Wednesday, May 30, 2012

Caterpillar Strike and Its Larger Story ... Some Questions I Have


The city of Joliet, Illinois, Caterpillar and labor relations are three things with which I'm quite familiar. I'll explain why.

When working long ago as a flagman on a truck, we'd deliver Caterpillar equipment from the East Peoria or Decatur facility to Joliet before returning to our home base in Chillicothe, my home town. The next day we'd do it again. It was a great summer job.  I was just pretty much along for the ride.

Later a childhood friend, now deceased, worked at the Caterpillar facility in Joliet.  He was a member of the IAM union, which is the same one involved in the current strike at Caterpillar's Joliet plant. We both lived in nearby Kankakee. Jerry Ginger liked his job and its high pay, too.

I grew up in a union household, worked in union facilities, interned for a union labor lawyer while in law school and began my work career representing the company in labor relations.  I've negotiated with the UAW, Teamsters, IAM, USW and many others. As individuals, most union leaders were great people. Just like the fine people I knew while growing up in Chillicothe.

The Current Strike at Caterpillar's Joliet Facility

Union Urges Caterpillar Rebuff is subtitled "Bonus-Payments Contract Sweetener Fails to Sway Striking Machinists' Leaders." Since it's not long but is quite revealing, we'll quote the article in its entirety

"JOLIET, Ill.—Union leaders at a Caterpillar plant here say they will urge striking workers to reject a slightly revised contract offer from the maker of construction and mining equipment.

"It is still a terrible contract," Tim O'Brien, president of the local branch of the International Association of Machinists and Aerospace Workers, or IAM, said in an interview on Tuesday. The workers, who have been on strike for a month, are due to meet Wednesday to vote on the latest Caterpillar contract offer. Mr. O'Brien said about 780 workers at the factory are out on strike.

The strike is a rare test of U.S. workers' willingness to fight at a time when the nation's manufacturers generally are succeeding in holding down wages and benefits. Caterpillar, based in Peoria, Ill., has long been known for grinding down union resistance.

"They're trying to see how desperate we are," said David Downs, a machinist who was picketing with more than a dozen other Caterpillar workers outside the plant before dawn on Tuesday. When asked whether he was getting desperate, Mr. Downs replied: "Not even close." He and others on the picket line said they planned to vote against the revised offer.

A Caterpillar spokesman declined to comment on the union statement.

The basic pay and benefit elements of the Caterpillar offer are unchanged. The six-year contract would allow Caterpillar to freeze wages for workers hired before May 2005. For those hired since then, the company could adjust wages based on its assessment of the labor market. Workers would pay more for health insurance and transition from a defined-benefit pension plan to a standard 401(k) retirement-savings program. Caterpillar would have more flexibility to require workers to switch to different shifts.

Workers in the plant, which makes hydraulic pumps for Caterpillar machinery, generally earn between $13 and $25 an hour. Those hired before May 2005 are on a higher wage scale. Caterpillar has been making increased use of "supplemental" workers who can be laid off at any time without severance pay, the union says.

To sweeten the terms, Caterpillar is offering a $1,000 bonus to each employee if workers ratify the contract on or before June 10. Workers also would get eight hours of extra pay if they ratify the contract by Wednesday and return promptly to work, and as much as $2,100 in bonus payments if the plant meets certain performance goals in the second quarter. The IAM's Mr. O'Brien said those performance goals are unrealistically high.

Caterpillar has continued to operate the plant by using managerial employees to run machinery.

The strikers hope those white-collar workers will find the work too difficult and dangerous. "These are office guys," said Mr. Downs. "They've got them out there doing our work. So-called doing our work. They want to get home to their families."

The strikers are getting about $150 a week in strike pay from the union. Groceries donated by charities and other unions are helping sustain them.

With unemployment high, U.S. workers generally have felt compelled to accept employers' efforts to cap pay for veteran workers and reduce wages for new hires. The U.S. government's inflation-adjusted Employment Cost Index, which includes benefits, shows that manufacturers' labor costs were 2.7% lower in the first quarter of 2012 than in 2005."

