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The South, Where Automakers Go For A Discount

Above photo: Workers at the Chattanooga, Tennessee, Volkswagen plant assembled Passat sedans. Erik Schelzig/AP Photo.

In 1978, Volkswagen became the first foreign-owned company to manufacture cars in the United States since Rolls-Royce in the 1930s, setting up shop in Westmoreland, Pennsylvania.

“This is one of the most important organized victories in years for the UAW,” said United Auto Workers President Doug Fraser after VW workers voted 865 to 17 to join the union. “We believe that there will be other foreign automakers deciding to open plants in the U.S. and we intend to organize those workers as well.”

Since then, some 35 shiny new engine and assembly plants have been installed along I-75 and I-55, forming an automotive corridor from the Midwest to the South that today employs about 150,000 workers—including Tesla in California, Nevada, and Texas, as well as Toyota’s assembly plant in San Antonio, Texas. But Fraser’s goal proved elusive.

Volkswagen closed its Westmoreland plant in 1988, and Chrysler, Ford and General Motors spent the 1980s closing factories, decimating the UAW, whose ranks had reached 1.5 million at its peak in the 1970s. In February 1980, some 170,000 auto workers were on indefinite layoff, with Big Three sales dropping by more than 1 million units. The only growth in auto jobs came from foreign-owned transplants that set up shop in the South to exploit cheap non-union labor.

In America’s Other Automakers: A History of the Foreign-owned Automotive Sector in the United States, Timothy J. Minchin investigates why the companies located where they did and what the decisions meant for workers and their communities. He explores these questions through seven “foundational factories,” starting with Japanese plants in the 1980s, followed by German carmakers in the 1990s and Korean manufacturers after 2000.

USA 001

The first American-made Honda Accord, christened with the license plate USA 001, rolled off the production line in 1982 in Marysville, Ohio. Next Nissan began building a $600 million factory in Smyrna, Tennessee, then the largest car plant in the state’s history.

In 1985, Toyota built its largest plant worldwide in Georgetown, Kentucky, with more than 8,000 workers. In the 1990s and 2000s, BMW arrived in South Carolina, Mercedes-Benz and Hyundai in Alabama, and Kia in Georgia, joining Subaru, Toyota, Nissan, and Honda. Next came Volvo in 2015.

“Foreign-owned plants took off just as their domestic counterparts were declining,” Minchin writes. The South, he writes, became a case of “globalization shifting capital and production from a wealthy country to poor areas of the wealthiest country.”

Today, these non-union plants account for about half of auto production in the U.S., undermining wages and conditions in union plants. After years of scattered failed attempts at a few transplants, the UAW, now fresh off a historic strike at Ford, General Motors, and Stellantis (formerly Chrysler), has launched plans to unionize 13 non-union auto companies. “We didn’t lose a million auto and auto parts jobs in this country,” said UAW President Shawn Fain in January. “There’s still more than a million people who make cars and car parts in the U.S. today. What’s changed is not the quantity of jobs but the quality.”

More than 10,000 auto workers across 10 foreign-owned transplants have signed union cards, including at Toyota, Hyundai, and Mercedes, as well as some in the electric vehicle sector at Tesla, Rivian, and Lucid. Some companies have responded to the union drive with preemptive pay bumps to stem the organizing momentum.

Union-Free Acid Bath

The UAW’s drive is focusing on the South. Investment there includes tire manufacturers and battery plants for electric vehicles as well as auto assembly. Southern states have historically erected bulwarks against unions, including right-to-work laws and an officially hostile “climate” from government. The governor of Alabama immediately came out against the new UAW drives, and the state’s Business Council has set up an anti-union website called “Alabama Strong.”

For employers with already unionized workplaces, the South has been a boon, “serving as a friendly acid bath that companies can dive into to dissolve any remnants of organized labor that may be clinging to them elsewhere,” writes labor journalist Hamilton Nolan in his forthcoming book, The Hammer: Power, Inequality, and the Struggle for the Soul of Labor, describing organizing prospects in South Carolina, where only 1.7 percent of working people are union members.

