Nearly 800 machinists at a Caterpillar plant in Illinois narrowly reached a deal to extend their labor agreement after a three-and-a-half month strike that weighed heavily on the workers, many of whom crossed the picket line to continue receiving their paychecks.
The six-year contract, which comes with a $3,100 signing bonus, places a freeze on cost-of-living increases and pensions while migrating workers to a 401(k)-style retirement plan with a 6% corporate match. The deal also forces workers to pay a portion of their health-care premiums, starting at 10% this year and sliding up to 20% in 2018.
The machinists' union ratified the contract on Aug. 17 after months of bitter negotiations. "We know situations like this are never easy," says Tim Flaherty, general manager of Cat's advanced components systems operations, in a statement. "I think everyone involved is ready to get this behind us." By all accounts, the vote passed by a slim margin.
Throughout the strike, union proponents contended that Caterpillar played hardball with middle-class workers in a time of increased sales and profits. Cat officials countered that the company needs to adopt new wage-fringe packages to remain globally competitive. Employees who joined the plant prior to 2005 are paid 34.2% above market rates, the company says. Newer employees will receive a 3% wage increase in December, but the deal allows for only market-based pay increases in the future.
To gain leverage during the strike, Cat relied on its "contingency workforce plan," which employed mostly managers and temporary workers to keep the line moving at the Joliet plant. The plant makes hydraulic components.
Michael LeRoy, a professor and labor expert at University of Illinois, Champaign, says that while the Cat strike sets precedents for manufacturing, particularly in how benefit costs are shared, it likely will have a "muted" impact on bargaining in construction. Manufacturing jobs "are much more transferable," he explains. "People can offshore production. You can't offshore construction."