BUSINESS

Tim Hudak's Labour Policies Take A Hit From Volkswagen

02/20/2014 02:37 EST | Updated 02/21/2014 09:59 EST

Ontario Progressive Conservative Leader Tim Hudak is taking on unions as a core part of his election strategy, promising to introduce “right-to-work” legislation and recently announcing a plan to allow private companies to compete with public unions for government contracts.

Hudak says this, along with other policies, will help create one million new jobs in Ontario.

UPDATE: Hudak has backed off making "right-to-work" laws a part of his election platform, the Canadian Press reported Friday. Many observers say the "right-to-work" platform cost Ontario's Progressive Conservatives votes in the Niagara Falls byelection, as union activists flooded the riding in an effort to stop the Conservatives.

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But Hudak's core argument — that unions are hindering job creation in Ontario — took a hit this week, when it turned out that sometimes you actually need a union for a company to invest in your community.

Workers at a recently-opened VW plant in Chattanooga, Tennessee — a right-to-work state — voted against forming a union last weekend, rejecting a proposal to have the United Auto Workers set up a German-style works council.

You’d expect this to be good news for Volkswagen's first U.S. plant. But the result could, in fact, be that Volkswagen workers around the world could themselves stop the company from making future investments in the U.S. south.

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Volkswagen follows the German “co-determination” model of governance, which requires that works councils represent workers at its plants. Representatives of the works councils have the power to block major decisions, such as investing in new plants.

Now the head of VW’s works councils and a member of the company’s supervisory board, Bernd Osterloh, is threatening to block future investment in the U.S. south if the Chattanooga plant doesn’t unionize.

"I can imagine fairly well that another VW factory in the United States, provided that one more should still be set up there, does not necessarily have to be assigned to the south again," Osterloh told German newspaper Suddeutsche Zeitung, as quoted at Reuters.

"If co-determination isn't guaranteed in the first place, we as workers will hardly be able to vote in favor" of more plants in the U.S. south, added Osterloh.

Osterloh’s comments “should be a wake-up call for Ontario PC leader Tim Hudak and other conservatives in Canada pushing the same anti-union agenda north of the border,” writes PressProgress, the blog of the left-leaning Broadbent Institute.

Some Canadian conservative politicians have been coming around to the idea of “right-to-work” laws, which would allow unionized workers to opt out of paying union dues — a move unions describe as a death knell, as unionization rates are considerably lower in “right-to-work” jurisdictions.

A recent report from the right-leaning Fraser Institute suggested “right-to-work” laws could boost Ontario’s economic output by $11.8 billion and create 57,000 jobs in the province.

But critics of the laws say workers in “right-to-work” states get paid some $5,500 a year less than workers in comparable jobs elsewhere, and those states spend thousands less per year on education, and see a considerably higher rate of workplace deaths.

Hudak’s labour agenda has proven controversial even within his own party, with news media reporting dissent within the ranks. In a sign that the policy may not play well in all parts of the province, Hudak stayed mum on the issue during the recent round of by-elections.