ContractsProf Blog

Editor: Jeremy Telman
Valparaiso University Law School

Monday, August 20, 2012

Strike Settlement Considered a Win for Caterpillar

"Strike" from the National Museum in Warsaw, Poland

As reported in Saturday's New York Times, 780 members of the International Association of Machinists ended their fifteen-week strike when, against the recommendation of union leaders, the workers voted to ratify a six-year contract that contained almost all of the concessions that Caterpillar demanded.  

The contract that the Caterpillare offered included a six-year wage freeze for workers hired before May 2005, a move that Caterpillar justified by claiming that its senior workers were being paid above market levels.  At the time Caterpillar made this pooposal, it was reporting record profits.  

The workers were losing a war of attrition.  105 workers had alredy crossed the picket line and returned to work and no concessions were in sight.  In addition to the pay freeze, the workers agreed to a pension freeze for the same group of senior workers and an increase in employee contributions for health care.  They were able to get Caterpillar to increases the "ratification bonus" form $1000 to $3100.  Caterpillar also agreed to a single 3% increase for workers hired after 2005 at the end of this year.  Finally, workers won a concession on the reasignment of workers, regardless of seniority.  Caterpillar wanted to be able to assign workers to new jobs indefinitely, regardless of seniority.  Under the new agreement, they may do so for a maximum of 90 days.  k

The senior workers subject to the pay freeze earn, on the average, $26/hour, which comes out to about $50,000/year gross, plus overtime.  Caterpillar reported profits of $4.9 billion last year and expects earnings to be stronger still in 2012.  Its chief executive, Douglas R. Oberhelman, increased by 60 percent in 2011 to $16.9 million.  That means his raise was about $8000 per striking worker.  


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