Officials in Tennessee celebrated when Volkswagen elected to sink more than $1 billion into a new plant in Chattanooga.

But a discussion, initiated by senior VW executives in Germany, about whether the Chattanooga facility might need a union now is raising alarms within the local business community.

"Nobody wants it," says Roland Zitt, president of Mahle Industries, who divides his time between the company's North American headquarters in Farmington Hills, MI, outside Detroit and Morristown, TN, where the supplier operates a manufacturing plant.

The German born-Zitt says both the Tennessee Chamber of Commerce and Tennessee Chapter of the German-American Chamber of Commerce have taken a stand against unionization at the plant.

In an era when both auto makers and their suppliers are under intense pricing pressure, an increase in labor costs is difficult to manage, he suggests.

The state also does not favor the move.

“I’ve talked to a number of employees in Chattanooga, and they are very comfortable with the way things are now,” Tennessee Gov. William Haslam says in statement. “Volkswagen continues to be incredibly successful with the current structure. I would hate for anything to happen that would hurt the productivity of the plant or to deter investment in Chattanooga.”

But Sean McAlinden, executive vice president-research at the Center for Automotive Research in Ann Arbor, MI, says Southern states, which have succeeded in luring new auto plants to their region in the past, already are facing intense competition from industrial development in Mexico, even without the threat of unionization.

Volkswagen of America officials have sought to minimize the controversy, which intensified in April when the auto maker confirmed it plans to reduce production at the Chattanooga plant because of a decline in U.S. sales of the midsize Passat sedan.

"We're not going to get into what we've been told in private," VWA spokesman Tony Cervone says of discussions the auto maker has had with local political leaders.

Says Guenther Scherelis, a spokesman at the Chattanooga plant, “The decision about their representation belongs to our employees."

It is possible sentiment could sway in the UAW’s favor, following planned cutbacks at the facility. Scherelis confirms VW will idle some 500 temporary workers at the end of May.

"We are changing the shift team system and are implementing a 2-shift system, as was planned originally. We are creating a list to be able to recall them," he says, adding the auto maker has made no decision yet on whether to add a second product in Chattanooga.

WardsAutodata shows VW adding output of a cross/utility vehicle based on the CrossBlue concept unveiled in Detroit in January to the Chattanooga mix in 2015.

For its part, the UAW has picked up some vital support from IG Metall in its bid to recruit VW workers in Chattanooga.

A letter from the German metalworkers union’s president was distributed to employees at the Tennessee plant in March. In addition, VW’s board of management said publicly it would be willing to accept the UAW in Chattanooga.

UAW President Bob King has hailed the developments.

“I read the recent comments from Volkswagen AG board of management member Horst Neumann with great interest,” King says in a statement. “The UAW is very interested in, and has great respect for, the German system of co-determination where the company has strong collaboration with management, unions and works councils.

“I am pleased that Volkswagen, known globally for its system of cooperation with unions and works councils, has an open mind about letting the employees in Chattanooga also be part of the global VW system of co-determination.”

However, union officials say privately they are not pressing for an election among VW's employees just yet.

Harley Shaiken, a labor expert from the University of California at Berkeley, says anti-UAW sentiment is deeply ingrained among managers at the foreign transplants.

However, IG Metall's open advocacy on the UAW's behalf in Chattanooga is unprecedented, he notes.

In addition, under American law, VW cannot have a European-style works council, where workers and managers meet to discuss common problems, without union representation, Shaiken says.

He points to VW culture as another driving force behind the unionization movement. The auto maker is partially owned by the German state of Lower Saxony, where the Socialist Party is a major political force.

"Volkswagen has more than 90 plants in the world, and only one is non-union," Shaiken points out.

Kent Wong, director of the UCLA Labor Center, notes King has spent the better part of two years traveling the world to line up support for the UAW's efforts to organize U.S. plants run by transnational auto makers such as VW and Nissan.

King also is a labor representative on the supervisory board of troubled Adam Opel. The appointment, which he accepted at the urging of General Motors Vice Chairman Steve Girsky, has brought him into regular contact with top officials from the German metalworkers union.

IG Metall’s Chattanooga letter was sensitive enough that representatives from VW told Daimler executives about the content before it became public, according to a Daimler official familiar with the dialogue between the UAW and German auto makers.

“The UAW is looking for a beachhead in the South and they think they may have got one at Chattanooga,” observes one Daimler official familiar with the exchange. “They also want to expand to Spartanburg, SC, (where BMW has a plant) and to Tuscaloosa, (AL),” where Mercedes has an assembly operation, he adds.

Even with the support of the influential German metalworkers union, the UAW faces an uphill battle. For example, morale and wages at the Tuscaloosa plant are high, and there has been no indication employees are thinking of unionizing, although the UAW has established a special website directed at plant employees.

Wilfried Porth, the board member in charge of human resources at Daimler, emphasizes the company is neutral on unionization. Daimler has signed a global compact that allows employees to join unions if they desire, he says.

Meanwhile, the UAW has yet to win over Southern workers in large numbers, and management-led anti-union campaigns have been critical in defeating a unionization drive at Nissan’s Smyrna, TN, plant in 2001 and holding off organizing efforts at Honda operations in the U.S.

The UAW did succeed in organizing workers at Daimler’s Freightliner commercial-truck plants in North Carolina, despite intense opposition from local politicians.

On May 1, the union also won an organizing drive at Flex-N-Gate in Arlington, TX, where 80 workers voted to join the UAW in an election conducted by the National Labor Relations Board. The facility sequences components for a nearby GM assembly plant.

The UAW also has launched a campaign at Nissan’s operations in Mississippi and Tennessee. The main target is the plant in Canton, MS, where better than three-quarters of the workforce is African-American and the union has gained support from civil rights activists and political figures.

But the union has held off calling for an election as it presses for a declaration of neutrality from Nissan management.