The United Auto Workers said late Wednesday night that it had secured a tentative first contract with Volkswagen AG at the automaker’s assembly plant in Tennessee — a historic milestone for a union that had long struggled to break into the South’s fast-growing auto industry.
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 UAW President Shawn Fain in a Facebook Live announcement of the deal, flanked by several members of the union’s bargaining team and his chief of staff.
Workers at the plant had overwhelmingly voted with 73% in favor of joining the union in April 2024, making it the UAW’s first foreign-owned plant in the South to organize.
The latest development comes after a broader southern car factory organizing push by the UAW has largely sputtered out, and the larger union has recently been distracted with various crises, including senior leadership turmoil and harsh criticism by a reform watchdog. But the VW tentative contract, after months of difficult bargaining and threats of a strike, is sure to provide a major boost for the union and Fain, as the UAW heads into an tumultuous election year for its top leadership positions.
Fain described the contract as a major breakthrough in a region where foreign auto companies set up shop because they could pay less, and have other looser standards than union shops.
“We have a different plan,” he said. “Our plan is to organize the non-union auto industry, win strong union contracts, and bring the standards up, so autoworkers everywhere can win their fair share.”
Volkswagen confirmed the deal and said 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.”
Talks to secure a first contract for more than 3,000 represented workers had dragged on.
VW said in September that it had provided its best and final offer to union bargainers and that members should be able to vote on it. But UAW officials said that offer, which did include a 20% wage increase but a lower ratification bonus, didn’t go far enough with job security language, as well as on health care costs.
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.
Officials sought a contract similar to the one Detroit Three workers secured in 2023. The Volkswagen deal notably includes wage increases lower than the 25% increases from those contracts, though Fain, in his address, pointed out that VW had previously handed out an “11% UAW bump” in salary after the union looked like it might organize the plant.
Last fall, UAW members voted to authorize a strike if necessary. But instead of a work stoppage, the two sides went mostly quiet for the past few months. Former UAW Vice President Chuck Browning, an experienced contract negotiator, had led the talks with Volkswagen and now plans to retire.
The original Volkswagen organizing victory was supposed to be the first of several as the UAW allocated $40 million to unionize a series of transplant auto plants in the South. But further efforts have largely stalled, including a failed vote at a Mercedes-Benz AG plant in Alabama not long after the VW election.
But the union succeeded last year in organizing a large joint-venture EV battery plant in Kentucky, jointly owned by Ford Motor Co. and SK On. But that facility recently laid off all 1,500 employees as it transitions to eventually make a different type of battery for energy storage.
Fain argued that, after the new VW contract, more workers should consider joining: “To all the non-union autoworkers listening out there, this is your victory, too,” he said. “A better life is out there, and it starts with joining the UAW.”
@lramseth
