CHATTANOOGA - The United Auto Workers union suffered a major defeat Friday when workers at German auto giant Volkswagen's Tennessee plant rejected its organizing efforts.

The closely-watched vote came as the U.S. labor movement is fighting for its survival after decades of shrinking membership rolls.

Volkswagen workers voted against joining the union in a final vote of 712 to 626.

"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."

The unionization efforts faced stiff opposition from local politicians, who warned that a UAW victory would make it harder to attract new jobs to Tennessee and even threatened to withhold tax credits that would help VW expand production.

A total of 1,338 employees at VW's Chattanooga plant – 89% of the workers -- voted over a three-day period in the secret ballot election, which was monitored and tallied by the National Labor Relations Board.

Volkswagen (IW 1000/7) opened the door to the UAW last year under pressure from German unions to give the Tennessee plant a seat on VW's global works council, which gives employees a say in the management of the company.

The tacit support of management was not sufficient to sway workers, however.

A 'Serious Setback' for the UAW

Volkswagen's management "seemed neutral to positive" toward the UAW's attempt to organize the workers, said Jack Nerad, executive editorial director at Kelley Blue Book, a vehicle valuation company that also provides analysis of the automotive industry.

And yet the union "still failed to gain certification," Nerad said in a statement, describing it as a "serious setback" for the union.

"The UAW's attempts to organize other non-union plants in the United States are very unlikely to be greeted with as much cooperation from other manufacturers, so this could mark the end to UAW hopes to gain traction in these non-union Southern state plants," he said.