In the U.S., negotiating a first union contract is always extraordinarily difficult.
For perspective, hundreds of Starbucks locations have formally voted to form a union over the past several years, but they have no collective bargaining agreements with the multinational coffee chain, said Art Wheaton, director of labor studies at Cornell University.
"Contracts for the unions are always building blocks," Wheaton said in a phone call. "You never get everything you want at the bargaining table ever, but if you get a first contract, that gives you a place to start and a place to build upon."
The United Auto Workers is now weighing an offer from owners of Chattanooga's Volkswagen production plant that observers said doesn't contain the same concessions the union has wrested over years from the Big Three automakers -- Ford, General Motors and Stellantis (owner of Chrysler).
While the Volkswagen offer isn't as good as the deals the UAW has forged with GM or Ford, Wheaton said, the union has been negotiating with those automakers for more than 80 years, which has given them plenty of time to assemble solid agreements.
"This is their first shot, so you're not going to get everything," Wheaton said about the Volkswagen negotiations. "But it gives you a foothold. It gives you a place to start."
PREPARED TO DO BETTER
About a year after talks began, Volkswagen leaders on Wednesday delivered what they described as their last, best offer to the UAW.
The proposal would raise wages 20% through 2029, add a cost-of-living allowance, reduce health care costs and introduce profit-sharing. Employees would also get a $4,000 ratification bonus -- plus an additional $1,500 if they approve the deal by Oct. 31 -- and two new floating holidays.
(READ MORE: Union criticizes Volkswagen over health care at Chattanooga plant)
In a statement Wednesday evening, UAW lead negotiator Chuck Browning said Volkswagen workers voted for a better life nearly a year and a half ago, adding the company has dragged its feet on putting a fair deal on the table. In the meantime, he added, the company has committed multiple unfair labor practices over which the UAW would be bringing federal charges.
"Our elected bargaining committee is reviewing the company's proposal," Browning said. "If it honors the hard work and dignity of the thousands of VW Chattanooga workers who make this company billions in profits, it will be taken seriously. If not, the company needs to be prepared to do better, and our members will be prepared to send that message loud and clear."
After a six-week strike against the Big Three automakers in 2023, the UAW reached an agreement that called for 25% increases in pay across a four-and-a-half year contract with GM, Ford and Stellantis, according to CBS News.
At Ford, the deal means the lowest paid members will see a 150% raise through this agreement, according to an overview published in October 2023 by the UAW. Temps hired in 2023 at $16.67 would earn more than $40 per hour in base wages by the end of the agreement.
With a cost-of-living adjustment, the top rate for staff working production would hit more than $42 per hour by 2028 and $50 per hour for skilled trades -- a greater than 30% increase. By the end of the agreement, the UAW said, the starting rate will push $30 an hour. Workers would also receive an up front ratification bonus of $5,000.
"The gains in this agreement are worth more than four times the gains in the 2019 contract," Browning and UAW President Shawn Fain wrote in a message to workers at the time. "In fact, the gains in each individual year of this agreement are worth more than the entirety of the gains in the last contract. The 2023 agreement is worth more than the past four contracts combined. It has more in general wage increases than Ford workers have received in the past 22 years combined."
BLIP
In Chattanooga, Volkswagen's offer is not terrible, Wheaton said, noting that, worldwide, almost all of the company's other facilities already have a union and a contract.
VW's proposal would bring the top base wage from $34 per hour upon ratification in 2025 t0 $39 in 2029.
Looking at sales numbers, the German automakers has had a slow buildup in the United States compared to its presence in Europe, Wheaton said.
"Americans don't even realize that Volkswagen is one of the largest companies in the world for the auto sector because they're barely registering a blip in the U.S. on their market share," he said.
Amid ballooning tariffs and slowdowns in the electric vehicle market, Volkswagen is navigating the same uncertainty and supply chain disruptions that have struck the auto industry as a whole.
Volkswagen plans to furlough 160 workers in Chattanooga as it pauses production of its electric SUV, the ID.4, in October. This occurs as the company reported a 65% decline in sales of the vehicle for April through June compared to the same period last year. Volkswagen Group CEO Oliver Blume recently said U.S. tariffs have so far cost the company billions in euros.
