4 Compensation and Working Conditions Fall 1998

MICHAEL H. CIMINI

Michael H. Cimini is an economist in the

Division of Compensation Data Analysis

and Planning, Bureau of Labor Statistics.

Telephone (202) 606-6275

E-mail: Cimini_M@bls.gov

Caterpillar’s

Prolonged Dispute Ends

Last March, a 61⁄2-year dispute

ended when members of the

United Automobile Workers at

Caterpillar Inc. ratified a 6-year agreement that replaced an agreement that

expired in September 1991. The dispute was one of the most contentious

and highly publicized labor-management conflicts in recent years. It reverberated from Caterpillar’s factory

floors to its executive boardroom. It

involved a highly sophisticated corporate campaign that reached from the

heartland of the United States to several foreign countries. And it spoke

about the right of free speech during

industrial disputes.

The accord followed on the heels

of a proposed settlement that was

soundly rejected by the rank-and-file

a month earlier. The workers rejected

the settlement because it failed to provide the guaranteed reinstatement of

all 160 union members, whom the

union said were illegally fired during

the dispute. That was a major issue

for the vast majority of the rank-andfile who felt honor bound to fight for

This spring, members of various United Automobile

Workers locals at Caterpillar Inc. ratified a contract

proposal that ended a 61⁄2-year struggle, which

demonstrated the weakness of confrontational labor

tactics in the 1990s.

their discharged comrades.1 The new

pact assures the return of the 160 workers and the arbitration of additional

cases involving another 200 workers

whose dismissals were not as a result

of the contract dispute.

Except for the effective dates, other

terms of the new agreement parallel

those of the rejected pact. Key economic provisions, which apply to most

covered workers, include an immediate wage increase, ranging from 2 to

4 percent, depending on a worker’s job

classification; lump-sum payments in

1999, 2001, and 2003, equal to 3 percent of an employee’s previous year’s

earnings; and continuation of the costof-living allowance provision, which

is expected to generate, on average,

about $2.07 per hour in increased

wages over the term of the agreement.

Several improvements were made

in the pension area as well. The

monthly pension benefit for future retirees increases in five stages, reaching $38.50 for each year of credited

service for employees who retire on or

after April 1, 2003. Basic pensions
 Compensation and Working Conditions Fall 1998 5

are supplemented, up to $5 per month

Caterpillar

for each year of credited service, for

employees who retire on or after October 1, 1994, and up to $7 per month

for each year of credited service for

retirements on or after April 1, 2002.

Other pension enhancements include

increases in early retirement supplements; credited service for periods of

the strike between May 31, 1995 and

March 1, 1998; and lump-sum payments for workers who retired before

the agreement was ratified.

Other contract changes favorable to

the union included a moratorium on

most plant closings, the reinstatement

of grievance procedures, enhancements in provisions dealing with union

representation, increases in sickness

and accident benefits and in long-term

disability benefits, and improvements

in dental and vision care benefits.

In return, the union agreed to drop

443 unfair labor practice complaints

filed during the strike with the National Labor Relations Board (NLRB),

the Federal agency responsible for processing them. Some of the complaints

had already reached the advanced

stages of processing in the NLRB and

had even been submitted to the courts.

But the most politically sensitive concession agreed to by the Auto Workers was the granting of amnesty to

some 4,000 union members who

crossed picket lines during the strike

and, thus, could be expelled from the

union.

In addition, the union accepted

terms that allow the company to pay

new employees lower wages, institute

more flexible work schedules, use

more temporary employees, and require current retirees to pay insurance

copayments.

Parties to the dispute

Caterpillar, headquartered in Peoria,

Illinois, is the world’s largest manufacturer of construction, farm, and

mining equipment and natural gas and

industrial gas turbine engines, and is

a leading producer of diesel engines.

The company employs more than

57,000 workers worldwide, including

about 16,500 in the United States, and

has more than 70 manufacturing facilities around the world. In 1997,

Caterpillar had revenues of $18.9 billion and had profits of $1.7 billion.

About one-half of the company’s sales

were outside the United States.

The United Auto Workers, a prominent union in the transportation equipment manufacturing sector, represents

about 13,000 Caterpillar employees at

plants in and around Aurora, Decatur,

Peoria, and Pontiac, Illinois; York,

Pennsylvania; Denver, Colorado; and

Memphis, Tennessee.

History of the dispute—1991

Overview. The 1991 contract negotiations between Caterpillar and the Auto

Workers came during a period of

changing times. The company was

facing strong foreign competition and

slumps in construction and farming.

It was operating in the red, in contrast

to the profits it had earned in the midto late-1980s. Complicating the situation, the company had reorganized in

1990, creating a number of profit centers with different competitive positions, labor costs, and other needs that

would have to be met in a single contract. In addition, Caterpillar had a

new chief executive officer (CEO),

Donald Fites, who was known as a

hard liner with little regard for unions.2

The Auto Workers were also experiencing rough times. In 1979, union

locals at Caterpillar had 40,500 members. By 1991, that number had

plunged to 15,100. The union felt its

survival was at stake.

