Nashville, Tenn. — In an unexpected shot across the bow of his GOP neighbors to the south, Kentucky Gov. Steve Beshear has a simple message on labor and economic development for automakers looking to build new plants: We’re not Tennessee.
The Democrat is touting Kentucky’s neutrality on labor matters as “a positive sales point,” particularly in contrast to the turmoil in Tennessee, where Republicans have pulled out all the stops in what may yet be a losing effort to keep the United Auto Workers from gaining collective bargaining rights at Volkswagen’s plant in Chattanooga. Similar unionization efforts are underway at a Mercedes plant near Tuscaloosa, Alabama.
Beshear’s public comments are unusually bold in the secretive, cutthroat world of recruiting big-name employers, such as the foreign automakers lured to the South with fat tax incentives and Republican pitches about anti-unionism as a competitive advantage.
Beshear first made the comments to Automotive News Europe during a recent recruiting trip to Germany, Volkswagen’s home turf, and to Sweden, the base for Chinese-owned Volvo Cars, which is rumored to be considering a new plant in the U.S.
“I’m not trying to tell Tennessee or any other state how to handle their economic development efforts,” Beshear told The Associated Press after his return last week. “I can just say that in Kentucky we would welcome either type of situation, either companies with unions or without them.”
The state already has both: Ford and General Motors plants represented by the UAW, and nonunion plants like Toyota.
Tennessee’s Republican Gov. Bill Haslam declined an interview about Beshear’s comments. But he said Thursday through a spokeswoman that Tennessee “is a welcoming state to auto manufacturers and suppliers and has a track record of more than 30 years of strong relationships with these companies that speaks for itself.”
Volkswagen’s labor-friendly corporate culture came into the political cross hairs in Tennessee last year when the automaker agreed to a union vote at its plant, with Republican politicians raising vocal opposition to the UAW gaining its first foothold at a foreign-owned plant in the South.
The run-up to the vote at the plant a year ago included Republican U.S. Sen. Bob Corker of Tennessee declaring that the company would become a “laughingstock” if it welcomed the UAW. Corker also made a huge gambit on the eve of the vote when he guaranteed Volkswagen would announce the expansion of the plant within two weeks if the union was rejected. VW denied that the issues were linked, and it was several months before a deal was struck to build a new SUV in Chattanooga.
It was later revealed that the Haslam administration’s $300 million incentive package offered to Volkswagen had contained the caveat that the money was subject to labor talks “being concluded to the satisfaction” of the state. Haslam at the time declined to specify which scenarios would have satisfied the state.
The UAW narrowly lost that unionization vote, but Volkswagen has continued to work closely with the UAW — which has since qualified for the top tier of a new labor policy at the plant that stops short of collective bargaining rights. That policy has renewed grumbling among Republicans in Tennessee, who control the Legislature and therefore approve or reject incentives to expand the plant.
Volkswagen management has been under heavy pressure from powerful worker representatives who control half of the automaker’s board in Germany because the U.S. plant is the company’s only one worldwide without labor representation.
Kentucky can benefit by not trying to place itself in the middle of those discussions, Beshear said.
“It’s a positive sales point for Kentucky, particularly when you look at many European companies,” he said. “Their model in Europe on labor-management relationships is different than here in the United States, and many of those large companies have management structures that include both union and nonunion management personnel.”
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