UAW, Volkswagen reach “historic” Tennessee deal

The United Auto Workers (UAW) has secured a tentative first contract with Volkswagen at the automaker’s assembly plant in Tennessee, marking a historic milestone for a union that has long struggled to break into the South’s fast-growing automotive industry. The deal includes a 20% wage increase over the four-year contract, a 20% health care cost reduction for members, and long-term job security provisions for workers at the Chattanooga plant 

Workers at the plant voted with 73% in favour of joining the union back in April 2024, making it the UAW’s first foreign-owned plant in the South to organise. The Chattanooga plant is a key part of Volkswagen’s North American strategy, producing the Atlas, Atlas Cross Sport and ID.4 SUVs. Victory at the plant was intended to set off a chain reaction, with the UAW allocating US$40m to unionise transplant automotive plants across the US south, but further efforts have largely stalled including a failed vote at a Mercedes-Benz plant in Alabama.

The tentative deal includes a US$6,550 worker bonus upon ratification plus annual US$2,550 bonuses. UAW President Shawn Fain described the contract as a major breakthrough in a region where foreign automotive companies set up shop because they could pay less and maintain looser standards than union shops. In an announcement video shared on UAW social media channels, Fain drove home: “This deal proves what happens when autoworkers stand up and demand their fair share. People said Southern autoworkers could never form a union or win a union contract. Volkswagen workers in Chattanooga said, ‘Watch this.’”

Talks to secure a first contract for the more than 3,000 unionised workers at Chattanooga had dragged on since the organising vote back in 2024. Volkswagen said in September 2025 that it had provided its best and final offer, which included a 20% wage increase but a lower ratification bonus. UAW officials maintained that the offer failed to provide the necessary reassurances with its language on job security and healthcare costs. Around the same time, plant workers voted to authorise a strike if necessary, although both sides have remained largely quiet in the time intervening.  

The tentative deal includes lower out-of-pocket health care costs and improved coverage, as well as protections against unilateral job cuts, shift reductions and outsourcing at the plant. It also includes stronger health and safety standards, certain paid time off and scheduling protections, and fair discipline and grievance rights. Notably, however, the deal’s wage increases fall 5% short of the 25% raises secured by workers during the Detroit Three strikes back in 2023. 

Last year, UAW succeeded in organising a large joint-venture electric vehicle battery plant in Kentucky jointly owned by Ford Motor and SK On, although that facility recently laid off all 1,500 employees as it transitions to eventually make a different type of battery for energy storage. Workers will receive details of the tentative agreement in the coming days followed by a ratification vote.