COLUMN ONE : After a Long Tug of War, Labor Slips : For years, the UAW and Caterpillar have traded blows. But this time they are locked in a bitter battle that has exposed the decline of both America’s union movement and its main weapon--the strike.

Sometimes the whole uncertainty of the world just reaches down through a man and pulls him inside out. One could witness that most days around the burn barrels at the picket shacks, the long war with Caterpillar going on endlessly and the cold wind mocking a striker’s sense of purpose.

Every now and then, someone spoke up as if he had finally understood the ways of Big Business. It’s all the Golden Rule, he would say: Him with the gold makes the rules. And that would start the usual talk about unions and solidarity and how workers were going to wise up one day and reclaim America.

It was a tough sell even here, on the line with the others who had hitched their fate to the United Auto Workers. They were trees falling in the forest and nobody heard. The very phrase “organized labor” sounded dull coming off the tongue. It may have been easy to get dewy-eyed about it in the ‘30s. But what was Labor today if not tired and mulish and out-of-step.

The American Century is now slipping from Uncle Sam’s broad shoulders, and capitalism has found its new frontier in the global economy. Labor, on the other hand, is fading slowly into the cultural wallpaper. Only one in six workers is now a union member--only one in nine, excluding government employees. It is the lowest rate since the Great Depression.

Forty years ago, when fully a third of all American workers belonged to unions, Labor was considered a vital part of democracy itself, the Average Joe’s necessary counterweight to corporate power. Now its decline goes by almost unnoticed, all those acronyms--USWA or IBEW--like the call letters of some out-of-town radio stations.

Unions were built on the strong backs of industrial workers, but now the Computer Age is redefining the give-and-take between men and machines, and management has been the faster to adapt. Manufacturers make and sell their products across the entire planet. They are ever more mobile, ready to close a factory here and open one there, new technologies always cutting the need for blue-collar workers. These are high cards to play in labor negotiations.

The strike was once the big gun in Labor’s arsenal, but now the weapon is seldom used because its wound is so often self-inflicted. A great shifting in the balance of power has occurred. And although it may have come on too gradually for many Americans to notice, here in central Illinois it is as obvious as the black prairie soil. Caterpillar Inc., the world’s largest maker of earthmoving equipment, is rolling over the UAW as if aboard one of its famous tractors.

Peoria, home to “Cat’s” headquarters, is often chosen to typify mainstream America, but the struggle here is far more than symbolic. Two giants of Business and Labor, each with a competing view of the future, are in an epic battle of will that divides the loyalties of 13,400 UAW members. The fight goes on house to house, whipping up fear in those whose high-paying union job is a last fragile foothold to a middle-class life.

To trace the roots of this conflict and to follow its four-year course is to observe the turbulent forces reshaping the American workplace, blue-collar and white-: global competition, massive corporate restructurings, payrolls cut to the bone. Workers can no longer depend on the economic sanctuary of lifetime employment by a paternalistic company. The rules of the game are changing, and very often the faithful not only feel betrayed but powerless.

Like many other American manufacturers, Caterpillar is profitable today only because it began a corporate metamorphosis in the 1980s, when foreign competition had taken advantage of its complacency. During one three-year period, Cat was awash in $1 billion of red ink and nearly went under. Its leaders vowed never again to allow costs to get out of line.

The reborn Caterpillar was a computerized marvel: smarter, faster and, most of all, smaller. More than half of 48,000 factory workers had lost their jobs, a familiar story, repeated again and again, sea to shining sea. Once blue-collar workers had lived in a world of rising expectations. But now that world was coming loose, spinning like a socket in the grip of a power wrench.

Escalating Battle

The dispute, which involved seven Caterpillar plants, began in 1991. One issue among the many was wages: just how much higher the average $17 hourly rate would go and whether the company could introduce a two-tier scale, paying only $7 to some of its new hires. Of even more importance to the union, Cat was promising a policy of no layoffs, but it wanted the right to eliminate jobs as people retired or quit.

A decade of lost jobs had already left the union at 40% of its former size; it felt its survival threatened. After contract talks proved angry and fruitless, the UAW declared a strike, just as it had nine times before over the course of 43 years. Older workers well knew the drill. They postponed their car payments to the credit union. Picket signs twirled beneath the sun.

