In 2008, the governments of the city of Chattanooga, the county of Hamilton County, the state of Tennessee, and the United States all collaborated to provide Volkswagen (VW) with a $577 million subsidy package, the largest taxpayer handout ever given to a foreign-headquartered automaker in U.S. history. The bulk of the subsidy package, $554 million, came from local and state sources. The federal government also threw in $23 million in subsidies.
The package provided to VW included "$229 million from the state for training costs and infrastructure; $86 million in land and site improvements from the city and the county; state tax credits worth $106 million over 30 years; and local tax abatements worth $133 million over the same period. In exchange the company promised to create 2,000 jobs in Chattanooga, bringing the price tag for each promised job to $288,500.
According to a 2015 study by the Center for Automotive Research, auto workers at VW in Chattanooga had the lowest hourly pay and benefits of any employees in a U.S. car factory. The starting hourly wage rate for an assembly line worker at Volkswagen is about $15 an hour, or approximately $31,000 a year. A full-time production employee can top out their pay in seven years at a wage rate of $23 an hour, or about $48,000 a year. That makes the top pay at Volkswagen less than 80% of the estimated annual median income for Hamilton County. Third-party contractors hired by Volkswagen to work on the line in the plant and the network of auto suppliers servicing the factory pay even lower hourly wage rates.
Tennessee's billionaire governor, Bill Haslam, who happens to be the richest politician in the country, has expressed little concern over whether or not the jobs brought to the state were high paying. In fact, it appears that he is proud that they are not. In official material directed to foreign companies by the Haslam administration, the governor touted a pro-business environment in which companies can exploit a "low-cost labor force" thanks to the state's "very low unionization rates." (That's alongside the boon of state and local taxes that are "some of the lowest in the region.")
At the Chattanooga VW plant, workers also face a brutal lean-production management model on the assembly-line floor that works to squeeze higher productivity from a scant and beleaguered workforce. The working conditions on the assembly line are so physically demanding that many production workers cannot see working at VW as a long-term career.
In 2013, the United Auto Workers (UAW) decided against organizing around the salient issues in the plant and instead chose to frame their entire organizing campaign around collaboration with the company to form the first German-style "works council" in the history of the United States. The UAW's strategy was exclusively predicated on advancing what the union championed as an innovative form of labor-management partnership.
The UAW even went so far as to sign a neutrality agreement with Volkswagen which committed the union to "maintaining and where possible enhancing the cost advantages and other competitive advantages that [Volkswagen] enjoys relative to its competitors." When pressed to account for why the union would make such a shocking concession, then-UAW president Bob King issued this reply:
“Our philosophy is, we want to work in partnership with companies to succeed. Nobody has more at stake in the long-term success of the company than the workers on the shop floor, both blue collar and white collar. With every company that we work with, we're concerned about competitiveness. We work together with companies to have the highest quality, the highest productivity, the best health and safety, the best ergonomics, and we are showing that companies that succeed by this cooperation can have higher wages and benefits because of the joint success.”
In July 2014, Volkswagen announced that it was planning to invest $600 million into expanding the Chattanooga plant, adding additional assembly lines. More than a third of that investment will initially come from state and local governments who agreed to pump more than $230 million of upfront tax dollars into the project to woo VW into expanding in Chattanooga rather than at its other major North American plant in Puebla, Mexico. Combined with other property tax breaks, TVA incentives, road projects and other potential tax credits, Volkswagen could qualify for more than $300 million of grants, credits and other government assistance over the next decade.
The expansion of the Chattanooga plant brings the total subsidy package provided to Volkswagen up to about $877 million dollars.
In 2015 VW acknowledged that it produced over 11 million diesel vehicles worldwide that contained software allowing them to cheat nitrogen oxide tests. In November 2015, the Chattanooga VW plant stopped the production of the diesel Passat. VW agreed to a partial settlement with federal and state authorities of over $15 billion. How have the local and state government responded to the news of VW's rampant criminality and corruption? Speaking to reporters about VW and the scandal, Governor Haslam said, "We're married to them. We want this plant to be a success." Hamilton County Mayor Jim Coppinger, meanwhile, told reporters, "We need for the plant to be successful. It's important to our economy." The state is too invested in VW -- politically and financially -- to be in any position to truly hold the company accountable for its actions.
Put it all together and we have a formula for maximizing corporate profits that mixes equal parts political opportunism with class collaboration. Following the Great Recession, voters were desperate for jobs. Politicians, campaigning on bringing jobs to voters, are willing to provide massive subsidies to companies willing to locate in their voting districts. The union, desperate to organize new bargaining units from which to collect dues and to be seen as a legitimate partner with corporate and political elites, actually agrees to "maintain" and "enhance" the competitive advantages corporations gain by pushing private business costs off onto the public while providing jobs with lower wages, reduced benefits, and deteriorating working conditions. Meanwhile, the public believes they are getting "good jobs," while the actual quality of those jobs continues to decline. The companies laugh all the way to the bank. With their backs to the wall, unions like the UAW can no longer put off organizing auto makers and suppliers that choose to locate their plants in the South, but they will not succeed by promising to "work in partnership" with the companies. Labor organizers in the South will usually be working in an environment in which both business and government are hostile to unions. When the UAW narrowly lost the VW vote in 2014, the union should have learned a valuable lesson. The company might have formally committed to being "neutral," but the business and political elites in the South made no such agreement. If unions fail to win over the broader working class, they have no chance of winning representation elections -- especially in states like Tennessee, where only 6% of all workers belong to a union, and in cities like Chattanooga, where the unionization rate is even lower, at an abysmal 3.4% of all workers.
To win, unions will not only have to jettison the pipedream of courting management with promises of maximizing worker productivity and containing costs. Rather, they will have to return to their militant roots: connecting shop-floor fights with community organizing. All of this is easier said than done. But we are currently faced with the atrocious working conditions and ever-diminishing wages and benefits of manufacturing jobs, the spread of poverty throughout our communities. The time is ripe for organizers to begin harvesting the fruits of our exploited labor.
Taken from here, an article by Chris Brooks on the Truth Out website