BMW invested $7.8 billion to build a gleaming factory in the state in 1992, lured by the “lowest work stoppage rate and lowest unionization,” hiring ex-farmworkers instead of displaced auto workers, and siting the plant in the western part of the state where few African Americans lived.

The Greer plant is the largest BMW factory in the world, employing about 11,000 workers. Before the current drive, the UAW had failed to garner enough support to call a vote, despite workers’ complaints of speedup and injuries.

Volkswagen: Lessons Learned

Volkswagen remained neutral during the 1978 union campaign at its original plant in Pennsylvania, and the UAW organizing was smooth, partly due to strong union traditions among former coal miners and steelworkers, with 87 percent of production workers signing union cards.

Invoking ugly racist tropes, many Westmoreland residents had fought the hiring of Black workers from 30 miles away in Pittsburgh—what they described as turning their town into “another Detroit.”

“I’d just as soon VW had gone to Ohio,” said a Westmoreland resident. Ohio had offered VW a former Westinghouse appliance factory in Columbus and a federal tank plant in a Cleveland suburb. “I don’t know how many outside people will be moving in—2,000… 3,000—but I definitely know that will increase crime. We’re having trouble with the NAACP picketing already.”

Racism later became a defining feature of where automakers would locate future plants. They would choose sites in predominantly white rural areas free of Black people and of workers from union backgrounds, trading factory experience for higher training costs, in order to keep unions out.

Inside the plant, VW racially discriminated in its hiring, job assignments, pay, and discipline. Ultimately VW paid 22 plaintiffs $7,500 to $50,000 apiece to settle a civil suit, acknowledging that it had discriminated against minority workers.

Labor strife became routine. Workers staged wildcat strikes to reject a subpar three-year contract that they deemed inferior to those negotiated with the Big Three and to redress health and safety complaints. The company responded with an injunction to limit picketing. But workers continued to use strikes to resolve shop floor grievances. “The Germans are all upset and don’t understand what’s happening and feel if they are threatened with strikes the situation is impossible,” wrote one UAW staffer in an internal report.

The UAW leaders couldn’t control a group called Autoworkers for Rank and File; its staff despaired that “militants” would “get themselves fired today in order to lead another walkout of the plant.” Fraser assured local businesspeople that the union would resolve problems at the bargaining table, but he also insisted that wildcats were “routine” in the industry when grievances weren’t resolved quickly. The workplace militancy paid off, a reminder of the shop floor rebellions that had swept the country in the 1960s and ’70s. Workers won a three-year contract with a $1.70 pay hike over two years, including shift premiums, fully paid health care, seniority protections, and a pension plan.

When the plant closed in 1988, the culprit was Volkswagen’s bad business choices. In 1959, Volkswagen had sold more than 100,000 Beetles in the U.S., a first for a foreign-owned carmaker. By the 1970s, the company had replaced the counterculture darling Beetle with the Rabbit, which it priced $4,000 higher than competitors, including the Toyota Tercel and the Chevrolet Citation. With no local suppliers, the company imported 75 percent of the Rabbit’s parts, shelling out 3 percent duty. Even before the Pennsylvania plant opened, Volkswagen’s sales were falling, with its market share dropping from 5 to 2.5 percent between 1973 and 1978. A stronger Deutsche Mark compounded these problems. But when the plant closed, the press blamed union wages and the routine strikes. The association between the UAW and a plant closure would linger in the public mind.

The German experiment in U.S. auto production had failed, but other automakers were watching closely. “The Japanese will probably follow the VW example and start up USA assembly production operations,” wrote a German state official in 1976. Fluctuating currency exchange rates, nationalist campaigns to impose quotas for imports, and domestic content legislation for vehicles would also promote a shift to auto production in the U.S. Another factor: The fuel crises of 1974 and 1979 started to wean Americans (temporarily) off their addiction to the big, gas-guzzling cars the Big Three produced, creating an opening for brands that made smaller cars like Honda, Nissan, Toyota, and Volkswagen. Before then, Minchin quotes an industry insider, “whatever Detroit built, America bought, partly because it didn’t have much choice.”

