Massenbach-Letter: NEWS 21/02/14 – Special – Volkswagen & „un-American“


Udo von Massenbach

Guten Morgen.

Washington Post: “The autoworkers, Volkswagen and the new, new South”- There is delicious irony, along with a generous dollop of hypocrisy, in the desperate efforts of business leaders and free-market conservatives to prevent 1,500 blue-collar workers at a Volkswagen plant in Chattanooga, Tenn., from forming a union.

For decades, these same elites have been busy telling American workers about all the benefits they’ll get from more cross-border trade and investment. But now that Volkswagen has overruled its American executives and decided to export its union-friendly German management style to a state that markets itself as a union-free zone, their enthusiasm for globalization has waned. To Bo Watson, the Republican president pro tempore of the Tennessee state senate, it’s downright “un-American.”

· ‘Conservative colleagues‘ opposition to the UAW in simple terms: "The UAW does not donate to Republicans." *

· Volkswagen = un-American?


*All eyes on Chattanooga: VW’s workers are deciding the future of unions in the South*

By Lydia DePillis, Updated: February 13 at 8:13 pm

Could life be better for Volkswagen’s line workers? (AP Photo/Erik Schelzig, file)

CHATTANOOGA, Tenn. – Employees at the Volkswagen auto plant here will vote Friday on whether to join the United Auto Workers union, marking the end of a fevered battle between national conservative groups and labor leaders over the future of the right-to-work South.

If a majority of Volkswagen’s 1,570 hourly workers vote yes, it would mark the first time in nearly three decades of trying that the UAW has successfully organized a plant for a foreign brand in the U.S. This time, the union has a powerful ally: Volkswagen itself, which is hoping the union will collaborate in a German-style "works council" and help manage plant operations.

Tennessee’s GOP leaders — along with well-funded conservative activists like Grover Norquist–aren’t letting the UAW in without a fight. Gov. Bill Haslam (R) has publicly fretted about the danger of torching the state’s low-cost reputation, and Sen. Bob Corker (R), who wooed VW to town as mayor of Chattanooga, has been barnstorming media outlets to warn against giving the UAW a toehold.

"This is all about money for them. They feel like, if they can get up under the hood with a company in the South, then they can make progress in other places." Corker said. "There’s no question that the UAW organizing there will have an effect on our community’s ability to continue to recruit businesses."

National labor leaders agree that Chattanooga would be a seminal victory, and are watching the vote closely.

"This is enormously important for the labor movement as a whole," said Damon Silvers, policy director at the AFL-CIO. "The European transplants are a puzzle that the American labor movement has been trying to work out for decades, and the UAW seems to have figured it out."

For their part, Volkswagen executives are lying low and claiming neutrality. They acknowledge their desire for a works council, arguing that their model of labor-management relations serves them well in every other country in the world, except China. Under U.S. law, the company cannot set up a works council without first having its employees vote for a union.

This week, however, GOP state Sen. Bo Watson threatened VW directly, warning that a potential expansion at the plant would have a "very tough time" winning tax incentives from the Republican-controlled Senate in Nashville if the election succeeds. At a time where almost no manufacturer goes anywhere without juicy incentive packages — Volkswagen itself already got $577 million to build its state-of-the-art facility — that’s a serious threat.

The ferocity may come from the knowledge that the UAW has historically supported Democrats, and could bolster the ailing liberal party if it got established in Tennessee, where union density is actually on the upswing after years of decline. In the shorter term, though, it may be a preemptive defense against tea-party challengers.

"Right now, because the Democrats are not very effective competitors in most of the state legislative races, most legislators‘ concern comes from the right, not from the middle or the left," says Vanderbilt political science professor John Geer. "They don’t want to give a potential primary opponent an issue, so they’re going to play pretty hardball to keep that from happening."

Meanwhile, conservative groups are pouring money into town, viewing Chattanooga as key to blocking labor’s momentum. The National Right to Work Legal Defense Foundation helped eight Volkswagen workers challenge union election procedures, alleging that VW did not give anti-union activists equal access to workers. Norquist’s Center for Worker Freedom has been handing out fliers to plant employees opposing the union, and has placed 11 billboards around town with slogans like: "Detroit: Brought to you by the UAW."

Here’s the problem with the get-tough approach: It’s making things uncomfortable with Volkswagen, which is deciding whether to build a SUV model in Chattanooga or at one of its plants in Mexico. For newly-elected Chattanooga mayor Andy Berke, that means another 2,000 jobs are on the line.

"What I’m trying to do is make sure that the city continues the positive relationship with the company, so they will be more likely to pick this location as opposed to Mexico," Berke said, choosing his words carefully. "We never want to put politics ahead of jobs."