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Stellantis, meanwhile, announced layoffs this spring at five of its plants: two in Michigan and three in Kokomo, Indiana. General Motors has similarly implemented temporary layoffs at its plant in Wentzville, Missouri, its facility in Spring Hill, Tennessee, and its Detroit-Hamtramck assembly center in Michigan.
UNDERMINING
However, Caleb Michalski, a member of the bargaining committee who has worked for Volkswagen for more than five years, said the company's offer still falls short.
Many of the items agreed to in bargaining subcommittees aren't present in the contract language, he said, noting he particularly wants to ensure there are stronger life and safety protections at the plant. As is, workers face a high risk of injury, he said.
"I'll give the company credit where it's due: They are able to make something very undermining look very wonderful," Michalski said in a phone call. "They've been misinforming the workers this entire time. I can see how a lot of people could see the deal at face value and think that it seems like a good deal. But I believe that if people actually read it and actually looked into it, they'd be pissed."
The company's proposed profit-sharing mechanism also isn't as lucrative as the Big Three, he noted. Volkswagen would provide each employee $1,000 if it sees a return on sales of between 4-6.99%, which could rise to $1,500 if that exceeds 8%. However, Michalski said the company has only hit that 4% benchmark a handful of times over the past decade.
"As far as I'm concerned, they're assuming that this is something that they're never going to have to pay out," Michalski said. "Rarely ever."
At the Big Three automakers, workers receive $1,000 for every billion dollars in profits, which means many of those checks have been close to $10,000 to $12,000 over the past couple years, Wheaton said.
But it's unlikely that Volkswagen has the same footprint or sales volume in the U.S. to produce those numbers, Wheaton said. Recent tariffs may also to cut into the Big Three's upcoming profits, which would mean leaner checks for employees.
(READ MORE: Hamilton County Schools, VW partner at new tech center)
Volkswagen is offering profit sharing in conjunction with its pre-existing attendance bonus, which is 8% of employees' annual salary. In 2024, the average annual attendance bonus was $4,269. About 95% of workers qualified, the company said.
As part of the offer, VW said it is starting a new committee made up of workers' peers that will cooperate with its existing safety board. There will also be a new process for raising safety complaints or concerns.
In a statement, Volkswagen spokesperson Michael Lowder said the company has presented a strong final contract offer to the UAW that reflects its commitment to employees, their families and the priorities they've shared. To ensure everyone fully understands the details and what this deal will mean for them, the company said it has distributed fact books, hosted office hours for face-to-face discussions and shared short video messages answering frequently asked questions.
"We're encouraged by the positive feedback received so far," Lowder said. "We believe our employees deserve to have their voices heard, and we urge the UAW to allow a vote so they can decide what's best for their future."
DYSFUNCTION
In early 2024, Hamilton County Mayor Weston Wamp and other local Republicans urged Volkswagen workers to vote against joining the UAW. He said Thursday the union has brought enormous dysfunction to the Chattanooga community.
"There's a reason this has taken so long," Wamp said in an interview. "I have to believe that a lot of them (the workers) now understand why the UAW has got a track record of plant closures going back decades."
Wamp said he is not an anti-union conservative, noting the county is working with trade unions on career and technical partnerships in the school system, but the UAW is different.
"They go too far," he said. "They put companies in precarious positions ultimately often leading to bad outcomes. And I fear that the same thing could happen here."
Volkswagen's offer seems very impressive, Wamp said.
"If I worked at Volkswagen ... I'd be wondering why this is not good enough, why this goes on and on and on," he said. "It's a significant improvement."
Asked for comment, Chattanooga Mayor Tim Kelly said the city tries to never take sides in economic or labor disputes, but he added nobody wins in a stalemate.
"Our hope is that both parties look at what's fair, what's economically viable and what's best for the future of our city so that negotiations can be concluded swiftly," he said in a statement.
Contact business reporter David Floyd at [email protected] or 423-757-6249.
Staff photo by Abby White / UAW members gather outside of the Chattanooga City Council building. The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) gathered outside of the Chattanooga City Council building to urge city officials to vote in favor of their resolution on Tuesday, August 26, 2025.Staff Photo by Robin Rudd / The United Auto Workers held a bargaining kick-off rally at The Signal on Sept. 15, 2024.