What lessons would new entrants in U.S. car-making draw from the Volkswagen experience? They’d choose undeveloped land in rural areas instead of taking over an abandoned site like the Chrysler plant in Westmoreland. They’d also improve on their quality and their prices for cash-strapped U.S. consumers. Toyota and Nissan had entered the U.S. market in 1957, but their products underperformed until the arrival of the Corolla in 1966.

If Volkswagen took the first racist footsteps, other automakers took leaps. Even if today Hyundai and Kia plants have majority-Black workers in these factory jobs in Alabama and Georgia, the plants were located far from workers with strong union traditions, in rural parts of Southern states where production costs were lower, and where the governments offered them big incentive packages, including business and political muscle to keep unions out.

Anti-union and racist aren’t interchangeable, but they do meet sometimes in destructive ways. In the 1980s, one out of every four Black workers was a union member. Racism would continue to factor heavily into the automakers’ calculations, though over time they also began to tread more carefully to avoid lawsuits and negative publicity.

Southern And Non-Union

In 2010 the Korean automaker Kia was siting its first U.S. plant in Georgia. Company managers mused whether Black workers could be paid less than their white counterparts. “They would ask us, ‘Do we have to hire Black people, or do we have to pay Black people the same?’” recalled Ray Coulombe, economic development manager for Georgia. Despite the racist attitudes of company management, Kia ended up hiring many African American workers to avoid Equal Employment Opportunity Commission charges. Troup County was 31.9 percent Black, so the company had to make sure its workforce reflected the racial makeup of the area.

Kia’s biggest concern was unions. Unions had failed to organize Georgia’s textile industry. Kia would recruit low-paid displaced textile workers, but when workers from Ford and General Motors plants in Atlanta applied for the jobs, they got no call-backs. They sued the state because it failed to release records of Kia’s screening process. “Kia runs a non-union assembly plant,” admitted an official at the Georgia Department of Labor. When union workers demanded to see training program records, the state legislature changed the law, putting in an exception to the Open Records Act that related to training programs. The case went all the way to the Georgia Supreme Court, where judges ruled in the state’s favor, claiming the training program documents were trade secrets.

The company made no bones about avoiding unions. When the militant Korean Confederation of Trade Unions, with more than 27,000 members at Kia, had struck in 2005, Hyundai’s 42,500 union members had also walked out. “In Korea the union is such a big headache for the employers,” said a manager from a Kia plant in Seoul. Georgia officials pitched the state’s low union density.

Toyota experimented with bringing its “team concept” production system to the U.S., in a joint venture with General Motors in Fremont, California, in 1982 (New United Motor Manufacturing, or NUMMI). NUMMI’s production system and its union contract did away with many worker rights in the name of management flexibility. With sterling production and quality figures, NUMMI became the plant for others to learn from and even set up a department to handle the huge influx of visitors seeking to learn the Japanese way. Today the Big 3 all use the strict production methods and standards first seen in this country at NUMMI, a major factor in speedup and job-cutting and the concomitant rise in injuries.

Honda: The Anti-Union Example

For its Ohio assembly plant, Honda chose a spot in a white and conservative part of the state, far from the Black and liberal cities of Akron, Cleveland, and Youngstown. In 1979, when it opened, the plant manufactured motorcycles, but it expanded to cars in 1982. Honda showed it was possible to run an auto plant non-union, enlisting the support of Ohio’s political elite, including the Republican governor. Government involvement in union avoidance would be used to great effect by the companies in the UAW’s failed drives at Nissan in Mississippi in 2017 and at Volkswagen in Tennessee in 2019. The UAW retreated to a top-down backroom deal to secure voluntary recognition; Honda executives signed a memorandum in 1982 but later refused to honor it, leaning on American managers to squash union drives.