The 1991 bargaining round began on

July 10, when company and union

negotiators met to discuss ground rules

for renegotiating their collective bargaining agreement that was set to expire on September 30.

A sign of trouble came early, when

Caterpillar and the Auto Workers

could not agree on where to hold formal contract talks, which were to begin in mid-August. In addition, other

problems were lurking in the background of the dispute. The company,

through a series of ads in local newspapers, made known its concerns about

the prolonged slump in its domestic

markets, its competitive position in

world markets, and the possibility of

being forced into a settlement similar

to the one the union might concurrently negotiate with Deere & Co.,

Caterpillar’s major domestic rival.

Little progress was made in initial

contract talks, so the union turned its

attention to Deere, whose contract was

also up for renegotiation in 1991.

After an agreement was reached with

Deere in October—which the Auto

Workers were committed to use as a

pattern—the union intensified negotiations with Caterpillar.

Caterpillar‘s contract offer at that

time asked for one concession after

another: No pattern on wages; employee contributions towards health

insurance premiums; no guaranteed

minimum number of union jobs; a twotiered wage system; and flexible work

schedules. These were items the union

had won in past negotiations. Now,

the company wanted to take them back

and break from pattern bargaining.

Strike ensues. Formal contract talks

ended on November 3. On November

4, immediately after the expiration of

a strike deadline, about 2,400 union

members at two plants in Decatur and

East Peoria, Illinois walked off their

jobs. A few days later, the company

locked out 5,650 union members at

non-struck plants in Aurora, Peoria,

and East Peoria, Illinois. This became

the 10th work stoppage between the

parties in 43 years.

1992

Overview. It was a bad year for the

strikers. Five months into the walkout, Caterpillar did what most union

members thought unthinkable: The

company sent letters to the strikers

warning them that, unless they returned to work in 1 week, they could

be permanently replaced. Whether to

return to work or continue to strike was

not an easy decision for workers to

make. Most of them were in their mid40’s, and more than half were within
6 Compensation and Working Conditions Fall 1998

6 years of retirement. Thirty percent

had already crossed the picket lines.3

The strike was lost.

On February 7, Caterpillar announced

that as a “good faith effort” to break

the 3-month stalemate it would terminate the lockout of workers in Aurora and East Peoria and would stand

ready to resume negotiations. The

union agreed to meet with the company, but inexplicably extended its

strike to include the previously locked

out plants.

When contract talks resumed on

February 19, Caterpillar presented its

final offer to the Auto Workers. The

proposal included general wage increases of 13 percent over 3 years (but

only 3 to 4 percent for skilled workers

over the same period), a cost-of-living allowance, and a two-tier wage

structure for new employees; fully paid

health benefits for workers using preferred provider services; enhanced job

security, including a 6-year job guarantee for current employees and a 6-

year plant closing moratorium;

changes in work rules to allow work

on weekends and 10-hour workdays

without overtime pay; and improved

pension benefits for active and retired

workers.

The union, adamant on the issue

of a pattern settlement, rejected the

contract offer, which it characterized

as a “pittance and a continued avoidance of serious, traditional bargaining.”4

 It threatened a companywide

strike to begin later in March.

On March 8, Caterpillar announced

that it had reached an impasse in bargaining with the Auto Workers. However, the union disagreed, saying that

it had not submitted its final offer to

the company.

After squabbling over meeting

dates, the parties resumed contract

talks on March 25; but both sides continued to take a hard line in negotiations. Two days later, the union filed

unfair labor practice charges, alleging

that the company conducted improper

surveillance, intimidated and threatened striking and locked-out workers

at two plants (Aurora, Illinois and

York, Pennsylvania), and failed to bargain in “good faith.” (The NLRB later

dismissed these charges.)

On April 2, Caterpillar sent letters

to its 10,700 striking workers telling

them to return to work by April 6 or

potentially “lose their place in a reduced workforce. They could be replaced by a returning striker, an employee recalled from layoff, or a

permanent new hire.”5 The company

also ran advertisements in local newspapers for replacement workers. In

turn, the union extended its strike to

four additional plants in Illinois,

bringing the number of workers idled

to 12,600.

At the request of the Federal Mediation and Conciliation Service—the

Federal agency that mediates labor

disputes in most industries—the parties met on April 13, but little or no

progress was made. The Federal mediator proposed a compromise: The

strikers would return to work, the company would stop trying to hire replacements, and the parties would withdraw

their last contract offers and return to

the bargaining table within 90 days.

The company agreed to stop hiring

replacements, but only if the union

would return to work under the imposed agreement. The union refused

to accept the terms.

Strikers return to work. One day later,

the Auto Workers, in a surprise move,

called off their 5-month strike and

agreed to return to work “unconditionally” under the terms of the company’s

final offer, while the parties continued

to bargain. In turn, Caterpillar agreed

to stop hiring permanent strike replacements and to allow strikers to

return to work. Six days later, striking

employees began returning to work.

