Caterpillar, UAW Finally Reach Accord


Caterpillar Inc. and the United Auto Workers union reached a tentative contract agreement Friday that, if ratified, will end one of the nation’s longest, most contentious labor disputes of the 1990s.

The company and its 13,000 UAW workers have been at odds since 1991, when the previous contract expired. The dispute prompted two lengthy strikes, the hiring of temporary replacements and the filing of more than 440 unfair labor practice complaints with the federal government.

The terms of the tentative deal were not disclosed, but labor experts said there was little doubt that Peoria, Ill.-based Caterpillar prevailed in the bitter dispute that divided communities, families and even the union. Nearly 4,000 union members crossed the picket line during the strikes. Despite the turmoil, Caterpillar increased productivity and racked up record profits.

“It looks to me that the company is like Gen. MacArthur on the bridge of the USS Missouri saying this is an unconditional surrender,” said Dale Brickner, a labor professor at Michigan State University.


The second strike ended two years ago when, in spite of the union walkout, Caterpillar posted record profits. To save itself, the union sent its workers back into the factories, but the dispute continued.

The settlement was hailed by U.S. Labor Secretary Alexis M. Herman. While the prolonged confrontation symbolized the inability of labor and management to peacefully settle differences in a changing economy, she said the agreement showed that companies and their employees can reach common ground.

“The desire for workers to have job security with good wages and benefits need not conflict with management’s desire for increased efficiency and high profits,” Herman said.

The dispute began more than six years ago when Caterpillar, a manufacturer of large earthmoving equipment, resisted a contract similar to one agreed to by Deere & Co. Caterpillar, which has more foreign operations than Deere, said to do so would make it impossible to be globally competitive.

Among the issues in dispute were higher wages and health benefits. The company was seeking a two-tier wage scale and wanted to pay new hires less than current workers. It offered a no lay-off policy in exchange for eliminating union jobs as people retired or quit.

The UAW responded with a walkout at several plants. The company then locked out all the workers. They returned in 1992 only when Caterpillar threatened to hire permanent replacements for their jobs.

The union then launched a slowdown within the factories. Caterpillar responded by firing and disciplining hundreds of workers. The union filed scores of grievances with the National Labor Relations Board.

In 1994, the UAW again went out on strike based on unfair labor practices. Since the strike was not based on economic issues, Caterpillar could not legally hire permanent replacements.


But to the surprise of the union, Caterpillar kept the plants running using managers, temporary hires and union members who crossed the lines. The company posted a record profit of nearly $1 billion in 1994.

The striking workers lost an average of $80,000 in wages over the next two years, only offset by $300 a week in strike pay. In late 1995, the company made another contract offer that was strongly rejected by the unions.

The UAW, however, ordered workers back to their jobs. The move was widely interpreted as a surrender. Federal mediators were brought in to try to bring the two sides together.

The most recent talks began several weeks ago at the urging of federal mediator John Calhoun Wells. He emerged at about 1 a.m. Friday to announce the deal. “They have crafted an agreement that we believe is good for the company and good for its workers,” he said.


The union said it would not discuss terms of the proposed settlement until after its membership votes on Feb. 20 to 21 at seven locals in Illinois, Pennsylvania, Colorado and Tennessee.

“I believe it will be ratified,” said chief UAW negotiator Richard Shoemaker.

Labor experts said the company clearly won on most issues but the union survived intact and can put one of its darkest chapters behind.

“One of the lessons of this dispute is that a Caterpillar-type strategy is not attractive to most companies,” said Harley Shaiken, a labor professor at UC Berkeley. “They made gains, but at a huge price.”


Though neither side would discuss details, labor sources said the agreement likely allows the company to expand its two-tier wage scale. It also is likely to provide modest improvements in wages and benefits.

The contract also may call for dropping unfair labor practice charges against the company, in exchange for Caterpillar hiring back some workers fired for strike activity.

The deal is not expected to have much impact on Caterpillar’s financial results. The company earned $1.67 billion in 1997, up 23% from 1996. “This won’t have any economic impact, but will get the union off its back,” said Alexander Blanton, an analyst with Ingalls & Snyder in New York.