The Ramifications of the UAW’s Victory at Volkswagen’s Chattanooga, Tennessee Assembly Plant

White Paper

This white paper examines the implications of the UAW’s historic unionization vote at Volkswagen’s Chattanooga plant.

Here’s a glimpse of what you’ll learn:

• How the UAW victory could reshape the landscape of auto manufacturing.
• Key challenges in negotiating a labor contract that benefits both workers and Volkswagen.
• An analysis of wage disparities between the Chattanooga plant and the Detroit Three.
• The potential impact on production costs and future investment in the Chattanooga plant.

Gain valuable insights into the future of the U.S. auto industry with this analysis.

Revision note: An earlier version of the white paper discussed temporary workforce wages. According to a Volkswagen Group of America spokesperson, Volkswagen does not employ a temporary workforce. Therefore, comparing the wages of part-time/temporary workers between VW Chattanooga and the Detroit Three plants is irrelevant to the total labor cost analysis.

UAW’s Next Frontier: Mercedes-Benz in Alabama

White Paper

This white paper examines the upcoming unionization vote at the Mercedes-Benz U.S. International (MBUSI) plant in Tuscaloosa, Alabama, scheduled for May 13-17, 2024. The paper explores the significance of this vote for both the United Auto Workers (UAW) and Mercedes-Benz, considering the recent changes within the UAW and the potential impact on labor relations in the South.

Key points explored in the white paper:

• The UAW’s recent leadership changes and renewed focus on organizing.
• Mercedes-Benz’s Tuscaloosa plant as a strategic asset and its current labor practices.
• Potential benefits and challenges of unionization for both the UAW and Mercedes-Benz.
• The broader implications of the vote for the future of labor relations in the U.S. automotive industry.

Impact of 2023 UAW-Detroit Three National Contracts on the U.S. Auto Industry 

Whitepaper

On October 30, 2023, General Motors (GM) and the United Auto Workers (UAW) reached a tentative agreement, bringing an end to the longest UAW strike against an automaker since 1998. Lasting 46 days from September 15 to October 30, 2023, the 2023 UAW strike saw extensive negotiations between the UAW and the three major domestic automakers—commonly referred to as the Detroit Three: Ford, GM, and Stellantis. These negotiations resulted in what are being reported as “record contracts,” poised to significantly influence the U.S. automotive industry for years to come. This whitepaper aims to encapsulate the salient components within the UAW-Detroit Three 2023 National Contracts and assess their immediate and long-term impact on the U.S. automotive sector.

CAR’s estimates demonstrate that General Motors—the largest automaker by U.S. market share and second-largest automaker by U.S. light vehicle production volume—is a significant contributor to the U.S. economy and the economies of the nine states in which GM has manufacturing facilities. Close to 90 percent of the light vehicles GM builds in the United States are also sold in the country. GM is also among the largest investors in the U.S. automotive industry, with a total of $44.3 billion in announced investments in the country since 2000. Over the past 19 years, nearly four out of every five dollars General Motors has announced it would invest in North America have been spent on U.S. facilities.

This report is presented in two major sections: a brief history of GM in the United States, which includes GM’s sales, market share, production, and investments, and the economic contribution of General Motors in the United States and the nine states in which GM has manufacturing operations. Two appendices cover the modeling methods and provide detailed employment contribution results by U.S. industrial sectors.

CAR’s analysis assumes that Canada, Mexico, and South Korea are exempt from potential Section 232 auto and based on the Korea-United States free trade agreement (KORUS) and exemptions from Section 232 auto and parts tariffs for Canada and Mexico that were agreed to in side letters to the USMCA that was signed in November 2018.

Rather than help the U.S. automotive and parts industries, the cumulative effect of the Section 232 steel and aluminum tariffs, Section 301 China tariffs, USMCA, and the potential 25 percent Section 232 tariff on imported autos and auto parts could lead to a 1.3 million drop in U.S. light vehicle sales, 366,900 fewer U.S. jobs, and $30.4 billion lower U.S. economic output (Gross Domestic Product). U.S. new automobile dealerships could lose as many as 77,000 jobs and $43.6 billion in revenue.

Used vehicle prices will also rise due to heightened demand and constricted supply, and higher automotive parts prices will drive up the price of vehicle maintenance and repair, so even holding on to an existing vehicle will become more expensive.

U.S. automotive and automotive parts manufacturers would not benefit from tariff or quota protection since all vehicles produced in the United States rely on imported content and a substantial share of U.S.-produced automotive parts and components are exported for assembly in vehicles built in other countries. CAR estimates that automotive demand will fall by between 493,600 to 2 million vehicles as a result of the implementation of tariffs or quotas. Declining demand is associated with employment losses ranging from over 82,000 to nearly 715,000 jobs and a $6.4 billion to $62.2 billion hit to U.S. Gross Domestic Product (GDP).

This briefing covers the economic, trade, employment, output, and price impacts of the potential Section 232 tariffs or quotas at a range of levels and levied against all trading partners or all non-NAFTA trading partners.

This report focuses on the impact of automotive lightweighting solutions involving new designs with lightweight materials and advanced forming and joining processes on training received by current skilled trades workers and industrial maintenance associates, as well as curriculum development for apprenticeships.

This research was conducted with support of a grant from the Arconic Foundation and was first released at the CAR T3 Manufacturing Summit.

President Trump has signaled his intention to withdraw from NAFTA or to renegotiate major provisions of the agreement. NAFTA has contributed to the growth of integrated automotive production and supply networks within the North American region, and significant changes to the tariff structure will have major ramifications for automotive manufacturers and suppliers. These ramifications range from the vehicle makers’ ability to deliver an affordable mix of vehicles consumers demand, to the ability to support supply chain requirements with globally cost-competitive raw materials as well as products that might not have any sources within the United States.

While there are always opportunities to improve the effectiveness —a wholesale withdrawal from NAFTA could set in motion a series of unintended consequences that would constrain future growth of the U.S. automotive industry. This briefing outlines the benefits of NAFTA to the automotive industry, consumers, and the economy as a whole, as well as the potential consequences if the U.S. were to unilaterally withdraw from NAFTA.

Combined with lower labor costs, Mexico’s unique free trade position with 40 countries and access to 47 percent of the world’s automotive market provides a significant competitive edge to attract automotive investment that the United States and Canada do not have. Growth in Mexican production volumes, however, can still result in new business for U.S. and Canadian suppliers. Due to well-integrated North American supply chains, vehicles produced in Mexico may be comprised of up to 40 percent U.S. content. In fact, U.S. exports of parts and components to Mexico more than doubled between 2005 and 2014 to a level of $18.4 billion.