For their part, Tennessee’s job creators have mostly remained quiet. The Tennessee Automobile Manufacturers Association, the Global Automakers association of foreign car companies, the Chattanooga Regional Manufacturers Association and the Tennessee Chamber of Commerce all either declined to comment or did not respond to inquiries.

Even Bill Hagerty, commissioner of economic development for the state’s Republican governor, acknowledges that he’s had little trouble attracting auto suppliers to Tennessee in the years since VW started talking about a works council. There are now a total of 650 firms, employing 94,000 people.

"They’re concerned whether the activity in our state might spill over into their operations, but we’ve been able to allay their concerns," Hagerty says. "We’ve still been able to succeed in this environment."

Tennessee has done pretty well on the auto manufacturing front. (Brookings Institution)

That hasn’t reassured State Rep. Mike Sparks (R), who represents the non-union Nissan plant in Smyrna, a town outside of Nashville. He used to work on an assembly line himself, and increasingly, he’s been frustrated at Nissan for cutting regular jobs and hiring temporary workers, who don’t earn as much or qualify for the same benefits. But Sparks doesn’t think unionization is the answer, worrying that the plant’s 7,000 jobs could disappear altogether if the UAW gains traction.

"I don’t want it to come to Nissan and I’ll tell you why," Sparks said. "I’ve been told by a very credible source that if Nissan ever unionized, they would leave the state of Tennessee. That would devastate my community."

There’s a certain irony to the organizing drive at Volkswagen, though: The employees there already have some of the best wages and benefits in the state. Union advocates say they’re not looking to earn more, and that management already treats them well. That’s why some workers — and their families — think it’s not worth it to pay dues.

Take Candy and Steve, who were eating hash browns, eggs, and toast at Waffle House during Wednesday night’s snowstorm. Their son works as a quality control manager at the Volkswagen plant — they declined to give their last name to avoid identifying him — and opposes the union.

"If you worked at a place that didn’t treat the workers fairly, it’d be a whole different thing," says Candy, slathering jam on toast. "But I think the people who think this is going to help them is the lower wage workers, they think this is going to help them move up the line. All it does is protect the people who don’t deserve to be protected. And it’s not fair to the people who’re working their tails off all day, that the people who don’t pull their share of the load are protected by the union. And that’s just not right."

Rather than fighting injustice, pro-union workers say, it’s simply a matter of respect.

Jonathan Walden, 39, worked in Alabama in low-wage food service and retail until landing a job in Volkswagen’s paint shop, where he currently earns $17 an hour. Walden, who describes himself as "so conservative I’m liberal," said he was initially skeptical about the union idea. But the more he thought about it, collectivism started to sound all right.

"It’s a sense and knowledge that my input is being taken into account, and that I am a part of the process, and not a sense of ‚I’m here and what I’m doing is what they’re telling me to do,’" Walden says. Besides, the pro-union workers argue, a works council allows companies to exchange information with employees and collaborate to solve problems. "It’s free market research."

Even the Japanese automakers like Nissan know this, not to mention other German companies like BMW and Mercedes; their foreign workforces are also largely represented by unions. "The Americanization of these companies is what poisons the atmosphere," says Thomas Kochan, co-director of MIT’s Institute for Work and Employment Research.

That’s what the UAW is trying to tell American and foreign manufacturers alike: That they’ve got the companies‘ interests at heart as well.

"You look at all the press the politicians are putting out, ’same old union, don’t mess with them.‘ But we’re actively trying to produce this new model of representation," UAW Southern Region director Gary Casteel said as voting got underway in Chattanooga this week. "We’re actively trying to produce this new model of representation. So if we’re successful, it should show employers that we’re willing to work with the systems that are important to them. This is important to VW. The UAW has no experience with a works council. But we’re willing to develop some."

And after that, they can convince people like Candy and Steve at Waffle House, and those in Smyrna, all the way down to the plants in Alabama. Just ask Chris Brown, another pro-union worker, whose grandfather helped organize a copper mine and his mother helped organize a Levi Strauss factory. If the UAW election succeeds, he said, the argument becomes easier to make.

"Because when they see the difference it makes in workers‘ lives, having union representation, it’s no longer a story about someone who lives on the other side of the country," Brown said. "It’s your next-door neighbor telling you about it."


Loss at Volkswagen plant upends union’s plan for U.S. South


1:33am EST

By Bernie Woodall

CHATTANOOGA, Tennessee (Reuters) – In a stinging defeat that could accelerate the decades-long decline of the United Auto Workers, Volkswagen AG workers voted against union representation at a Chattanooga, Tennessee plant, which had been seen as organized labor’s best chance to expand in the U.S. South.