Then, 21 weeks into the walkout, a stunning letter arrived at each home. Hands began to quiver as eyes slid down the page. Cat was doing something that had been unthinkable for Big Business only a decade before. Dear Fellow Employee, the letter said: Report to work or we will permanently replace you.

Most of the workers were in their mid-40s, with just enough seniority to have ducked the storm of layoffs; more than half were within six years of retirement. Could all that effort toward a full pension suddenly be wiped away? Holes began to open in union solidarity. Two weeks later, the walkout was called off, with the workers returning to their tool cribs without a contract.

The UAW was unused to this, going out like a lion only to come back like a lamb. It decided to fight on with an “in-plant campaign,” asking its members to slow things down on the job, check their brains at the door, wear buttons and T-shirts that pricked the company’s thin skin: “Catbuster!”

Management grew predictably vexed and made examples of this one and that, firing some and suspending others. The UAW protested to the National Labor Relations Board, which filed dozens upon dozens of charges against the company. This in turn emboldened the union to strike again last June.

This second walkout is still going on, and it has an important legal distinction to it. Because it was called over unfair labor practices instead of contract issues, by law the company cannot hire permanent replacements.

So workers had reason to expect a strike like those in the old days, one side withholding labor and the other pay, the two burning themselves out until economics determined which of them was the candle and which the flame.

A Daring Idea

The company had something different in mind, an idea that delighted those plant managers who had fought a million daily skirmishes over a million union grievances. Time and again, some of them had argued that Cat could run nearly full-speed through a strike, using management, office workers and temporaries. Some union jobs demanded critical skills, but automation had made a lot of others routine. Anybody who’s motivated can out-pull a union guy, they said.

No manufacturer as big as Cat had ever tried such a thing. It was a daring idea--and it seemed a plain folly to many strikers, the grease of a lifetime ground into their fingernails. “I’d like to see some of them secretaries in their high heels hauling around a tool box,” laughed Duane Burlingame. “Or them young kids. Your average 20-year-old doesn’t know what real work is.”

Still, it ate at the nerves just to watch it going on, struck factories turning out products, one shift in the pre-dawn, another in the grainy half-dusk. Long lines of cars wheeled through the gates. “You greedy scab, how can you live with yourself?” the strikers shouted with a haunting anger that sawed clear across their lungs and throats. “That’s my job you’re taking!”

The vehicles sped through anyway, windows usually up, radios turned loud. Most of the faces inside were as familiar as one’s own--neighbors, friends, former friends. And a few were altogether new, temporary hires in cars with out-of-state plates. Who were these people and how endless was the supply? Maybe all America was out gunning for their $40,000 jobs and full benefits.

Strikers were desperate for information, but rumors were the only plentiful coin. The longer the walkout went on, the less anything seemed sure. Cat lied, the union lied. For sanity’s sake, they clung to the UAW line, even if it kept changing: Nothing is being built . . . they’re building, but it’s all junk . . . just think how much more money they’d be making if they had us in there.

Who could tell anything for sure? Strikers might have asked their union’s “scabs.” Some 30% of the UAW was crossing the line. Many of them were convinced that the cause was dead wrong; others were too piled up in debt to do without a paycheck. But strikers would only glare at scabs, or stare through them. And even when the grudges could be laid aside, the truth was too painful to believe.

Caterpillar was only hobbling along in some plants, but the engine works were quickly going all out, and, inside Building SS, full quotas of tractors were making their daylong journey up the line. The smell of oil lingered in the damp air. The joke of the day was: “UAW stands for U Ain’t Workin’.”

Diane Roberts, a union line-crosser with 22 years at the company, said: “If those people out there could just take a look in here, they’d know they were beat.” Down the way from her was a temporary hire named Rory Franklin, whose father-in-law was an officer in the UAW’s Peoria local. Down from him was another temp, April Smith, her new job still a secret from her striking dad.

