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Volkswagen lays off 500 Chattanooga workers

The redesigned Volkswagen Passat has been a decent seller since its debut in 2011, but sales have apparently dropped off enough that the automaker is trimming some of the employees from its Chattanooga, TN assembly plant. According to Automotive News, Volkswagen will be cutting shifts and laying off 500 contracted workers in response to slowing sales.
Currently, the plant has three teams running 10-hour shifts Monday through Saturday, but starting May 13, this will be reduced down to two teams running 10-hour shifts Monday through Thursday. This will be done to reduce dealer inventory (the article says that VW dealers, on average, have a 97-day supply of Passats) and production capacity (currently running at an annual pace of 170,000 units, which is more than the 150,000 annual units the plant was planned to produce).
This, of course, isn't saying that the Passat has been a failure since VW added 200 full-time employees to the plant in February 2012 to keep up with increased demand. The AN article says that automakers frequently overstaff plants during the launch of a new product - or in this case, a new product and a new plant - but eventually reduce the workers as things run smoother and more efficiently.

VW to relax ambitious US sales targets?

The Volkswagen brand sold 407,704 cars last year, a 6.95-percent decline compared to 2012, and it's down a further 8.36 percent through the end of April 2014 compared to this time last year. In order to to put the sales football between its Strategy 2018 goal posts, the brand would need to add 100,000 more sales every year to achieve the lofty 800,000-unit target. Coming to grips with how unreasonable that is, VW US CEO Michael Horn has said, "For now, we have to have realistic targets."
The reasons for the brand's slow-down are imprecise, but lots of folks are throwing lots of reasons around. Last November, VW Group Chairman Ferdinand Piech told Bloomberg, "We understand Europe, we understand China and we understand Brazil, [but] we only understand the US to a certain degree so far." Analysts say the brand hasn't had midsize and compact SUV offerings, especially an overdue retail version of the CrossBlue, and the ones it does have are priced too high for their segments. It "didn't introduce enough new engines, or alternative technologies or model variants" for the Passat and Jetta. It devoted so many resources to China that the US market suffered. It was being outspent two-to-one on advertising by competitors. Its J.D. Power dependability ratings aren't high enough to overcome its past. It "has never really taken the US customer seriously." And so on.
There's still no official admission of defeat concerning the target, but reading between the lines there are some VW execs that appear to accept it won't happen short of some deus ex machina. Still,

VW Chattanooga plant very close to UAW representation

After months of fighting from both sides, it looks like the Volkswagen factory in Chattanooga, TN, might unionize under the United Auto Workers after all. According to a letter acquired by The Associated Press, VW and the UAW reportedly struck a deal last spring where the union agreed to stop its challenge of the organization vote with the National Labor Relations Board to help clear the way for the CrossBlue to be produced in Tennessee. In exchange, the automaker would recognize the UAW at the plant. Leaders of the Local 42 at the facility reportedly signed the letter.
It seems that such an agreement would clear the way for the factory to unionize after months of dispute. According to The Detroit News, under Tennessee law, workers aren't required to join the organization. Although, that might not be a problem. As of a few months ago, Local 42 already claimed to have signed around 700 of the plant's roughly 1,500 workers.
Controversy has constantly swirled around the possible unionization at the Chattanooga plant. The UAW held its official decision in February and lost 712 to 626. However, there were allegations of intense political pressure to make sure the ballot failed. A later report also found that VW was offered $300 million in incentives well before the vote to make sure things progressed to the "satisfaction of the State of Tennessee," but the deal was later retracted. In July, the UAW opened Local 42 on the campus in hopes of signing up a majority of the workforce by volunteering to be a part of it.