North / South America
Machinists strike at Caterpillar's Joliet plant
May, 02 2012
(Chicago) -- Roughly 800 workers at a Caterpillar plant at Joliet went on strike early Tuesday, saying the heavy-equipment maker proposes to freeze wages, double health care premiums, and eliminate pensions and seniority rights over a six-year contract.
About 800 workers at a Caterpillar plant in Joliet went on strike early Tuesday, claiming the heavy-equipment manufacturer proposes to freeze wages, double health care premiums and eliminate pensions and seniority rights over a six-year contract.
Particularly irksome for the workers, members of the International Association of Machinists Local 851, is that they would be locked into their pay scales. Workers make anywhere from around $13 per hour on the lower end to $28 per hour for senior workers. About 250 to 300 of the union members are at the lower pay scale.
Caterpillar said its offer is competitive. "The company's last and best final offer was presented last Friday, and we believe it was a fair and reasonable and comprehensive proposal," said Rusty Dunn, a Caterpillar spokesman. Negotiations had gone on for more than a month, and no further talks are scheduled.
The prospect of stagnated wages has Caterpillar workers worried that they won't be able to cover escalating health care costs as well as keep up with food and housing costs.
"I'm at the cap. That's it,'' said John Andrews, 33, who moved from being a supplemental employee to a new hire at $19.73 an hour. He was among several dozen union members walking the picket line outside the plant Tuesday. Andrews, who lives in Joliet, said his biggest concern is "keeping a roof over my head."
Joe Stachon, 25, who was hired April 9 at a base pay of $13.90 an hour, said the company promised wage increases every six months for the next 31/2 years. Now that seems unlikely as a result of the contract proposal.
The labor issues playing out in Joliet are illustrative of a rapidly changing global economy where technology advances have made it possible for companies to make products virtually anywhere in the world.
The U.S. auto industry opened the door for two-wage systems some three decades ago, suggesting that as older workers retired second-tier counterparts ultimately would gain those jobs, along with pay increases. Barry Chiswick, a professor of economics at George Washington University, said the two-tier system made American workers more competitive globally.
At the same time, however, the two-tier system gave U.S. manufacturers the upper hand in negotiations with unionized workers. As a result, they have demanded more concessions in return for creating and retaining jobs, and the lower pay scales have driven down wages at other companies as well. Caterpillar's last contract with workers at the Joliet plant was negotiated in 2005.
Labor costs at some American companies have gotten low enough to allow them to "reshore" or restart manufacturing in the U.S. as wages have soared in emerging economies like China.
Bill McCarl II, a machinist and an IAM official, said the lowest-paid workers were capped at 15 percent of the workforce and do not have any benefits. He said those workers were to be laid off at the end of two years if they weren't hired permanently. Instead, he said, the company laid them off at 23 months and called them back to work for another two years.
McCarl he is paid $25.82 an hour, but faces the same stagnation in pay as Andrews: "Neither one of us will go any higher, and my pension's frozen."
Citing the bonus and incentive pay increase given to Caterpillar's chief executive, along with company first-quarter profits, McCarl said, "Yet you don't want to give anything to the employees who've helped you make the profit."
Last week Caterpillar reported that its first-quarter net income rose 29 percent to $1.59 billion, or $2.37 per share, as revenue increased 23 percent to $15.98 billion.
Lower-paid workers also complained that the standards they're expected to uphold are the same for them as for the higher-paid workers. "I have to do the same job, while the guy next to me makes $26.98 (per hour)," said Andrews.
McCarl said the fact that members voted 94 percent in favor of a strike "in this time and this age is unheard of."
"I'd rather strike here (at the plant entrance) and lose my house than work in there and lose my house," said McCarl, 49, who lives in Elwood.
Robert Bruno, a professor of labor studies at theUniversity of Illinois at Urbana-Champaign, said lower wages benefit companies in the short term but create other problems in the long term, especially in towns dominated by large plants. A multinational company like Caterpillar, which is not tied to the economic fortunes of the U.S., can use its muscle to lower labor costs. But that outcome can leave behind a community of workers in need, he said.
"It becomes a race to the bottom,'' Bruno said. "It's hard to see anyone benefit but companies.''
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