Some Thoughts and Questions I Have

Even though I predict that the union leaders and most IAM members will vote to reject Cat's offer, why can't others as free Americans choose to accept the offer and return to work under the proposed terms?  Isn't liberty all about being free to choose for ourselves without being in any way coerced by others?

In other words,  assume I'm an hourly worker who is willing to work for $13 to $25 per hour and accept the $1,000 to $2,100 bonus payment, as well as transition to a 401k retirement plan. Even though I'm not "desperate," I do want the income, and I don't think Cat's proposal is a "terrible contract" offer. Besides, I've explored my options and this looks like the best deal I'll be able to find. So why keep striking?

And why do U.S. labor laws and union threats prevent me from exercising my rights as a free American to go back to work? Better yet, why did I have to stop working anyway when the strike began? Don't I have a choice?

Now don't get me wrong.  If others don't want to work for what Cat's offering, they shouldn't be forced to do so. But neither should people who think as I do be forced not to work just because others choose not to work?  I don't get it. Not in America.

And why do I have to pay union dues to the IAM for representation that I don't want? So they can take part of the dues I pay them and give me back $150 weekly to stay fed  while out on strike? I'd let them keep their dues if they'd allow me to quit the union and stop paying dues.

And why do I have to rely on donations from churches to stay afloat during the time I'm out of work? If I returned to work, the churches could use that money for people really in need as well as for those without jobs.

And if my fellow IAM members want not to work for Cat, why can't others have their jobs?  In a free country, we should all be free to work or not work as circumstances permit.

Of course, union leaders should be free to "urge" me to strike, but I should be free to refuse to follow their lead. Why can't I decide for myself?

That said, my fellow workers should certainly be free not to work for Cat under the terms offered, but I should be free to accept their offer to return to work. Seems only fair.

And in the future, why can't I just make my own deal with the company about pay and such, and allow the IAM to represent those who choose to be represented by the union?

Oh and by the way, who pays the union leaders their salaries and my $150 weekly pittance of a strike subsidy? How much are the union leaders paid anyway?

And if the source of the union's money, the dues paid and the strike fund is Caterpillar, why are we trying to make things so difficult for the company? Aren't things pretty tough out there already?

Last I heard, good jobs were hard to find, so I want keep mine at least until something better comes along. But the Cat job is a good job, so something better probably won't come along anytime soon.

I want to help Caterpillar survive and even thrive in this economy. They're doing well, and we need to keep it that way.  I call that job protection.

I call this strike crazy, but that's just my view.

Summing Up

Individual freedom of choice is lacking in U.S. labor relations. The unions have monopolistic powers. Individual workers have minimal rights. It's all a collective thing as opposed to an individual thing.

That's not good, because it makes union leaders too powerful. And frequently they don't even work at the struck facility.

The UAW has brought the American auto industry to its knees. Most foreign based transplant auto companies are non-union and located in the south.

The USW brought the old line American steel companies to their knees. Nucor, Steel Dynamics and other successful U.S. steel companies today are largely non-union.

And why can't the Joliet "office guys" do the work previously done by the union members?

With technology today, maybe we could combine the job of the office guy with the job of the union guy and go from there. Guess who would be best qualified to do the combined job?

Then we'd pick the best and give him a raise. That would increase productivity and make one current employee happier while allowing one currently unhappy employee to seek employment elsewhere.

We need to understand why unions aren't good for workers or American competitiveness today. The ostrich approach to competitiveness and labor relations simply isn't workable.

Finally, we must stop emulating the European socialist collectivist model and adopt a free to choose capitalist individualist approach to create meaningful employment for all who want it.

But compete we must!

At least that's my vote.

Thanks. Bob.


  1. Having been a former union member, I sympathize with the striking group. But, at the same time, seeing things from the other side of the fence, I also question why someone would argue so forcefully against working in a time when there are those that want to work, and cannot find a job. Simply put: If you don't want to work, don't. But if that is your choice, don't impose your opinions on others. Let those who want to go to work choose for themselves.
    Very well put, Bob!

  2. People Corprate greed is running amuck! Can you support a family on a $13.00 an hour salary & pay for medical benefits? What's to stop Cat from cutting the wages even further? Cat needs to do thr right thing and share the wealth with the workers ! Investors sell off you Cat Stock !

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