August 23, 2012
In a fiscally suicidal
state with an
unemployment rate higher than the nation’s, perhaps a “work stoppage” at a
plant owned by a multinational corporation with numerous facilities in low-cost
regions … isn’t a good idea.
So concluded many Caterpillar employees in
Joliet, Illinois, a city 40 miles southwest of Chicago. On August 17, a majority voted to
end their lengthy strike.
The previous contract for the 780-member “bargaining unit”
expired on May 1. Management wanted the new agreement to permit greater shift
flexibility, freeze wages for overpaid staffers, and raise the portion of health-insurance
premiums borne by workers from 10 to 20 percent.
Steve Jones, business manager for “Lodge 851” of the International
Association of Machinists and Aerospace Workers, denounced the company’s offer:
“Essentially, Caterpillar is making record profits, $1.5 billion in the first
quarter. They made a $4.9 billion profit last year, and their CEO received a 42
percent increase in compensation, but they’re taking away from the workers.”
Caterpillar set an April 29 deadline for ratification of the new
contract, sweetening the proposal with a $5,000 bonus for each employee. The
“brothers” didn’t go for it. The union claims that 94 percent voted to strike.
No unionized workforce? No problem. Caterpillar kept churning
out hydraulic equipment, using salaried personnel and replacements. By the
middle of August, it was clear that the Machinists’ media
rat were impotent. Production continued -- a spokesman bragged that
non-union employees were “identifying inefficiencies, improving processes and
meeting our customers’ expectations.” The company refused to cave at the
negotiation table. More and more “scabs” returned to work. Union loyalists were
low on morale -- it’s tough to man picket lines in the middle of a brutally hot
Three and a half months after it started, the strike fizzled out.
The new contract contained, The New York
Times reported, “almost all of the concessions the company had demanded.” Management
prevailed on both the wage freeze and the increase for health-insurance
premiums. The $5,000 bonus it initially offered was cut to $3,100. Labor bosses
could claim a partial victory on the shift-change demand, and workers hired
since May 2005 will receive a one-year raise of 3 percent.
Why did the union’s rank and file relent? Press coverage and online
commentary of the conflict suggest that an acknowledgement of economic
realities played a decisive role.
Pay at the factory is not low. According to the Chicago Tribune, it ranges “from $11.50
to $28 per hour,” with fewer than 40 percent of union members clustered at the
lower end. Production employees in the area, as computed by the U.S. Bureau of
Labor Statistics, earn an average of $16.46 per hour.
A doubling insurance-premium obligation sounds steep, but data
from the Kaiser Family Foundation reveal it
to be a reasonable request. The nonprofit organization’s 2011 analysis found that
nationwide, workers’ share of healthcare costs ranged from 18 percent for singles
to 28 percent for families.
Another issue that weighed heavily on strikers’ minds is
Caterpillar’s beachheads in right-to-work
states. In addition to Illinois, where it
is headquartered, the company manufactures and overhauls its products in Georgia, Mississippi,
North Carolina, North
Dakota, Texas, and South Carolina. And
there’s a new possibility next door. Indiana’s
gone right-to-work. The Hoosier
is already home to Caterpillar facilities, and more job opportunities are on
the way, thanks to a Canadian union’s obtuseness. Employees at a locomotive works
in London, Ontario wouldn’t bring their compensation
down to affordable levels, so in February, the company closed the plant. Much
of its work is likely to migrate to Muncie.
Finally, even in the era of “Occupy Wall Street,” greedy-executives
agitprop is wearing thin. In April, the (Peoria)
Journal Star listed the pay of
Caterpillar’s CEO and five group presidents. Adding the value of their loot and
distributing the wealth equally to company employees worldwide would generate
checks worth $350.12. Not a sum anyone would turn down, of course, but it won’t
rocket Joe Sixpack into “the top 1 percent,” will it?
must be tied to market forces. Jobs can flee to lower-cost locations. Profits
today don’t guarantee profits tomorrow. Shareholders, not workers, own
corporations. It’s encouraging to watch core economic laws
influence bitter union-management throwdowns.
Since the 1930s, the federal government has showered privilege
after privilege on unions. America
won’t be rid of labor
cartelists for many years. But the Battle of Joliet demonstrates that
class-warfare bluster can be ineffective when confronted with undeniable truths
about the bottom line.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
# # # # #