Success securing a tentative contract for the United Auto Workers' first unionized foreign-owned plant in the South this week could help labor gain traction in the region and aid embattled union leaders' reelection campaigns, analysts said.

The deal announced late Wednesday night between Volkswagen AG and the automaker's assembly plant in Tennessee follows what so far has been a largely unsuccessful car factory organizing push in the South by the UAW. Also plaguing the UAW are a series of recent crises, including senior leadership turmoil and criticism from a federal reform watchdog.

A contract in the South might be the boost the union, as well as embattled UAW President Shawn Fain, needs, said Art Wheaton, director of labor studies at Cornell University.

“It helps to have more progress for when you try in the same state,” Wheaton said. He pointed out the Nissan Motor Co. facility in Smyrna, Tennessee, as a workplace that could become “more of a target.”

The UAW has tried and failed to unionize that plant three times before, most recently in 2023.

“It also gives a little bit more push for Mercedes-Benz in Vance, Alabama,” the labor scholar added. “For Hyundai and Kia, it's still going to be a very difficult battle, since they are notoriously anti-union.

“And I am not optimistic for BMW at all. South Carolina has kind of put their marker out front saying we don't allow unions here. Stay out. You'll never get money from us if you bring a union in.”

The deal, which now goes to a vote by members, includes a 20% raise over the four-year contract, what union officials described as a 20% health care cost reduction for members, as well as long-term job security provisions for the Chattanooga plant that makes Atlas, Atlas Cross Sport and ID.4 SUVs. It also includes a $6,550 worker bonus upon ratification, plus annual $2,550 bonuses.

"This is a historic moment, not only for these members, but for the union as a whole, and the entire working class," said Fain in a Facebook Live announcement of the deal late Wednesday night, flanked by several members of the union's bargaining team and his chief of staff.

The tentative deal includes lower out-of-pocket health care costs and improved coverage, according to the union, as well as protections against unilateral job cuts, shift reductions, and outsourcing at the plant. It also includes stronger health and safety standards, as well as certain paid time off and scheduling protections, officials said.

Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions LLC, cautioned against overestimating the value of a Volkswagen contract.

"Breaking into Volkswagen is a good sign for the UAW's growth," Fiorani said. "However, they've had a similar move at Mercedes that failed. So just looking at Volkswagen by itself might be a positive sign, but it's an anomaly in the South.

"A lot of the workers are happy with their situation," he added. "And a lot of the workers, especially in the South, question the idea of organizing in a labor union. So getting more of them on board would be tough, but it's not impossible."

Marick Masters, a management professor emeritus at Wayne State University, said "the devil is really in the details" when it comes to the contract. The longtime UAW observer said he's waiting to see the text of the agreement on health care, scheduling and job assurances to gauge how protective it will be for the rank-and-file going forward.

He similarly cautioned that organizing efforts outside Chattanooga "seem to have to come to a standstill" and pointed out that Fain, in his Facebook Live announcement, was mum on the status of union drives elsewhere.

Wheaton said the tentative VW contract, even without being ratified yet, is a significant accomplishment in its own right.

“There's like 650 Starbucks that have voted to get a union, and they currently have zero collective bargaining agreements,” he added. “It is not easy getting a first contract if the employer digs in and says, ‘No, no, no, absolutely not, over my dead body.’ So it means they did a lot of things right to get to this point.”

But he also stressed final approval is not a given.

“First contracts are tricky,” Wheaton said. “It's never a slam dunk that they will get enough votes to ratify. Are the membership’s expectations going to be too high? Or are they going to accept what looks like a pretty good contract, but not as good as Ford and GM?”

If the membership does not ratify the contract via a simple majority, UAW and VW negotiators will have to go back to the bargaining table.

Longtime VW worker Darrell Belcher voted against unionization originally and later helped organize a union decertification campaign. He said Thursday that he needs more specifics about the tentative deal before deciding whether to vote for it, but he's leaning against it. Among his concerns is whether the promised bonuses will be fully paid out to members.

Volkswagen said Wednesday night that the UAW would be explaining the details to its membership.

"This comprehensive agreement will provide meaningful changes for our workforce, including increased wages, reduced health care costs, and more paid time off," the automaker said in a statement from spokesperson Michael Lowder. "All these benefits recognize and reward the hard work and dedication our team members give every day."

Union leadership

Fiorani said UAW leaders, including Fain, will "tout the fact that they opened up the South" during reelection campaigns this year.

"It's a move that has been planned for decades," Fiorani said, "and it finally happened under President Fain's watch."

Wheaton said sealing the contract will bring another boost.

“Every UAW president in the last 40 years has made some attempt to do something in the South, and this is one that actually gets a contract,” Wheaton said. “So one, successful organizing. Two, if you get a ratified contract, that's a really big thing that many people did not expect to be possible.”

Fain’s successful collective bargaining with the Detroit Three automakers in late 2023 combined with a Volkswagen win would be a “another big feather in the cap of saying, ‘I’m not just a blowhard politician trying to promise the world,'" Wheaton said.

"This is someone actually delivering on a promise that he has been working very hard on," he said.

He added that a recent scandal over Fain’s retaliation and threats toward other UAW leaders likely would not factor strongly into rank-and-file voters’ decisions in upcoming union elections.

“What do you care more about, the scuttlebutt and the whispers and the gossip at work?” Wheaton asked rhetorically. “Or do you care about your paycheck?”

Masters, of Wayne State, was more skeptical on that front. He said the scandals could significantly erode Fain's support within the union, though that would matter only if a formidable opponent emerges.

"The question of his future depends on if a viable candidate surfaces to run against him," Masters said. "And it's not evident right now that there is a viable candidate."

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