German car manufacturer Volkswagen AG announced today that Jonathan Browning, who runs its U.S. division, would be stepping down. The change comes as the company is struggling with sluggish sales and continued turmoil at its Chattanooga, Tenn., plant over whether it will unionize.
Company executives want to expand production at Chattanooga but that has faced several snags. The only way to do it may be to allow the workers to unionize. Under German law, labor unions are given seats on company supervisory boards along with executives. These boards have veto power over major decisions and Volkwagen's German union, IG Metall, is using its clout to oppose expansion in Chattanooga unless the workers there get representation.
VW has said it will settle for a European-style company-backed "works council" -- essentially a committee to allow workers to air grievances. This is not allowed under U.S. labor law though, which prohibits company-backed labor organizations due to the inherent conflict of interest. The plant would have to be unionized first.
The United Auto Workers has been trying to use the leverage its German counterparts gave them to organize the plant and VW has helped in that regard. But some workers, aided by conservative groups led by the National Right to Work, have resisted the push, filing challenges with the National Labor Relations Board. State Republican lawmakers have criticized the push also.
UAW has claimed it has enough workers signed up through a "card check" process to unionize the plant and VW should accept that rather than having an NLRB-monitored secret ballot election. That claim is dubious though: A top UAW official conceded in October the union may not win a majority of workers in an election. VW has not said what it plans to do and has Treaded carefully on the subject in recent months.
The company has taken a recent hit on its U.S. sales too. They fell 16 percent in November and are down 5.2 percent overall for the year.
Browning, 54, will rejoin his family in Britain. He will be replaced as U.S. president and CEO by Michael Horn, 51, Volkswagen's former head of sales for Europe.