The company seemed like a military power, its managers maintaining their corporate discipline and staying tight-lipped. They called up the reserves. Retirees returned to work at $25 an hour. Welders rushed up from the Mississippi shipyards. For them, the work was easy, all flat welds without any jigs or mounts. “The union guys are suckers,” said one of them, Charlie Jones. “We’re making their money, and outside all they’re getting is a runny nose.”

It was easy to get depressed against such a tide. A long strike changes a person. Too many bills get juggled, too many children told no. Riding the ups and downs becomes tiresome, and down seems the more natural way to stay.

Where were the UAW’s reinforcements? Other unions donated some money, but the strikers wanted a national show of force. Instead, Teamsters hauled Cat’s engines and Longshoremen loaded its tractors. Union job shops around Peoria produced Cat parts. Tazewell Machine supplied oil pans--and it was UAW!

The union did not seem to have a strategy beyond simply trying to outlast the company. Strike pay was tripled to a survivable $300 a week. In return, a striker was assigned four hours of picket duty, often a boring stint on wobbly chairs, stomachs contending with too many doughnuts. Most people busied their free days with odd jobs; a few even finagled work with Cat suppliers.

To hundreds of others, however, the strike was the struggle of a lifetime. It tested and energized them, and each day, they tried to somehow raise their voices so loud that the company would have to hear. This was hard to do.

Caterpillar had hired Vance International, a security firm specializing in strikes. Guards in paramilitary garb--on foot, in vans, on perches--used camcorders to tape every incident at the many plant gates. Company people wrote down names. Firings for “picket line misconduct” arrived by mail.

Caterpillar’s lawyers had gone to court. State judges agreed to limit the number of pickets at each gate to 10. Guards would call the police at the first sight of a gathering. The ritual then was maddening: Now you folks know you can’t stand here. Why not, we thought this was America? Well it is, but there are laws. Yeah, one law for Caterpillar and another for the rest!

What few victories the union won were small, though for the zealous they were sustenance enough, even mindful of an earlier era, when working-class solidarity was an idea stitched into the quilt of America’s oral history.

Just before Christmas, 150 strikers marched in front of the company’s seven-story headquarters in what had become a regular occurrence for noontime on Thursdays. The Vance men watched through the lobby’s plate-glass windows. To get a better camera angle, one even stood inside the company’s huge Yuletide display, there among the elves loading candy with motorized wheel loaders.

Suddenly, in the street, a large semitrailer truck passed by, and the driver blasted his horn in support of the strikers. A police car raced into traffic after it. People charged up the street to find out why. The driver was getting a $75 ticket for “unnecessary volume of horn.”

With no one saying a word, the union workers began lining up at the cab, dropping dollar bills onto the passenger seat. The wind was swallowing their muted voices until one of them began a chant that cut through the cold.

“If one hurts!” he shouted, and the crowd answered with something that seemed from another time and place, something against the grain of a people who pursue their own deals and look out for No. 1.

“If one hurts!” he shouted, and the crowd answered as if they had seen Joe Hill last night, alive as you and me.

“If one hurts!” he shouted, and the crowd answered, “We all hurt!”

Need for Unions

For so long, Americans lived with the rivalry between communism, the bad, and capitalism, the good, that it was easy to forget that the one rose up against the cruelties of the other: a world of unsafe work and unfair pay, where people were very often just another kind of raw material to be milled.

Capitalism’s eventual triumph owes much to its ability to transform itself into something with a more kindred face, a change forcefully urged upon it by workers with an unprecedented capacity to rally together.

“The industrial worker (of 1900) . . . was the first lower class in history that could be organized and stay organized,” management expert Peter Drucker wrote last year. “No class in history has ever risen faster than the blue-collar worker. And no class in history has ever fallen faster.”

Now, during the difficult years of that fast fall, American companies are making more goods than ever, but they are doing it with fewer workers. It is the service sector, that broad catchall including everyone from surgeons to short-order cooks, that is the main engine for creating jobs.

Labor’s successes in organizing these new masses have been few; at the same time, depleted numbers make it hard to defend the traditional strongholds.

Collective bargaining was built on a model of negotiations among equals: Whatever their common goals--chiefly, a firm’s survival and prosperity--Labor and Management were thought to be natural enough enemies that some parity was needed to keep one from overwhelming the other.