The loss, 712 to 626, capped a sprint finish to a long race and was particularly surprising for UAW supporters, because Volkswagen had allowed the union access to the factory and officially stayed neutral on the vote, while other manufacturers have been hostile to organized labor.

UAW spent more than two years organizing and then called a snap election in an agreement with VW. German union IG Metall worked with the UAW to pressure VW to open its doors to organizers, but anti-union forces dropped a bombshell after the first of three days of voting.

Republican U.S. Senator Bob Corker, the former mayor of Chattanooga who helped win the VW plant, said on Wednesday after the first day of voting that VW would expand the factory if the union was rejected. "Needless to say, I am thrilled," Corker said in a statement after the results were disclosed.

National Right to Work Foundation President Mark Mix hailed the outcome: "If UAW union officials cannot win when the odds are so stacked in their favor, perhaps they should re-evaluate the product they are selling to workers."

An announcement of whether a new seven-passenger crossover vehicle will be produced in Chattanooga or in Mexico could come as early as next week, VW sources told Reuters.

Despite the indignation of pro-union forces, legal experts earlier had said that any challenge of the outcome, based on Corker’s comments, would be difficult, given broad free speech protection for U.S. Senators.

The UAW said it would "evaluate" the conduct in the vote, where 89 percent of eligible workers cast ballots.

"We are outraged at the outside interference in this election. It’s never happened in this country before that a U.S. senator, a governor, a leader of the house, a leader of the legislature here threatened the company with those incentives, threatened workers with the loss of product," Bob King, the UAW president who has staked his legacy on expanding into the south, said.

UAW membership has plummeted 75 percent since 1979 and now stands at just under 400,000.

The Tennessee decision is likely to reinforce the widely held notion that the UAW cannot make significant inroads in a region that historically has been steadfastly against organized labor and where all foreign-owned vehicle assembly plants employ nonunion workers.

Before the results were announced, King had said in an interview with Reuters that his group and the German union were already at work organizing a Daimler AG factory in Alabama.

"We will continue our efforts at Daimler. It’s not new. We’re there. We have a campaign. We have a plan. We are also very involved globally with Nissan, so that will continue," he said. He did not mention the other plants when speaking to reporters late in the evening.

Dennis Cuneo, a partner at Fisher & Phillips, a national labor law firm that represents management, said earlier in the day that a loss would be a big setback for the union movement in the South, showing the UAW was unable to convince rank-and-file workers even with management’s cooperation.

Such a loss "makes the UAW’s quest to organize southern auto plants all the more difficult," he said.

Local anti-union organizers had protested the UAW from the start, reflecting deep concerns among many workers that a union would strain cordial relations with the company, which pays well by local and U.S. auto industry standards.

Mike Burton, one of the anti-union leaders, cheered the results. "Not on our watch," he exulted, adding, as did VW management, that plans to find a way for a workers council to help set rules for the factory would continue.

Many labor experts have said that a workers council, which is used in Germany, would not be possible at a U.S. VW factory without a union.

"We felt like we were already being treated very well by Volkswagen in terms of pay and benefits and bonuses," said Sean Moss, who voted against the UAW. "We also looked at the track record of the UAW. Why buy a ticket on the Titanic?" he added.

Many workers believed that the union had hurt operations at plants run by General Motors Co, Ford Motor Co and Chrysler, now a part of Fiat Chrysler Automobiles, he said.

For VW, the stakes also were high. The German automaker invested $1 billion in the Chattanooga plant, which began building Passat mid-size sedans in April 2011, after being awarded more than $577 million in state and local incentives.

VW executives have said the new crossover vehicle, due in 2016 and known internally as CrossBlue, could be built at either the Chattanooga plant or in Mexico, but Tennessee facility was built with the expectation of a second vehicle line.

The vote has received global attention, and even President Barack Obama waded into the discussion early on Friday, accusing Republican politicians of being more concerned about German shareholders than U.S. workers.

The vote must be certified by the National Labor Relations Board.


*UAW: Historic election brings outside interference in the vote of Chattanooga Volkswagen workers *


CHATTANOOGA, Tenn. – Workers at Volkswagen’s Chattanooga plant today have voted against union representation that would have led to the establishment of a works council that would have been the first such model of labor-management relations in the United States.

At the end of voting on Friday, Volkswagen workers voted against joining the union in a vote of 712 to 626.

The decision follows three days of voting during an election supervised by the National Labor Relations Board and comes amid a firestorm of interference and threats from special interest groups.

“While we certainly would have liked a victory for workers here, we deeply respect the Volkswagen Global Group Works Council, Volkswagen management and IG Metall for doing their best to create a free and open atmosphere for workers to exercise their basic human right to form a union,” said UAW President Bob King.