The UAW organized a micro-unit of four boiler workers at the plant in 1981, but it got tied up in the courts. Next the union tried to organize a consumer boycott to pressure Honda to be union-neutral, with support from the International Longshoremen’s Association and the Teamsters to disrupt Honda deliveries. Finally, the UAW tried some organizing of Honda workers themselves, but it came at the cost of flirting with the anti-Japanese sentiment pervading the country in the form of UAW-supported legislation to limit the quantity of foreign parts in cars sold in the U.S.

The UAW’s Ohio regional director negotiating with the company at the Marysville plant had served in World War II, receiving a purple heart after sustaining an injury in the Battle of Okinawa, and he didn’t hide his animus. He also had an abrasive style that rankled Honda negotiators accustomed to a collaborative relationship with the Japanese Automobile Workers’ Union. The regional director “made all manner of hostile comments, about Honda and about the Japanese in general,” wrote a UAW aide.

In Michigan, domestic car dealerships offered visitors the chance to smash Japanese cars with a sledgehammer. “Many union people, you couldn’t pull a Toyota in their driveway,” said a Big Three auto worker. “They would run you off.” Politicians also fomented anti-Asian racism. “You better have the United States Army with you when they land on the docks,” Democratic presidential nominee Walter Mondale told auto dealers in 1982, about selling cars made in Japan. That year, 27-year-old Vincent Chin was beaten to death with a baseball bat on the night of his bachelor party in Detroit. His killers were an auto plant manager and a laid-off auto worker.

Recession deepened. Unemployment shot to double digits. Honda sat down with the UAW, to avoid a national boycott. But the union didn’t gain momentum. Honda offered workers a pension, a 401(k) savings plan, profit-sharing, and a $15 million sports center on site, with a swimming pool, gym, Jacuzzi, sauna, and basketball court—but no grievance procedure.

Workers enjoyed wage and benefit hikes for several years, including, in 1984, when the plant celebrated its fifth anniversary. One year later, as UAW organizers pressed on with the union drive, ramping up pressure through unfair labor practice charges, Honda announced a plant expansion. It increased employment to 3,500 workers and plant size from 1 to 2.2 million square feet. Management claimed the plant was thriving without a union; the UAW called off the election.

Why did the drive fail? The UAW had identified health and safety as core issues. Honda’s American managers held captive-audience meetings and ran an internal questionnaire meant to discourage unionization. They spewed the familiar union-busting tropes: a union would make the company non-competitive; think of the cost of union dues and the prevalence of strikes! Local businesspeople launched an employer opposition front group, linking the union to layoffs at the Big Three: “UAW Loses Jobs While Honda Gains.”

Women comprised about 15 percent of Honda’s workforce, but the UAW struggled to organize around workplace sexism. That was a missed opportunity, as the plant’s early managers were not accustomed to working alongside women; Japanese labor law banned women from working in factories after 10 p.m., and Honda didn’t hire them at all in its factories there. In a confidential memorandum, a UAW organizer wrote: “384 identified women; very little UAW support.”

In unfair labor practice charges, the UAW described the company as a “patriarchal monarchy.” But there was just one woman on the UAW’s 25-member executive board, and all the organizers on the campaign were men.

The most devasting critique came from a UAW staffer who said the organizing drive became a “fight between the UAW and Honda,” with workers mere “bystanders.”

Honda hired within a 35-mile radius, just barely excluding Columbus where most Black workers lived, to maintain a heavily white and male workforce. In 1984, Black workers made up 11 percent of the U.S. workforce but 17 percent of Big Three auto workers; at Honda’s Marysville plant, Black workers were 2.8 percent, in an area that was 10.5 percent Black. A visitor to the plant in 1985 remarked: “Another thing that was striking to me was that 98-99 percent of the employees were white people. There were only a few Black people.” In 1988, after a federal investigation, Honda paid $6 million to 377 Black workers and women as part of a settlement with the Equal Employment Opportunity Commission.

Four Plants In Alabama

In Alabama, none of the four major auto plants—Mercedes, Hyundai, Toyota, and Honda—or their suppliers were located in the Black Belt, where the soil is most fertile, slavery was most concentrated, and Black majorities still live. Many of these counties are beyond commuting distance from the auto plants, leaving residents wishing the factories had “come a little closer”; these areas missed out on jobs. In 2014, Hyundai and its suppliers accounted for 2 percent of Alabama’s entire gross domestic production.

