagen as well as Mayor Berke and other city and county leaders who persevered and brought these jobs despite Republican threats, attacks, and interference with the rights of this company and its workers,” Herron said.

The UAW’s secretary-treasurer, Gary Casteel, issued a statement Monday to congratulate Volkswagen, its employees and Tennesseans on the automaker’s expansion, and thank Haslam for extending the necessary incentives to make the expansion work.

“State officials assured the public and Volkswagen employees that the decision on incentives for Chattanooga would not be related to whether workers exercise their right to join a union, and they kept their promise,” Casteel said in the statement, as reported by WTVC in Chattanooga.

In the statement, Casteel also alleged that the autoworkers union’s decision to expand to the Scenic City played a part in the decision of the automaker. “The fact that the new line is being announced four days after the rollout of UAW Local 42 in Chattanooga reinforces the consensus that the UAW has reached with the company,” Casteel said.

The decision garnered national and international coverage from outlets such as the Associated Press, New York Times, Wall Street Journal, USA Today, Detroit Free Press, CNN, Reuters, Bloomberg, and Automotive News.

Upcoming UAW Vote at VW Concerns TN Senate Labor, Commerce Cmte Heads

Press release from the Tennessee Senate Republican Caucus; February 10, 2013:

NASHVILLE, Tenn, (February 10, 2014) — The Chairman and Vice-Chairman of Tennessee’s Senate Commerce and Labor Committee today expressed concern regarding the United Auto Workers (UAW) upcoming vote in Chattanooga, saying a vote for organized labor would harm Tennessee’s reputation as a business-friendly state and reverse the state’s recent progress in automobile-related job growth.

Chairman Jack Johnson (R-Franklin) and Vice-Chairman Mark Green (R-Clarksville) said the General Assembly has worked in concert with Governors Phil Bredesen and Bill Haslam for the past several years to move forward policies to support Tennessee’s competitive standing in growing and expanding new and better paying jobs in the state. The lawmakers said that pending decisions of VW employees are of statewide interest at a pivotal time when Tennessee stands currently as a national leader in job creation.

“We greatly value our auto workers, both in Middle Tennessee and in Southeast Tennessee,” said Senator Johnson, a businessman whose legislative district is home to the General Motors Spring Hill plant and Nissan’s North America headquarters.

“Our communities are very similar with great neighborhoods, schools that focus on achievement and a local economy that is envied by many. The automotive industry is a very important part of the quality of life we enjoy.” “As Chattanooga workers vote on the United Auto Workers presence, it is a decision that transcends just one community,” he added. “There is tremendous competition for job growth among states. A vote for organized labor would impede our daily efforts to benefit Tennessee families as we compete nationally in job growth. I ask that Chattanooga lead to honor Tennessee’s competitive spirit so we can continue moving our state’s job growth forward. Chattanooga workers, we don’t need the UAW in our state.”

“In business, reputation means a lot,” added Senator Green, who is a practicing physician and businessman who represents the more rural Clarksville region that competes with industry across the state-line of Kentucky. “Tennessee has developed a reputation of a top location for families and businesses because of the lower cost of living, commitment to an educated workforce and folks keeping more of our wages by holding taxes low.”

“Volkswagen chose our state and your community for important reasons: Chattanooga workers have a great reputation of a great work ethic and make an excellent product. That reputation has been yours without the United Auto Workers,” he continued. “The free market that VW chose in our state produces competition, empowers employees far more than a labor union, and keeps bringing jobs to Tennessee.” The United Auto Workers vote is scheduled for Wednesday, February 12 through Friday, February 14 at the Volkswagen site in Chattanooga.