Volkswagen workers in Tennessee narrowly voted to reject joining a union, crushing the United Automobile Workers union’s attempt to unionize a foreign-owned car factory for the first time, officials announced late Friday.

The 712-626 vote (53%-47%) against unionization at the German automaker’s three-year-old factory in Chattanooga is a setback for UAW because labor experts had thought Volkswagen gave the union its best shot of setting a precedent to make inroads with transplants such as Mercedes-Benz, BMW and Nissan.

“It would have been a confidence booster, a relevance factor and message saying that we’re growing and doing things people didn’t think we could,” said Art Wheaton, director of The Worker Institute at Cornell University.

The UAW is almost certain to challenge the vote with the National Labor Relations Board because of potentially influencing comments made by Republican lawmakers and anti-union groups in recent days. U.S. Sen. Bob Corker (R-Tenn.) suggested that Volkswagen would reward Tennessee by bringing production of a new car to the factory if voters rejected forming a union. The automaker denied the claim. About 165 workers, or 11%, didn’t vote.


Volkswagen said it stayed neutral through the process, even welcoming UAW representatives to speak to employees inside the factory.

“Whatever the result, workers and Volkswagen should feel proud of how they conducted themselves,” the UAW said on Twitter as votes were being counted Friday night.

The union also said the “outside interference was an outrage.”

Like many European automakers, Volkswagen has long worked with unions at home through a system known as works councils.


Workers at each factory elect a works council to make decisions with bosses over local issues, such as work schedules, while the larger national union negotiates pay and other major bargaining points. It was expected that the two-part system would take hold in Chattanooga, the only notable Volkswagen plant that didn’t have a works council. And in the U.S., labor law experts said a works council couldn’t be created without a union representing the workers as well.

Wheaton compared the system to the U.S. Senate.

“Chattanooga doesn’t get a senator unless they have a union,” he said. “With a union, they are given a voice in the Senate to say, ‘Bring that product to Chattanooga.’”

The automaker said it would not stop trying to bring works councils to the U.S.


“Our employees have not made a decision that they are against a works council,” the company’s local chief exeutive, Frank Fischer, said. “Throughout this process, we found great enthusiasm for the idea of an American-style works council both inside and outside our plant.”

German and Japanese automakers opened shop in the South four decades ago, taking over cornfields and deliberately avoiding areas where unionization might be desired. As they cut into the profits of unionized Detroit automakers such as Ford and General Motors, the UAW’s membership plummeted from 1.5 million to 380,000 as of 2013.

To grasp back what it’s lost, the UAW has tried to soften its image to appeal to German, Japanese and South Korean automakers with U.S. plants.

Bringing in a works council would have sent a signal to the other automakers that the UAW is prepared to be more cooperative and less adversarial, labor relations experts said.


“This was going to help reduce some of the demonetization of the unions,” Wheaton said. “You’ll have workers elsewhere saying, ‘Volkswagen doesn’t see them as a huge problem, maybe we can do something like that.’”

The vote could bring discomfort to IG Metall, the union that represents Volkswagen workers in Germany.

“Work is being outsourced to a cheaper, non-union site and unions throughout the world would be upset with that,” Wheaton said.

Tennessee saw union membership grow more than any other state in 2013, rising 25% to include 155,000 of its 2.5 million workers. The numbers were boosted by a new General Motors plant and the rebounding construction industry.


But the white, male workers that represent much of the South’s labor force remain staunchly anti-union, said Nelson Lichtenstein, director of UC Santa Barbara’s labor studies center.

“This stuff is embedded into the political life of Tennessee, and they take their guidance from conservative politicians,” he said.

That’s why the comments made by leading Republicans and groups such as those run by anti-tax advocate Grover Norquist worried union organizers during voting this week. Two-thirds of Chattanooga voters supported Corker in the 2012 election.

Labor advocates criticized Corker for saying he is against government interference in private affairs, yet meddling with the Volkswagen vote. Cornell’s Wheaton said Tennessee leaders want to protect the state’s reputation as having a low cost of doing business.


“The members of the Tennessee Senate will not view unionization as in the best interest of Tennessee,” State Sen. Bo Watson told reporters this week. He said the legislature might not approve more incentives for Volkswagen if the plant joined UAW.

Except for some new hires, the pay of UAW workers at U.S. automakers exceeds that of the more than 1,500 Volkswagen workers in Chattanooga, according to industry estimates. The $1-billion plant builds the Passat sedan, and the world’s third best-selling automaker has said its weighing whether to begin manufacturing a new crossover vehicle there or in Mexico.

Jack Getman, a law professor at the University of Texas at Austin, said foreign automakers are crucial to the UAW’s future.

“The single biggest group that could change the fate of the union is transplants such as Toyota, Honda and all those who have built factories in the U.S. and successfully fought off the union,” Getman said.


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