An imbalance now exists, and that disturbs many observers, Republicans as well as Democrats. George P. Shultz, secretary of labor in the Richard Nixon Administration, said in a 1991 speech that the workplace needs “some system of checks and balances. . . . Free societies and free trade unions go together. Societies are missing something important” without a healthy labor movement.

Robert B. Reich, the current labor secretary, concluded in an interview that a momentous change has taken place: To please Wall Street’s demand for more profits, Business has breached an “unwritten social contract” with workers.

“The most important part of the contract is that if the worker is diligent and reliable, and if the company is making money, that worker keeps his or her job,” he said. “The second principle is enjoying rising wages and benefits as a company’s profits improve. This social contract is no longer with us.”

Since 1973, the inflation-adjusted earnings of hourly workers have steadily declined. At the same time, gains have stopped in workplace injury rates and turned the other way. A smaller percentage of workers is getting health benefits--or even holiday pay. Job insecurity is an American fact of life.

Since 1970, the gap between the nation’s rich and poor has widened after 40 years of moving the other way. In 1993, families in the top 5% earned more of America’s income (20.3%) than all those in the bottom 40% (earning 14%).

There are many causes for these trends. The world is undergoing a major economic restructuring; centrifugal forces pull especially hard at people with few skills. But as Business makes adjustments, and as factories and offices are reconfigured, the voices and well-being of workers are often neglected.

People sense a powerlessness against management; a “representation gap,” experts call it. Polls show that two-thirds of the public feel that workers “still need unions,” though not without great reservation. Asked to rank their confidence in 13 major institutions, people had routinely put organized labor at the list’s bottom until 1993, when Congress finally nudged it out.

The nation instinctively seems to believe in unions, just not the ones it has now. And that has a lot to do with how Big Business and Big Labor grew up in America, strange bedfellows like Caterpillar and the UAW.

City Painted Yellow

The big machines needed no roads. They made their own, creeping through the thickest mud, able to ignore every shrub and hill and gully. They had the undeniable willpower of insects but were a million times the size, a fusion of movable limbs on an iron body that exhaled the breath of spent gasoline.

Since 1909, these tractors were built in East Peoria, a tiny farm community along the Illinois River. The company came to be called Caterpillar because that is how its machines looked, crawling along on their two iron belts.

From the start, a Caterpillar product was known for durability. Others were often first with something new, but Cat would find a way to make it more mobile and rugged before applying a distinctive coat of yellow paint.

Cat’s management had the foresight to look beyond farming. Vehicles were built to level the land for highways and scoop beneath it to lay pipe. There was a solid business in making the machines that molded the world. Until 1982, the company had only one losing year, 1932, at the height of the Depression.

Companies can assume personalities, and Cat’s was as solidly Midwestern as a plow handle: hard-working, strait-laced, close-mouthed. Its workers came from the small towns of Illinois and its neighboring states, attracted to a builder of heavy equipment the way showgirls might seek out bright lights.

People in management, from shop foremen to top executives, were expected to earn their own “coat of yellow paint,” starting out in the plants and coming up through the ranks. They were people of old-fashioned values, ready to take orders and pass them on, writing the company a blank check on their loyalty.

On the shop floor, this often translated into a manager’s ability to kick butt to get the product out the door, a quality unappreciated by workers who thought a coat of yellow could change a man and make him less.

An American History

The early years of the labor movement are chapters often omitted from most proud retellings of American history. From 1870 to 1920, the nation led the world in strikes, including some of the bloodiest anywhere. In 1877, more than a hundred people died as striking railroad workers took over entire towns in 14 states. In 1914, the Colorado militia shot down striking coal miners and burned their families out of a tent camp; the miners--among other things--had asked for the simple right to choose where they could live and buy food.

In the early 20th Century, giant factories were becoming commonplace--and with them came a theory of management that split up production into small, repetitive jobs that took the thinking out of the doing. The assembly line was “scientifically” organized into carefully timed tasks. Its ceaseless beat would keep workers from their natural tendency to “steal minutes” and loaf.