“We commend Volkswagen for its commitment to global human rights, to worker rights and trying to provide an atmosphere of freedom to make a decision,” said UAW Region 8 Director Gary Casteel, who directs the union’s Southern organizing. “Unfortunately, politically motivated third parties threatened the economic future of this facility and the opportunity for workers to create a successful operating model that that would grow jobs in Tennessee.”

“While we’re outraged by politicians and outside special interest groups interfering with the basic legal right of workers to form a union, we’re proud that these workers were brave and stood up to the tremendous pressure from outside,” said UAW Secretary-Treasurer Dennis Williams, who directs the union’s transnational program. “We hope this will start a larger discussion about workers’ right to organize.”


SEIU President Henry’s Statement in Support of VW Workers

Working People in the South Will Continue to Unite

CHATTANOOGA, TN – "I am so proud of the workers at the Chattanooga Volkswagen plant for sticking together and trying to make their voices heard," Henry said. "They are an inspiration to a growing movement of working people across the nation who are uniting for good economy-boosting jobs."

"The courage that the Volkswagen workers showed over the past three days in the face of an aggressive anti-worker campaign by special interests and anti-worker politicians is an inspiration to all workers.

"This setback won’t stop working people from continuing to unite for a better future. Whether it’s auto workers, fast food workers, Walmart workers, or healthcare workers, more and more people are joining together at work to make their voices heard. We know that if we can join together we have the strength in numbers to raise wages, improve working conditions and make the economy work for all of us."


The Service Employees International Union is the fastest growing labor union in North America, with a membership of over 2.1 million


Roderich Kiesewetter,MdB: Aufgaben nicht auf Militäreinsätze verengen
Interview mit der Zeitung "Das Parlament"

Auszug: .. plädierte für eine grundsätzliche Debatte, in der man sich über Interessen, Aufgaben, Instrumente und regionale Schwerpunkte der deutschen Außenpolitik verständigt … „Was Militäreinsätze angeht: Solche Einsätze sind keine Lösung, wenn sie nicht eingebettet sind in ein zivilmilitärisches Gesamtkonzept. Wir sind bereit, im Ernstfall militärisch zu unterstützen, aber dazu gehören ein klares Einstiegs- und ein klares Ausstiegsszenario, also deutliche formulierte Ziele und auch eine Strategie, für den Fall, dass solch ein Einsatz scheitert … Die Diskussion nach diesen Reden [Bundespräsident Gauck, Außenminister Steinmeier und Verteidigungsministerin von der Leyen] erscheint mir zu stark auf das Militärische fokussiert. Ich glaube, es geht erst mal darum, dass wir uns grundsätzlich über unsere außen- und sicherheitspolitischen Interessen verständigen sollten … welche Instrumente setzten wir dafür ein? … zivile Instrumente, mit denen wir Interessen wahrnehmen können. In bestimmten Fällen können sie eine militärische Absicherung benötigen, zu der wir dann auch bereit sein müssen … Über … vier Punkte – Interessen, Aufgaben, Instrumente und Regionen – müssen wir sprechen. Eine stringente außenpolitische Strategie macht es auch einfacher, für ein gemeinsames Vorgehen innerhalb der EU zu werben. Das bringt uns dann auch nicht in die Verlegenheit, fallweise Partner zu unterstützen, die bereits vorangegangen sind … die Libyen-Entscheidung hat zu einem heilsamen Prozess geführt, etwa zu der Einsicht, dass wir uns noch enger mit unseren Bündnispartnern über das Vorgehen abstimmen … Man mag zur Libyen-Entscheidung stehen wie man will. Eines hat sie aber gezeigt: Wir konnten damals weder dem Ausland noch der eigenen Bevölkerung vermitteln, dass wir uns zunächst nicht mit dem Luftaufklärungssystem AWACS in Afghanistan beteiligen wollten und drei Monate später, nachdem wir gesagt haben, dass wir uns bei Libyen heraushalten, wie aus heiterem Himmel dann doch dafür bereit waren. Hätten wir eine klar formulierte Strategie gehabt, wäre uns das nicht passiert … Noch nie ist ein Auslandseinsatz am deutschen Parlament gescheitert … Wichtig ist etwa, dass deutsche Soldaten in internationalen Stäben, etwa im Nato-Hauptquartier in Brüssel, grundsätzlich mandatiert sind. Es muss klar sein, dass deutsche Soldaten und Diplomaten bei den Planungen von Einsätzen mitwirken können. Auch so können wir deutsche Interessen wahrnehmen und auch mal den Finger heben, wenn bestimmte Entwicklungen nicht in unserem Sinne sind …

