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With end of long strike at Caterpillar, a blow to US labor movement

Machinists striking against Caterpillar since May 1 have voted to accept a new labor contract that calls for concessions on benefits and a virtual freeze on wages. It's not much to cheer for manufacturing workers, analysts say.

By Richard MertensCorrespondent / August 20, 2012

In this Aug. 15 photo, striking members of the International Association of Machinists and Aerospace Workers wave to passing motorists that honked their horns outside the Caterpillar Inc., plant in Joliet, Ill. The bitter strike ended Friday, as workers at the plant in Joliet, agreed to numerous concessions, including a virtual pay freeze.

Matthew Grotto/SouthtownStar/AP

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The end of a machinists' strike at Caterpillar Inc., after a 3-1/2-month standoff, not only points to the weakened state of the American labor movement, but also bodes poorly for the manufacturing worker – even those in high-skill jobs that many say are the future of manufacturing in the US.

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The bitter strike ended Friday, as workers at a plant in Joliet, Ill., agreed to numerous concessions, including a virtual pay freeze. Members of the International Association of Machinists and Aerospace Workers had been on strike against Caterpillar, one of the world’s largest heavy equipment manufacturers, since May 1.

“It’s one more small piece of evidence that the lower half of the income distribution is struggling while the people at the very top are faring quite well,” says Richard Hurd, a professor of labor studies at Cornell University in Ithaca, N.Y.

The workers agreed to concessions that have become familiar in labor negotiations throughout American manufacturing. The six-year contract froze pay for older and higher-paid workers and granted a 3 pecent raise for newer, lower-paid workers. Like many manufacturers, Caterpillar pays newer workers at a lower wage scale than older workers. Workers at the Joliet plant, which builds hydraulic components for heavy machinery, earn wages ranging from $11.50 to $28 an hour.

Workers also agreed to Caterpillar’s demand that they pay more for their health insurance and switch from a defined benefit pension plant to 401(k)s. Each worker will receive a $3,100 bonus for ratifying a new contract.

The machinists’ defeat suggests that “wages in manufacturing will be flat in the foreseeable future,” says Michael LeRoy, a professor of labor relations at the University of Illinois at Urbana-Champaign.

Analysts say they were surprised by one twist in the dispute: The concessions were demanded not by a company struggling to survive, as US auto makers were in 2008 and 2009 when auto workers agreed to concessions to help keep American car manufacturing afloat, but by a thriving firm. Indeed, Caterpillar is earning record profits, including a profit of $1.7 billion in the second quarter of this year, 67 percent higher than a year ago. Last year top executives also received hefty raises.

The machinists had previously rejected two offers from Caterpillar, but the strike’s length had begun to wear them down. About 780 workers went on strike, and union officials conceded that more than 100 had since crossed the picket line to return to work. Striking workers had received $150 a week in strike benefits from the union.

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