In reaction, the unions also grew into giants, often just as inflexible and undemocratic as the companies. Lost along the way were grand notions of a mass movement that might transform society. Labor accepted the company’s rigidly defined “science” and matched it with its own: strict work rules, wages linked to jobs and not skills, seniority as a sole basis for promotion.

This evolution would come about only after decades at the bargaining table. In the meantime, thousands were killed and injured in violent labor wars that only began to subside with the Wagner Act of 1935. For the first time, the federal government granted workers the right to choose their own union by majority vote--and to strike and picket without being fired.

Even then, many businesses refused to comply. The auto companies were among the most dogged, using spies to sniff out union activity and brass knuckles to break it up. The “speed-up” was the workers’ big complaint. The pace of the line was unforgiving. A worker who fell behind was fired.

The UAW’s first foothold came in 1937 with a tactic soon to be illegal, the sit-down strike. For six weeks, workers occupied a General Motors plant in Flint, Mich. They endured subzero cold with the heat turned off, sleeping on car seats and hauling up food from lunch wagons. The police stormed the gates, but workers repelled them with water hoses and a barrage of iron bolts.

When a settlement was finally signed, the workers had gotten little of what they demanded. The speed-up would still go on.

But something more fundamental was won: the union’s right to exist.

‘Entente Cordiale’

A single decade would make a world of difference. America emerged from World War II as an economic Goliath, and the unions thrived right along with the corporations. More and more, the two sides confronted each other not at the battlements but in the conference rooms, with lawyers for both sides reviewing a contract’s fine print and computing cost-of-living adjustments.

Historians speak of the 30 postwar years as the labor-management entente cordiale, an implied accord with the two sides getting much of what they asked of each other and passing on the costs to a nation of prospering consumers.

With profits rolling in, Business wanted a stable shop floor, organized as it saw fit without any work stoppages during the life of a contract. In return, it gave workers a slice of the American pie: paid holidays, pensions, sick leave, health insurance, wages that galloped ahead of inflation.

The deal was cinched around a practice known as pattern bargaining. Unions expected every company in an industry to pay roughly the same wages and benefits. So their logic went, businesses ought to compete with each other on the basis of quality and efficiency, and not on any upper hand in labor costs.

This meant that Caterpillar pretty much signed for the same terms as John Deere, International Harvester and a dozen other competitors. The UAW had an entire wing for farm machinery workers. From 1948 to 1980, a crafty negotiator named Pat Greathouse hammered out its farm-equipment pattern. “You’d pick the weakest company first and then get the others to fall in line,” he said.

Within the UAW, there was a competition of sorts. Greathouse would try to one-up his counterparts on the auto side and vice versa. If one made a deal for five paid holidays, the other went after six. If one got a nickel, the other wanted a dime. It drove the companies nuts.

What did a tractor have to do with a station wagon, anyhow?

Blue-Collar Rise

Blue-collar workers bought new cars and drove them out to their homes in the suburbs. The unions had paved them a road into the middle class, though few of the lanes were opened for women and minorities. The labor movement no longer threatened to be an avenging force for the exploited and downtrodden.

More than ever, unions came to be bureaucracies, distant from the rank-and-file and asking little of their members but permission to deduct dues from their paychecks. The union hall would not be a hotbed of organizing effort. The working middle was not inclined to reach out to the working poor.

Actually, workers rarely went to the hall at all. The unions had grown up along the lines of what the labor professors called a “servicing model.”

They were there to help if needed, like insurance agents or accountants.

Japanese Rival

The stodgy Midwesterners who ran Caterpillar were not shy about venturing out into the world. Through the ‘50s and ‘60s, the company not only opened plants in the Midwest and Pennsylvania, it also expanded across five continents. Peoria had become the home base to an enormous multinational.

Many competitors envied Cat’s long reach but none more than Komatsu Ltd. of Japan, whose urge to catch the world leader was near to mania. Komatsu’s in-house slogan was “ Maru-C ,” loosely defined as “encircle Caterpillar.”

Americans had first seen a Komatsu tractor when U.S. troops captured one on the Aleutian Islands during World War II. The machine was a replica of a 1920s-vintage Cat with some of the parts converted to metric sizes.