Europa wird grundsätzlich mehr Verantwortung in Afrika zu übernehmen haben, weil die USA sich stärker auf den pazifischen Raum konzentrieren … Wir haben in Afghanistan viel zu spät auf das regionale Umfeld, etwa auf die Nachbarn Pakistan oder Iran, geachtet … Gefehlt haben in Afghanistan ein ziviles Wiederaufbaukonzept und auch Organisationen, die bereit waren, diese Aufgaben zu übernehmen …



Policy= res publica

Freudenberg-Pilster* Merkels Autoritätsverlust

Im Zentrum des aktuellen Polittheaters steht eine regierungsamtliche Gaunerei, die ein fahles Licht auf die Zustände im Parteienstaat wirft. Ein schwarzer Parteisoldat versorgte einen roten Parteisoldaten mit Munition aus dem Innersten des Polizeiapparats, offenbar in der Absicht, so das Netz seiner Loyalitäten über die eigene Parteigrenze hinaus auszuweiten. Der rote Parteifürst rechnete in der gleichen Währung und versuchte, das Geheimwissen parteiintern in Gefolgschaft zu verwandeln, bis der Sprengsatz irgendwo zwischen Niedersachsen und Berlin detonierte. Nun tragen alle Beteiligten peinliche Schmauchspuren im Gesicht.

Und plötzlich fällt dem staunenden Publikum vor allem auf, was uns schon vorher hätte auffallen können: Die Kanzlerin sieht in den Schlachtennebeln merkwürdig mutlos aus, wirkt verzagt – nicht nur in dieser so unappetitlichen Angelegenheit. Von der Energie- bis zur Rentenpolitik hat Angela Merkel das Regieren offenbar an andere outgesourct. Sie wirkt derart entkräftet, dass die Krücken, die sie seit ihrem Skiunfall benötigt, zum bisher stärksten Symbol ihrer dritten Amtszeit wurden.

Merkels Vitalität lässt nach (Forts. s. Anlage)



Politics: From Vision to Action

Barandat* White House offers help to industry on cyberattack

WASHINGTON — The Whited House on Wednesday offered to help U.S. businesses protect their computer systems from cyberattacks that President Obama called “one the gravest national security dangers that the United States faces.”

Administration officials warned during an event at the White House that an attack on critical sectors of the U.S. economy could put the entire country at risk.

“It boils down to this — in cybersecurity, the more systems we secure, the more secure we all are,” said Homeland Security Secretary Jeh Johnson. “We are all connected online and a vulnerability in one place can cause a problem in many other places.”

The administration released a 39-page guide urging vital industries like transportation, financial, health care and energy to assess their risk and take action to close gaps. The Homeland Security Department also launched a voluntary program for businesses to get help at no cost from its cybersecurity experts about ways to counter threats.

The cyberthreat to the U.S. has been heavily debated since the 1990s, when much of American commerce shifted online and critical systems began to rely increasingly on networked computers. Security experts began to warn of looming disaster, including threats that terrorists could cut off a city’s water supply or shut down electricity.

But what’s emerged in recent years, according to cyber experts, is the constant pilfering of America’s intellectual property. Administration officials say it’s difficult to put an estimate on the losses, especially since businesses don’t always know or tell the government if they’ve been attacked.

The guidelines and voluntary program come on the one-year anniversary of Obama signing an executive order calling for their creation. Obama wants Congress to pass legislation that would give the government more power to secure networks and deter attacks, but lawmakers have disagreed over the need for legislation.

AT&T chief executive Randall Stephenson, who joined chief executives of electric utility Pepco and defense contractor Lockheed Martin on a panel at the White House event, said he opposed more government regulation and pointed to fear as “the best incentive that I have in this regard.”

“That’s what motivates on this nonstop,” Stephenson said. “It just scares the living hell out of us.”

Stephenson said companies must proselytize that fear to their suppliers as well as their employees. Workers need more training to prevent against attacks, he said, and suggested that staff who knowingly or inadvertently violate systems should face stronger penalties, maybe even “go home for a period of time.”

“It can be fatal if you have an exposure in this area,” Stephenson said.

Obama did not speak at the event in the Eisenhower Executive Office Building, but instead issued a written statement. “America’s economic prosperity, national security, and our individual liberties depend on our commitment to securing cyberspace and maintaining an open, interoperable, secure and reliable Internet,” he said.



Suter* Better high school, better university performance

Posted on February 14, 2014 by IZA Press

In recent years, many states in the U.S., including California, Texas, and Oregon, have changed admissions policies to increase access to public universities for students from lower socioeconomic backgrounds. However, it is not clear how these students will perform, which is an important concern. A new IZA Discussion Paper by Sandra Black, Jane Arnold Lincove, Jenna Cullinane, and Rachel Veron examines the relationship between high school quality and student success at college. Using newly available administrative data from the University of Texas at Austin, the authors take advantage of a unique law introduced in 1997, which grants automatic admission to UT Austin to all students who graduate from a Texas public high school ranked in the top 10% of their class. The law implies that, regardless of school quality, the best students from each high school in Texas can enroll at the state’s flagship university, which increased the diversity of high schools in the state that send students to the university.

