BUS 3040 Unit 8 Volkswagen Case Study

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  1. Using the Internet, find current information related to this case. Provide a summary of this case’s current situation (or resolution, if there is one). Be sure to incorporate existing information about this case with your responses to the following two questions.

The ongoing conflict between Volkswagen and the United Auto Workers (UAW) continues to unfold, with the current situation reflecting unresolved tensions. In December 2015, a vote exclusively involved the skilled labor trades at Volkswagen’s Chattanooga plant, excluding the rest of the workforce. 

The United Auto Workers emerged as the victor in this vote, but Volkswagen contested the results, alleging that the UAW had unfairly influenced the outcome. While the most recent information dates back to 2016, the conflicts and disputes between the two entities have persisted.

BUS 3040 Unit 8 Volkswagen Case Study

The United Auto Workers Union accuses Volkswagen of intentionally stalling any progress in allowing workers to unionize, thus preventing them from engaging in collective bargaining and securing a contract. The National Labor Relations Board (NLRB) ruled in favor of the United Auto Workers, but Volkswagen promptly appealed this decision. 

In 2016, the NLRB denied a review of the 2015 ruling, leaving the situation in a state of stalemate. The United Auto Workers, despite losing the initial vote, strategically chose not to appeal based on outside influence, allowing them to intensify their campaign efforts and establish a foothold within the Chattanooga plant.

  1. What business objectives were Volkswagen managers trying to meet by allowing the UAW to organize its workforce in Chattanooga?

Volkswagen’s managers pursued various business objectives when considering the organization of their workforce through the United Auto Workers in Chattanooga. Drawing inspiration from their successful partnership with the German union, IG Metall, Volkswagen aimed to establish a German-style works council within the Chattanooga plant. 

Such a development would have marked a groundbreaking achievement in the United States, granting workers a voice in management decisions and fostering a collaborative work environment.

By inviting the United Auto Workers into the plant and providing them with an office, Volkswagen sought to facilitate the establishment of a works council that could effectively address workplace issues. 

The company recognized the importance of worker participation and input, understanding that those directly involved in the work often possess valuable insights and solutions. Volkswagen believed that a unionized structure would provide a platform for workers to voice their concerns and contribute to the overall improvement of the plant’s operations.

BUS 3040 Unit 8 Volkswagen Case Study

However, the contract negotiated between Volkswagen and the United Auto Workers imposed certain limitations, leading to discontent among American workers. One significant issue was the prohibition of the UAW from campaigning on worker issues and conducting in-home visits. 

These restrictions hindered the effectiveness of the UAW’s campaign and limited their ability to gain widespread support among the workforce. The perceived shortcomings of the contract created skepticism and dissatisfaction among the workers, resulting in a lack of enthusiasm for the United Auto Workers Local 42.

In addition to the internal challenges faced by Volkswagen, external influences also shaped the business objectives. Politicians and interest groups pressured the company, raising concerns about potential political interference in the unionization process. These external factors added complexity to the situation and contributed to the difficulties faced by Volkswagen’s management in achieving their desired objectives.

  1. Assuming that Local 42 succeeds in signing up workers, do you expect that Volkswagen’s management will need to prepare for problems in collective bargaining with the union? Why or why not?

If Local 42 of the United Auto Workers succeeds in signing up workers, Volkswagen’s management will likely encounter challenges during collective bargaining with the union. One primary concern revolves around production demands and flexibility. Under a union contract, Volkswagen may face restrictions on employing temporary workers to meet increased production demands. This could result in decreased output and potential disruptions to supply chain efficiency. The ability to

Adapting to fluctuations in demand and maintaining productivity levels could be hampered by the rigidities imposed by a collective bargaining agreement. Pay and benefits are also significant focal points during contract negotiations. 

While the immediate impact might be insignificant, as contracts are renewed, and workers make incremental gains, direct pay and benefits could increase over time. While this may be advantageous for workers, it could negatively affect the company’s profitability and financial stability, requiring Volkswagen to allocate additional resources to meet the growing demands of employee compensation.

BUS 3040 Unit 8 Volkswagen Case Study

Furthermore, the risk of strikes and labor unrest cannot be discounted. Strikes can ripple effect, impacting dealerships, customer satisfaction, and overall brand reputation. In the event of a strike, production would halt, resulting in financial losses for the company. The repercussions would extend beyond immediate losses, as delayed or unavailable product availability could drive potential customers to seek alternative options from competitors.

It is important to note that unions have played a vital role in shaping labor rights and improving working conditions. However, the potential for conflicts and challenges arises when unions gain substantial power and influence, potentially leading to demands that strain a company’s financial sustainability.

In conclusion, the ongoing conflict between Volkswagen and the United Auto Workers in Chattanooga highlights the complexities surrounding unionization efforts and collective bargaining. 

While Volkswagen aimed to establish a works council and provide workers with a voice, the limitations imposed by the negotiated contract and external influences hindered the success of the United Auto Workers’ campaign. 

If Local 42 successfully signs up workers, Volkswagen’s management should anticipate difficulties during collective bargaining, including restrictions on production flexibility, potential financial strains, and possible strikes. Finding a balance between workers’ rights and the company’s long-term sustainability will be crucial in navigating the challenges ahead. BUS 3040 Unit 8 Volkswagen Case Study


Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2015). Fundamentals of Human Resource Management, 6th Edition. McGraw-Hill Learning Solutions.

Brooks, C. (2017, February 14). The Volkswagen Defeat Wasn’t Inevitable—And Labor Can Still Win in the South. Retrieved June 04, 2017, from http://inthesetimes.com/working/entry/19898/the_volkswagen_defeat_wasnt_inevitableand_labor_can_still_win_in_the_south

Snavely, B. (2014, December 09). UAW to Push to Be Exclusive Bargaining Agent at VW. Retrieved June 05, 2017, from

http://www.freep.com/story/money/cars/2014/12/09/uaw-volkswagen-chattanooga-labor/20140305/(2016, September 26). Volkswagen Is Challenging UAW’s Union Strategy. Retrieved June 05, 2017, from http://fortune.com/2016/09/26/volkswagen-uaw-union/

UAW Local 42 Seeks NLRB Election for Volkswagen Maintenance Employees. (2015, October 23). Retrieved June 05, 2017, from