A generation later, Komatsu was still patiently copying the Caterpillar example. Executives studied every announcement in Cat’s employee newsletters and read the Peoria Journal Star, express-mailed to Tokyo each day.

This persistence would pay off. Soon, Komatsu was not only making machines as good as their American rival, they were selling them for less.

Among other reasons, they did not have to pay those high UAW wages.

Jolted Awake

By 1980, America’s economic dominion had given way to global competition, a shock to the many businessmen who had mistaken near-monopoly conditions for financial smarts. A great shakeout was going on, with companies closing plants or filing bankruptcy. Millions of jobs disappeared, gone abroad, gone south, gone into the vapors. The financial pages needed an obituary section.

The entente cordiale would not survive such unkind times. Many of America’s problems in the world market were caused by the high foreign exchange value of the dollar, but such forces were beyond a company’s control. Instead, Business looked to the cost side of the ledger and demanded union concessions.

“Lean and mean” became the new motto of the boardroom. Downsizing was in, and if the diet included de-unionizing as well, all the better. In one industry after another, union wage patterns crumbled under corporate pressure. Hourly compensation in America would soon fall behind that of Western Europe.

At mighty Caterpillar, the grim reckoning with global change would not come until 1982. Customers were few, inventories were full. Komatsu was No. 2 and gaining, taking full advantage of the favorable dollar-yen ratio.

In contract talks, Caterpillar insisted that the UAW settle for far less than the customary pay raises, but the union refused. Its leaders thought the always-profitable company was poor-mouthing on a full stomach.

The ensuing walkout would last a record seven months. Usually, after a strike, Cat worked 10-hour shifts to catch up on lost production.

This time, it laid people off.

Unions in Retreat

Industrial unions were in full retreat. From 1981 to 1991, the UAW lost 34% of its members, down to 840,000; the electrical workers 12%, down to 730,000; the machinists 22%, down to 534,000; the steelworkers 50%, down to 459,000. Not all of the losses could be linked to a drop in manufacturing employment; many union jobs vanished from unionized plants only to reappear as lower-paying jobs in the same company’s non-union plants--or among its contractors.

Labor was having its share of troubles worldwide, but the massive declines in membership were not repeated in industrialized Europe, where unions often had their own political parties. In these nations, benefits, such as health insurance, were won through legislation rather than by bargaining contract to contract; they were harder to take away. National wage scales made it less practical for employers to shed union workers for non-union replacements.

In America, Labor had long ago forsaken the idea of a party of its own and instead entered into a stormy marriage with the Democrats, for richer and poorer, in sickness and in health. But the 1980s would find the White House solely a Republican domicile. In fact, in a historic shift, millions of union workers would desert the Democrats for Ronald Reagan, who at least wanted to protect their place in line from the social engineers of affirmative action.

The irony of this pro-Reagan vote became clear soon after he took office, when he fired 11,400 striking air traffic controllers and replaced them with non-union workers. The stern tactic met with broad public approval and sent an instructive signal to Business: The nation’s sympathies had switched; in the long wrestle with Labor, few holds were any longer barred.

*

In 1983, thousands of business executives were reading the bestseller “In Search of Excellence: Lessons from America’s Best-Run Companies.” Caterpillar was lavishly praised for its devotion to quality and service, though the book’s timing was a bit awkward. In 1983, Cat was losing $1 million a day.

However deserving of laurels, the company was too hidebound about developing new products and too high-priced to flourish during a recession. Komatsu was underselling it by up to 40%. If the dollar-yen ratio had not improved, and if Caterpillar had not rebuilt itself from top to bottom, the company would likely have become just another American titan slain by foreign competition.

At the heart of Cat’s survival plan was the familiar downsizing. A leaner, meaner company would not need so many plants. Doors closed in 10 locations, 15 million square feet falling idle. Workers were let go by the thousands.

Caterpillar had always been a company that wanted to make even the tiniest part itself. But now the idea was to “shop the world” for simple items, such as valve covers and fuel pipes, and to use its own factories for the engines, gears and other parts that made a Cat machine different from the rest.

Those plants would get a breathtaking $1.8-billion infusion. Computerized machine tools replaced craftsmen with hammers. Laser-guided robots carried parts from one place to another, reading bar codes like road signs.