Exploiting this law, the authors find that high school characteristics positively affect student performance: high school variables measuring campus socioeconomic status, academic preparation for college, and school resources have a positive effect on college performance, as measured by freshman year GPA. Importantly, the authors show that these effects persist over time spent in college, with continued significant effects of high school characteristics on student GPAs in sophomore and junior years. Moreover, they show that the effect of high school quality on college performance seems more pronounced for women and low-income students.

Read abstract and download discussion paper.



Middle East

No oil, but a phosphate future for Saudi desert outpost

* Industrial complex planned in far north around phosphate mine

* Total investment to cost $9 billion

* Part of Saudi strategy to diversify from oil

* Oil and gas still roughly half of Saudi GDP

* Future oil revenue uncertain if prices hit by U.S. shale oil

TURAIF, Saudi Arabia, Feb 13 (Reuters) – Billboards on the highway outside Turaif, a remote desert town in the far north of Saudi Arabia, foretell a glittering future of glass offices and palm-shaded residential streets. A future that won’t rely on Saudi oil.

Last week an array of government ministers gathered in a tent near this barren outpost, 1,100 kilometres (700 miles) from Riyadh, to sign contracts to develop an industrial complex around a phosphate mine, with a new railway link to a Gulf port and total investments estimated at more than $9 billion.

The Waad al-Shimal project, or "Northern Promise", is part of a wider strategy in the kingdom, the world’s largest oil exporter, of building downstream industries and boosting the private sector instead of simply exporting raw materials.

It follows in the footsteps of Jubail and Yanbu, massive industrial cities on the Gulf and Red Sea coasts that were built in the 1980s as Saudi petrochemical production grew.

Riyadh is also pushing the King Abdullah Economic City near Jeddah, run by Emaar Economic City , as a private-sector scheme along the same lines.

"I think this approach is something that will help diversify the economic base," said Paul Gamble, director, sovereign risk, at Fitch Ratings. "It will help diversify export revenues. It will have an impact on employment, though not a large one. The one thing it doesn’t address is diversifying budget revenues."

Recent diversification efforts through industrialization have had little impact on official figures showing the size of the oil industry relative to the wider economy as increased crude revenues have outpaced growth in non-oil sectors.

Oil and gas accounted for 49.7 percent of GDP in 2012, up from 37.7 percent in 2002, the most recent central bank data shows, as the price of Brent crude quadrupled over the period.

But many analysts expect oil prices to fall in the next few years as the United States ramps up shale oil production, which will shine a light on the virtues of diversification.

"We started out exporting crude oil, then we moved into refining, then we moved into gathering gas and creating a petrochemical industry. Then we moved into large-scale mining. The benefit of it is that it has large downstream industries," Economy Minister Mohammed al-Jasser told reporters at Turaif.

The desert stretches in all directions from the spot where he spoke to an unbroken horizon, but when complete, Waad al-Shimal will be a major producer of phosphate products including the industrial fertiliser ammonia, animal feedstock, plastics and detergents.


The project could make its biggest shareholder, half state-owned Saudi Arabian Mining Company ( Maaden ) , a significant player in the global minerals industry, modelled perhaps on Saudi Basic Industries Corporation ( SABIC ) , which was built from nothing in the 1980s and is now one of the world’s biggest industrial chemical companies.

SABIC is not only Saudi’s main source of non-oil exports, but provides the raw materials for a host of downstream factories in Jubail and Yanbu.

"There (will be) many industries that also have high employment value in the region," Finance Minister Ibrahim Alassaf told Reuters.

A measure of the importance attached to job creation at Waad al-Shimal is that the kingdom’s technical training institute plans a new college nearby, to educate 300 graduates a year for white-collar jobs in industrial fields.

Saudis increasingly work in technical fields that were once the preserve of expatriates, something government labour reforms are aimed at encouraging.

However, many companies still say they prefer to hire foreigners, who cost less and often have more experience.

Mineral production has been largely neglected by the Saudi Oil Ministry and for decades has been restricted mostly to smallscale gold mining.

The government set up Maaden in 1997 and opened the sector to private and foreign investors in 2001.

"Saudi Arabia is hardly explored. We expect very high potential for additional mineral resources. Saudi Arabia is virgin. There is a lot of activity and interest in the development of minerals," Oil Minister Ali Naimi told reporters.

