Instead of celebrating a potential watershed moment for labour politics in the region, UAW supporters were left crestfallen by the 712-626 vote against union representation in the election that ended Friday night.
The result stunned many labour experts who expected a UAW win because Volkswagen tacitly endorsed the union and even allowed organizers into the Chattanooga factory to make sales pitches.
The loss is a major setback for the UAW's effort to make inroads in the growing South, where foreign automakers have 14 assembly plants, eight built in the past decade, said Kristin Dziczek, director of the labour and industry group at the Center for Automotive Research, an industry think-tank in Michigan.
"If this was going to work anywhere, this is where it was going to work," she said of the Volkswagen vote.
Organizing a Southern plant is so crucial to the union that UAW President Bob King told workers in a speech that the union has no long-term future without it. The loss means the union remains largely quarantined with the Detroit Three in the Midwest and Northeast.
Many viewed VW as the union's best chance to gain a crucial foothold in the South because other automakers have not been as welcoming as Volkswagen. Labor interests make up half of the supervisory board at VW in Germany, and they questioned why the Chattanooga plant is the company's only major factory worldwide without formal worker representation.
VW wanted a German-style "works council" in Chattanooga to give employees a say over working conditions. The company says U.S. law won't allow it without an independent union.
In Chattanooga, the union faced stern opposition from Republican politicians who warned that a UAW victory would chase away other automakers who might come to the region.
Sen. Bob Corker of Tennessee was the most vocal opponent, saying that he was told that VW would soon announce plans to build a new SUV in Chattanooga if workers rejected the union. That was later denied by a VW executive, who said the union vote had no bearing on expansion decisions. Other state politicians threatened to cut off state incentives for the plant to expand if the union was approved.
After 53 per cent of the workers voted against his union, King said he was outraged at what he called "outside interference" in the election. He wouldn't rule out challenging the outcome with the National Labor Relations Board.
"It's never happened in this country before that the U.S. senator, the governor, the leader of the House, the legislature here, threatened the company with no incentives, threatened workers with a loss of product," King said. "We'll look at all our options in the next few days."
The union could contend that Corker and other local politicians were in collusion with VW and tried to frighten workers into thinking the SUV would be built in Mexico if they voted for the union, said Gary Chaison, a labour relations professor at Clark University in Worcester, Mass.
But Chaison said it will be difficult to tie the politicians to the company, which remained neutral throughout the voting process.
"It's the employer that has real power," he said.
The loss put a spotlight on the union's major difficulty in the South: signing up people who have no history with organized labour and are fearful of being the first in the area to join, Chaison said.
Dziczek said the union may have to change its tactics in future organizing efforts, because King's strategy of the union and company working together to help each other did not work.
Republican Gov. Bill Haslam said through a spokesman that he was pleased with the vote and "looks forward to working with the company on future growth in Tennessee."
Corker echoed that sentiment in a release issued after the vote.
"Needless to say, I am thrilled for the employees at Volkswagen and for our community and its future," he said.
In Toronto, Unifor National President Jerry Dias lamented the news from Chattanooga.
"Volkswagen plants all over Europe are unionized. There is no good reason for American workers not to have the right to a union and all the benefits unions bring," he said in a statement issued late Friday night.
"This is a very sad story — republicans and well-funded conservative groups have convinced workers to vote against their own best interest," Dias said.
"In Canada, we don't face the same pressures, but still the legislative climate favours big business over workers' right to choose," he added.
The UAW is a sister union to Unifor, which was formed last year by merging the Canadian Auto Workers and the Communications, Energy and Paperworkers unions.
With files from The Canadian Press