This expensive overhaul had its doubters on Wall Street, but the company held its ground against investors out for short-term profits, so often a prod to American business. Caterpillar was remaking itself for the global future.

And soon it would have its largest share of the world market ever.

Fites Takes the Helm

Before completing the make-over, executives did not want the added stress of a strike. Contracts were signed without a work stoppage in 1986 and 1988, though the latter talks ended with more than the usual bad feelings about who sandbagged whom. The two sides frequently found themselves in conflict about basics, the company wanting to assign workers where they were most needed, the union intent on preserving the time-honored pecking order of seniority.

In 1990, Donald V. Fites became Caterpillar’s CEO. In many ways, he fit the standard mold, another company lifer who had grown up on a farm with the growl of a tractor in his ears. But there was a difference too. Most of his experience had been in marketing. He had lived abroad for 16 years and was thoroughly at home with the high-tech talk of the global marketplace.

Don Fites foresaw a day when he would be able to use a computer in Peoria to talk via satellite to a tractor in Kenya, finding out if there were impurities in the oil or whether the engine was running hot. As for unions, he thought workers could just as well speak for themselves without something that “blocks communication channels” and “adds a layer of inefficiency.”

Unions might still have a place if they were “properly managed,” Fites said, but they needed to recognize that the world had changed, the economy gone global and manufacturing more competitive. Unions too often got in the way of an executive’s right to manage; the UAW wanted a voice in even the most basic of Caterpillar’s decisions: how many people to employ and what work could be farmed out to contractors. Fites was looking for workers, not partners or advisers.

His attitude was no secret. Around the UAW halls, the rumor mill said to expect a “big-time union bust,” meaning that Cat would again try to break pattern and this time leave the UAW forever weakened. And, sure enough, the company’s 1991 contract offer broached one union taboo after another: no pattern on wages, employee contributions to health insurance premiums, no guaranteed minimum number of UAW workers on the payroll.

But all this urgent new talk about a “union bust” was actually quite tardy. After all, the crucial math had already changed. In 1979, Cat employed 40,500 UAW members, 45% of all its workers. By 1991, the numbers were 15,100 and 28%.

Outside suppliers and those costly new machines were now doing a lot of the UAW work, as they could through a strike. The company was in a strong position to impose its will.

When it came to leverage, the union was already busted.

Breaking the Pattern

Some things are sure to make a union furious, and, months before the 1991 negotiations, the company purposely did one of them by making a direct plea to the workers in a series of newspaper ads. The global economy was here, the ads said. Our main competitors are foreign. Pattern bargaining is a relic.

That new company catch phrase, “globally competitive,” was often invoked. One ad even gave a roll call of dead Cat rivals, such as International Harvester and Allis-Chalmers, whose labor contracts had not heeded the global challenge.

As his first order of business, Don Fites had reorganized Caterpillar into 17 profit centers, and the ads explained that each of them had to pull their own weight; they would require separate treatment in a labor contract.

About three-quarters of Cat’s assets were in America, but in the future that might change. If costs were not brought down, the company warned, it would either have to lose business or shift production to other Caterpillar facilities.

These were fighting words for the UAW, and every union family knew it. A showdown was surely coming, and, no matter who won, it was going to cost the workers money and grief. These days, wasn’t that the way of the world?

Each worker knew dozens of people who had been laid off by Caterpillar. A return to profitability had not brought back their jobs. Many of them now worked for Cat suppliers, making Cat parts at half of their Cat wages.

The company had begun to open some new U.S. factories again, but most were in the South and all were non-union. These workers did not earn UAW wages.

Was that the upshot of “the global marketplace?” people wondered. They hated that stone-hearted phrase. What exactly did it mean anyway?

In the old days, workers felt like foot soldiers for the U.S. economy. If it was good for Caterpillar, it was good for America. Class interests meant nothing next to national loyalty. Americans were all in this together.

But now companies flew many flags and manufactured all over; the Japanese were here, the Americans were there. Capital pursued profit across borders and did not worry about who was left behind. Unions were not so agile.