Even before Hyundai’s arrival, Montgomery was economically robust. “Montgomery County is part of the belt geographically, but the activities of the Capital set it apart from the region economically,” explained a local paper, the Montgomery Advertiser.

Mercedes, arriving in the state in the 1990s, also chose a predominantly white and relatively well-off part of the state, Vance, a small town near Tuscaloosa. “Honda and Hyundai probably came because Mercedes did look and choose here,” said Ed Castile, director of Alabama Industrial Development. With the addition of a $1.6 billion joint venture between Toyota and Mazda in 2018, Alabama would tie with Tennessee as the fifth-largest producer of vehicles in the country.

Alabama Arise, a public advocacy organization, found in 2023 that auto workers’ take-home pay was $7,770 lower in 2019 than in 2002. The same report found pay disparities along racial and gender lines, with Black workers earning 83 cents for every dollar a white auto worker earned, while Latino auto workers earned 73 cents; women also earned 73 cents per dollar that men earned. The study blamed a tiered wage system, where workers doing the same work earn different pay and benefits based on date of hire.
In South Korea, the jobs were also grueling, with hourly employees working from 8 a.m. to 8 p.m., six days a week, with mandatory overtime. A typical workweek was 84 hours, and even managers slept in the factory in temporary cots. The mandatory hours changed in the early 2000s. In Alabama, workers blamed the company’s military and business culture.

“Sometimes it seems Koreans see Americans as trained pets that are only alive to work,” said one employee, complaining about “10-hour work shifts Monday through Friday and sometimes Saturdays… you’re usually away from home more than 12 hours a day on average.”

Far-Flung In Tennessee

Nissan’s American CEO Marvin Runyon told the press that the company chose Smyrna, Tennessee, because of the “homogeneity of the labor force,” meaning white, excluding the Black residents of Nashville. Fifteen hundred building trades workers protested the groundbreaking ceremony in 1983; their demands for union jobs were tinged with racist overtones about Cuban and Mexican refugees.

By this time Tennessee and Georgia between them were buying 36 percent of the country’s light trucks, and the new plant was located within one day’s delivery by road of 76 percent of U.S. consumers. The integrated factory is the biggest vehicle-producing factory in North America, employing 8,000 workers.

Workers tried to unionize in 1989 and 2001, but the UAW struggled to mount an organizing campaign at the mammoth plant, as big as 151 football fields. It was located in an isolated rural area; workers drove long distances to get there.

“They live within maybe a hundred-mile radius of the plant,” said UAW secretary-treasurer Bill Casstevens. “They even come over from Alabama, and there are some from Kentucky. They live all over, so it is a little difficult to run them all down.”

That rural sprawl also undermined a sense of community among workers. The main issues were speedup and injuries, but workers had grown resigned to the aches of factory work—Nissan awarded merit points for accident-free production, a practice meant to discourage the reporting of accidents.

“We would still have to build cars if the union came in,” said one Nissan worker. “We would still have back pains. They want us to think these things would go away.”

A Global View

Between the 1980s and 2000s the foreign-owned plants became powerful exporters. The luxury vehicles Mercedes builds in Alabama are sent to 135 countries, while 70 percent of BMWs built in South Carolina are shipped overseas.
By 2018, Mexico had also become an important player; Honda, Mazda, Nissan, and Volkswagen were producing vehicles there, and so were the Big 3. The new United States-Mexico-Canada Agreement further integrated these supply chains.

America’s Other Automakers is an important corrective to the postindustrial laments that frequently appear in the press and in scholarly books. “In the United States, it is the absence of factories rather than their presence that gets publicized,” wrote the historian Joshua Freeman in Behemoth: A History of the Factory and the Making of the Modern World.

When we talk about the factory, it is usually a node in a global supply chain. Picture a U.S. worker who has economic leverage, and you’re more likely thinking of someone who sorts, transports, delivers, stocks, or rings up the product—not someone who makes it.

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