Caterpillar Labor Dispute Has National Implications

Outcome could be instrumental in shaping labor relations in 1990s

CATERPILLAR Inc. and organized labor are engaged in a dispute of such ferocity it could color worker-management relations at other United States manufacturing companies, labor experts say.

Some 14,000 members of the United Auto Workers (UAW) have gone on strike at seven plants in three states since June 21, asserting that Caterpillar is guilty of unfair labor practices. Caterpillar says the strike is the result of a longstanding contract dispute. The company is the world's largest maker of construction machinery, with 38,000 US employees.

``In labor relations, we haven't had a dispute this bitter for many years,'' says Raymond Hilgert, professor of industrial relations at Washington University's business school in St. Louis

Some experts in labor-management relations say the outcome of the rift will indicate whether organized labor can curtail its steady decline in power over recent decades. Labor leaders believe that ``if the UAW at Caterpillar goes down, then the labor movement in general is weakened another notch,'' Dr. Hilgert says. ``They see it as a very, very important part of the national picture.''

Other experts disagree, saying the wrangle is unique and offers limited insight into national trends.

Still, they all concur that the dispute offers a potentially influential gauge of the power of a national union to defeat a recalcitrant management in the 1990s. If the UAW convinces federal officials and the courts that Caterpillar has mistreated labor, then the company will likely be compelled to pay workers tens of millions of dollars in compensation.

Management says the UAW does not want to acknowlege that the walkout is prompted by a contract dispute over wages and benefits because then Caterpillar could hire permanent replacement workers. In strikes over allegations of unfair labor practices, federal law prohibits hiring permanent replacements.

A good part of the workers' resentment in the current walkout stems from Caterpillar's humiliating defeat of the UAW in 1992. In April of that year, the company quashed a 163-day strike by threatening to hire permanent replacements. Since then, labor has grudgingly worked under a six-year contract that management imposed. Workers have staged nine brief wildcat strikes at several factories since last fall.

The breach has come at a critical time for both labor and management. After a long, hard recession, there is high demand for many of Caterpillar's diesel engines, heavy construction equipment, and other products. In the past several months, the company has expanded its world market share for many products and has watched its profits surge.

``Now is the best time for the union to strike,'' says Peter Feuille, a professor at the Institute of Labor and Industrial Relations, University of Illinois, in Champaign-Urbana. ``Every day of lost production means eventually down the road lost sales, lost revenues, and lost profits.''

The wrangle also highlights the UAW's vulnerabilities. During recent decades, as the number of manufacturing jobs has eroded nationwide, the union has fought a rearguard effort to protect the wages and benefits of its declining membership.

The UAW hopes to compel Caterpillar to accept a contract similar to ones the union has signed with the company's competitors, experts say.

By securing a common pattern of wage settlements with management across an industrial sector, a union can deter individual companies from seeking to reduce costs in wages and benefits. The UAW is confronting Caterpillar with a sense of urgency because it is scheduled to begin contract talks this fall with John Deere & Co., a major competitor. The credibility of UAW's demand for pattern bargaining is in question.

``If Caterpillar succeeds in deviating from the pattern, other companies the UAW negotiates with might correctly say, `Well, maybe we ought to push harder on the union than we have in the past,' '' Dr. Feuille says.

The pride and self-interest among leaders of management and labor also have intensified the conflict and reduced the chances of a compromise. Caterpillar Chairman Donald Fites and UAW Secretary-Treasurer Bill Casstevens have put their reputations on the line, labor experts say. ``They both see the survival of their organizations and their personal survival tied up in the dispute - it's almost like they're in a holy crusade,'' Hilgert says.

UAW and Caterpillar executives met on June 20 in Indianapolis but broke off discussions after just 40 minutes. No further talks are scheduled.

In supporting its assertion of unfair labor practices, the UAW points to 90 complaints it has filed with the National Labor Relations Board and has demanded that Caterpillar rehire 14 workers fired for disciplinary reasons.

If management and labor fail to compromise, then both parties are likely to be long-term losers, labor experts say. ``If the strike is played out to the bitter end, then whoever loses will just be resentful and so upset and so determined to get even that you're just sowing the seeds for more trouble down the line,'' Feuille says.

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