VW offers Tennessee workers 14% wage hike, profit sharing amid contract talks

Volkswagen (VW) on Wednesday proposed a 14 percent wage increase for four years for workers at its Chattanooga, Tennessee assembly plant, profit sharing incentives, and improved healthcare benefits. This follows ongoing contract negotiations with the United Auto Workers (UAW), which was granted the right to represent the plant’s hourly employees in April.

The state, part of VW's effort to address worker demands and strengthen labor relations in the US auto industry, introduces profit-sharing at the Tennessee facility for the first time.

But the UAW still remains critical of the offer. UAW Volkswagen Bargaining Committee member Yogi Peoples expressed dissatisfaction, saying VW is still not taking our demands seriously. They have the resources to meet our calls for a record contract, which, with their record profits and dividend schemes, benefits shareholders.”

The outcome follows a historic win for UAW President Shawn Fain, who spearheaded the effort to organise VW's Chattanooga plant—the first foreign-owned auto plant in the South to unionise through an election. It came after unionised workers in Detroit secured a 25 percent wage hike and cost of living adjustments against Ford, General Motors and Stellantis in a six-week strike in late 2023.

But these wins don't represent an overall win for the UAW in its quest to expand union representation. Workers rejected a unionisation effort at a Mercedes-Benz plant in Alabama in May. Meanwhile, the UAW is also trying to organise workers at auto companies like Tesla and Toyota, which are not unionised.

The Chattanooga talks come as the automaker faces labor tensions worldwide. Record strikes in Germany have added to pressure on the automaker, which has warned of potential job losses or plant closings to cut costs and remain competitive against Asian manufacturers.

The outcome of these negotiations could have broader implications for unionisation efforts in the southern U.S., a region traditionally resistant to organised labor in manufacturing.