What did that all mean for an assembler at Caterpillar? Every hour, 16,000 people were born into the world, and it was a good bet that most of them would be willing to work for less money than an American. It was a scary thought.

Owen Bieber, the UAW’s president, told people not to fall for any of this mumbo jumbo: Caterpillar was simply trying to squeeze out more profits by “cloaking anti-worker bull into fancy talk about global competition.”

But who really knew? And was the answer worth the risk of a job and a home and the kids’ college tuition? Caterpillar’s workers had not walked out since 1982, but they had watched what was going on across America. Companies were permanently replacing strikers, leaving them with one godawful choice.

The thought rattled around in people’s heads. Is that what a lifetime of work would now come down to, some personal drama where everyone acts out that old folk song played time and again at union rallies?

How did it go? Will you be a scab or will you be a man? Which side are you on? Which side are you on?

What would happen if it really came to choosing?

Which side were they on?

Times researcher Anna M. Virtue contributed to the reporting of this series.

Next: 13,000 decisions

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Salaries Slip

After adjusting for inflation, the average hourly wage of American production workers in manufacturing has gone down since 1972. 1972: $13.21 1974: $12.97 1976: $13.28 1978: $13.69 1980: $12.76 1982: $12.75 1984: $12.95 1986: $13.04 1988: $12.68 1990: $12.43 1992: $12.07 1994: $12.06 Constant 1994 dollars

(CPI-W) 1982=84=100

Non-Government Work Force Other private industry workers in 1994: 87% Production workers in manufacturing: 13% Source: Bureau of Labor Statistics

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Caterpillar Fact Sheet

Caterpillar Inc. builds some of the biggest tools in the world, earthmoving machines used on everything from roads to dams. Here is a look at the company:

MAJOR PRODUCT LINES

* Track-type tractors: Move and rip rock, soil and other material

* Excavators: Dig, lift, load, hammer and cut material

* Paving equipment: Soil and asphalt compacting; asphalt paving, reclaiming and stabilizing

* Engines: Power locomotives, trucks, boats

* Wheel loaders: Excavate rock, minerals, soil; load and carry material

* Motorgraders: Create and maintain road surface, construction sites

* Trucks: Haul rock, minerals, soil

MANUFACTURING SITES

Factor sites (Some partially owned)

California

Florida

Illinois

Indiana

Kansas

Michigan

Minnesota

Missouri

North Carolina

Oregon

Pennsylvania

South Carolina

Texas

***

Factor sites (Some partially owned)

Australia

Bangladesh

Brazil

China

Mexico

England

France

Hungary

India

Italy

Japan

Malaysia

Papua New Guinea

Russia

United States of America

***

EMPLOYMENT TREND

Employment at Caterpillar from 1979 to 1994. Figures include hourly, salaries and management employees:

Year U.S. Worldwide 1979 69,753 89,924 1981 67,748 85,922 1983 43,665 58,097 1985 37,753 53,616 1987 36,938 54,463 1989 41,979 60,409 1990 40,895 58,448 1991 38,669 53,636 1992 37,311 50,749 1993 38,103 51,250 1994 39,749 53,986

***

BOTTOM LINES

Total Sales ‘91: $9,838 ‘92: $9,840 ‘93: $11,235 ‘94: $13,863 *Profit loss ‘91: -$404 ‘92: -$218 Profit gain ‘93: $652 ‘94: $955 Profit loss (Per share of common stock)* ‘91: -$2.00 ‘92: -$1.08 Profit gain (Per share of common stock)* ‘93: $3.21 ‘94: $4.70 * Dollars in millions except per share data

Source: Caterpillar Inc.

The Rise and Fall in Union Membership

Membership in unions, as a percentage of the work force, is at the lowest point since the ‘30s.

1945 Non-agricultural employment: 40,394,000 Union members: 14,322,000 Percentage in unions: 35.5% 1994 Non-agricultural employment: 107,989,000 Union members: 16,748,000 Percentage in unions: 15.5% Notes: In 1968, BLS began including employee association members. In 1983, BLS changed its definition to include only employed wage and salary workers.

Source: U.S. Dept. of Labor, Bureau of Labor Statistics