Maaden was part privatised in 2008, floating half its shares on the Saudi bourse, and it moved towards large-scale minerals developments supported by extensive state-funded infrastructure.

The thinking behind Maaden and other former state-owned companies set up with an eye to privatisation was as a means of distributing wealth and bringing private-sector nous to development projects.

"They have so many foreign partners for these big projects, which gives more confidence in the due diligence process, and therefore their chances of success," said Fitch’s Gamble.


A first project, Maaden Phosphate Company (MPC), started up in 2011 in partnership with SABIC , had capacity to produce 11.6 million tonnes a year (t/y) of ore at al-Jalamid in the Northern Borders region, supplying a 3-million-t/y diammonia phosphate (DAP) plant at Ras al-Khair on the Gulf coast.

Last year Maaden inaugurated a second major development, a $10.8 billion aluminium joint venture with U.S.-based Alcoa

, with an alumina refinery, aluminium smelter and rolling mill at Ras al-Khair.

It currently imports raw material, but will eventually use bauxite from a mine at al-Ba’itha near Quiba in Qassim Province scheduled to start up this year with output of 4 million t/y.

The phosphate mine at al-Jalamid, the bauxite mine at Qassim and the processing facilities at Ras al-Khair are connected by a new rail network built by state-owned Saudi Arabian Railways that will be extended to Waad al-Shimal.

The government built the port and some other facilities at Ras al-Khair, but Maaden developed a power and water desalination plant for its aluminium and phosphate projects.

Waad al-Shimal, a joint venture with SABIC and U.S. phosphate and potash producer Mosaic , builds on these earlier developments with a mine at Umm Wual near Turaif and nine large processing facilities.

In December Maaden said it had secured $4.2 billion financing commitments from banks, while government bodies would supply $3 billion. First production is expected in 2016. Government agencies will also pay for rail and port expansions.

Engineering, procurement and construction contracts for the main facilities have already been awarded, with the largest jobs going to Daelim Industrial Co , Spain’s Intecsa Industrial, SNC Lavalin , Sinopec Engineering Group

and Hanwha Engineering & Construction Co .

The engineering consultant is Fluor Corp , and the project manager is Bechtel.

Saudi Arabia is already a major exporter of urea and ammonia, two of the most common artificial fertilizers, via Saudi Arabia Fertilizers Co (SAFCO) , a unit of SABIC .

"It’s about using what they have and producing value-added goods instead of just exporting the raw material. Around that is an industrial cluster strategy that you hope will create jobs and industries you never had before," said John Sfakianakis, chief investment strategist for Saudi investment company Masic.





Auto union loses historic election at Volkswagen plant in Tennessee

CHATTANOOGA, Tenn. — The United Auto Workers was dealt a stinging defeat tonight, with a majority of employees at a Volkswagen plant here voting against joining the union after a high-profile opposition campaign led by Republican politicians and outside political groups.

Company and union executives announced the outcome at a news conference at the plant, hours after polls closed. The results, still to be certified by the National Labor Relations Board, were close: With 89 percent participation, 712 workers voted no, and 626 voted yes.

The loss came in spite of an unprecedented level of support from the company being organized. Frank Fischer, CEO and chairman of Volkswagen Chattanooga — who had encouraged the idea of starting a German-style "works council" at the plant, like those in place at Volkswagen’s other factories — even seemed saddened by the outcome.

“Our employees have not made a decision that they are against a works council. Throughout this process, we found great enthusiasm for the idea of an American-style works council both inside and outside our plant,” Fischer said, reading from a statement. “Our goal continues to be to determine the best method for establishing a works council in accordance with the requirements of U.S. labor law to meet VW America’s production needs and serve our employees’ interests.”

The UAW reacted with ire at those who had pushed workers to vote against organizing the plant.

“Unfortunately, politically motivated third parties threatened the economic future of this facility and the opportunity for workers to create a successful operating model that would grow jobs in Tennessee," UAW Southern Region organizer Gary Casteel said.

Casteel was referring to anti-union statements by Tennessee’s Republican lawmakers, who threatened to withhold tax incentives from Volkswagen if the workers unionized, and attention from D.C.-based activist Grover Norquist. At a press conference following the vote, UAW officials said that they started to notice workers start to turn against the union as they started hearing "threats and intimidation" against the company, and that they had not decided whether to pursue legal action because of it. But that was just the public campaign.

The worker-to-worker outreach, by contrast, was carried out by a dedicated core of anti-union employees who handed out flyers, voiced their opposition through a website and social media, and held a big meeting one Saturday to make their case. "It just spread," said Mike Jarvis, in a group gathered outside the press conference in the rain on Friday night, wearing blue T-shirts with a crossed-out UAW. "I told two people who told four people who told eight people, like a pyramid kind of thing."

What was the winning argument? Jarvis said people on the fence were persuaded by a clause in the Neutrality Agreement negotiated between Volkswagen and the UAW before the election, which established this as one of the principles of collective bargaining: "maintaining and where possible enhancing the cost advantages and other competitive advantages that VWGOA enjoys relative to its competitors in the United States and North America." In other words, keeping wages and benefits from getting too high relative to the already-unionized Big Three automakers in Detroit.

"Once we got people to realize they had already negotiated a deal behind their backs — they didn’t get to have a say-so in it — they went ahead and signed the paperwork that this is going to happen as soon as we win the election," Jarvis said.

The clause in the VW-UAW "Neutrality Agreement" that might’ve made the difference.

Asked why that clause was included, UAW President Bob King said it was exactly the kind of innovation the union was attempting to bring to its organizing: Cooperation with companies to help them compete in the marketplace, not perpetual conflict. His full response is pretty illuminating.

Our philosophy is, we want to work in partnership with companies to succeed. Nobody has more at stake in the long-term success of the company than the workers on the shop floor, both blue collar and white collar. With every company that we work with, we’re concerned about competitiveness. We work together with companies to have the highest quality, the highest productivity, the best health and safety, the best ergonomics, and we are showing that companies that succeed by this cooperation can have higher wages and benefits because of the joint success.

Germany is a great example of that. Germany has extremely high wages, and is extremely successful because people work together. What I hope the American public understands is that those people who attack this are attacking labor-management cooperation. They don’t believe in workers and management working together.

That’s the pitch that’s supposed to make companies more amenable to the idea of allowing their workers to have representation, though. The whole works council model is predicated on the idea that it helps management communicate with labor to reach more efficient and effective solutions to everyday problems.

But what if the prospect of too much cozyness with management spooks the workers themselves? Successful organizing campaigns need a scary opposition — and there was no way to make Volkswagen into such a figure. "Volkswagen’s a class act," sadi UAW Secretary General Dennis Williams.

The narrow loss throws into jeopardy the UAW’s future strategy for organizing the South. It had already begun to apply a similar organizing model to a Mercedes-Benz plant in Vance, Ala., figuring that parent company Daimler might also be more willing to accept a works council — now, there’s little competitive pressure to do so.

The foreign automakers are a huge problem for the UAW. Over the years, they’ve exerted downward pressure on compensation and working conditions at the Big Three Detroit car companies — while the Hondas and Nissans used to have to match union wages in order to attract workers, they’ve achieved enough of a critical mass to create their own market power.

"The balance of power in setting wages and benefits has shifted to the non-union sector," says Kristin Dzickek, a labor specialist at the Center for Automotive Research. "If they are bargaining for more of the work force, they can make more of an even playing field for labor costs."

Meanwhile, while the South’s resistance to organized labor might be softening — Tennessee itself saw the fastest union growth of any state in the country last year –local electeds can still be deeply skeptical of the union’s political influence. Take Republican State Rep. Mike Sparks, whose district includes Nissan’s 7,000-worker plant in Smyrna. His mother-in-law worked in the plant for 24 years and had 11 surgeries because of it, and he’s frustrated at how the company has hired more temporary workers. But he doesn’t want Nissan to unionize, and explains his conservative colleagues‘ opposition to the UAW in simple terms.

"The UAW does not donate to Republicans," Sparks said. ‚That’s one fear, let’s just call it like we see it."

At the same time, many of the plant’s workers are themselves conservatives — and have started to wonder why the politicians who represent them oppose their right to organize. John Wright, 43, is a test driver at the plant and identifies as a right-leaning independent. He says he makes between $30,000 and $40,000 a year, and supports a wife and three young daughters. When Corker — who takes more money from the securities and investment industry than any other — came back to Nashville to voice his opposition to the UAW, Wright was puzzled.

"I can’t for the life of me understand why the Republicans and big money are coming against us so bad. To me, they’re attacking the average worker," Wright said, in the hours before the election results were announced. "To have politicians think that there’s nothing more important than coming down and picking on the little guy because he wants a union, there’s a national debt we’ve got to control, we have foreign policy things that we elect them to go up there to do, but you have to fly home for an emergency meeting because I want a union?"


Joerg Barandat: WATERINTAKE 02/2014




see our letter on:

Wir wünschen Ihnen ein angenehmes Wochenende. Ihr Team.

Udo von Massenbach – Bärbel Freudenberg-Pilster – Jörg Barandat – Edith Suter



Will a new, new South emerge from the showdown in Chattanooga_ – The Washing.pdf


U.S. senator drops bombshell during VW plant union vote _ Reuters.pdf