During May, the parties held informal, low-level contract talks that reportedly centered on health care and

job security issues. The negotiators

reported that little or no progress was

made in the talks.

In June, the union’s bargaining

strategy focused on attempts to pressure Caterpillar to withdraw its final

offer and to agree to concessions. The

union began to use in-plant actions,

such as slowdowns or “work-torules,”6 to induce concessions, and a

corporate campaign (which included

picketing businesses selling the

company’s products) to focus public

attention on the dispute.

On July 2, the NLRB (Region 33)

dismissed three unfair labor practice

charges filed by the Auto Workers

against Caterpillar.7 In those charges,

the union alleged that the company

had conducted improper surveillance

of union officials and employees and

had intimidated and threatened striking and locked-out workers. Three

weeks later, the Auto Workers withdrew charges of bad-faith bargaining

by the company because it believed it

would lose the case.8

On September 1, Caterpillar made

a modified contract offer, extending for

3 more years the terms it imposed on

strikers when they returned to work

in April. The union rejected the proposal, the first made by either party

since the strike ended. Meanwhile, the

union continued to pressure Caterpillar with work slowdowns. Some industry analysts speculated that the

slowdowns had cut production at the

company’s three major plants by as

much as 40 percent.9 Caterpillar denied that the slowdowns were effective and said that production and quality had increased since the union began

conducting its work slowdown campaign.

On December 1, Caterpillar implemented most of the remaining terms

of its final offer of February 19, 1992.

Among them was a flexible scheduling provision under which employees’

work schedules could include weekend work, shift work, or four shifts of

10 hours each without overtime. Other

terms included improved pensions,

various changes in health care benefits, and limitations on employer contributions to retirees’ health insurance

expenses.

A few days later, the NLRB (Region 33) issued an unfair labor prac-
 Compensation and Working Conditions Fall 1998 7

tice complaint against Caterpillar afCaterpillar

ter the company barred employees

from wearing “prounion expressions”

on certain clothing items (buttons,

hats, and black armbands). The company said it banned the items because

they were “personalized attacks and

messages that seem divisive to any

employee.”10 Later in the month, the

Board (Region 33) filed another unfair labor practice complaint against

Caterpillar, alleging that the company

refused union members representation

by no longer paying the salaries and

benefits of 29 full-time union committee members. (An administrative law

judge subsequently ruled that the company was within its rights to do so.)

1993

Overview. During the year, Caterpillar and the union made little progress

in resolving the dispute; in fact, they

did not hold formal contract talks at

all. Instead, they continued their “cold

war,” resulting in a further rash of

unfair labor practice charges and complaints issued against both parties by

the NLRB.

By January, the union had filed 58

unfair labor practice charges against

Caterpillar with the NLRB. The Board

had issued five complaints based on

these charges.

On February 25, the NLRB (Region 5) issued an unfair labor practice complaint against Caterpillar. It

alleged a “top-to-bottom pattern of

assault against workers’ rights”

through a series of actions, including

unlawful suspension of several union

members because of protected union

activities, discouraging employees

from using the grievance procedures,

and limiting employees’ right to free

speech.11

On March 2, the NLRB (Region

33) filed an unfair labor practice complaint against Caterpillar because the

company refused to provide the union

with information on job assignments.

The union claimed that Caterpillar had

given preferential treatment in job assignments to workers who had crossed

the picket lines during the 1992 strike.

The NLRB found that “the requested

information is necessary and relevant

to the union’s function as bargaining

representative to monitor job assignments.”12

Two weeks later, under a settlement

reached with the NLRB (Region 33),

the Auto Workers agreed to stop picketing independently owned and operated Caterpillar dealerships. The

union had picketed various Caterpillar dealers, including some independent operators, as part of its corporate

campaign to bring the company back

to the bargaining table and negotiate

more favorable contract terms.

“Cold war” escalates. In late April,

the cold war escalated when Caterpillar indefinitely suspended 140 workers at its Mapleton, Illinois foundry

because they were wearing T-shirts

reading, “Permanently Replace Fites,”

referring to Donald Fites, Caterpillar’s

CEO. There had already been a number of instances when Caterpillar had

employees and union representatives

arrested for wearing T-shirts with

similar messages while on company

property.

In early May, Caterpillar announced that it would no longer discipline workers for wearing controversial T-shirts while the issue was

pending before the NLRB, which had

issued several complaints against the

company over this issue.

On May 21, the NLRB (Region 33)

issued an unfair labor practice complaint against Caterpillar for discriminating against union members in its

hiring and tenure practices. The complaint stemmed from Caterpillar’s action at its East Peoria, Illinois plant in

June 1992, when it gave “superseniority” for shift purposes and job classification to employees who crossed the

picket lines during the strike.

On September 9, 715 workers at

Pontiac walked off their jobs to protest the suspension of a union official

who was in the process of filing a

grievance. Later that day, almost

2,000 workers at Caterpillar’s Aurora

facilities went out in support of their

fellow union members.

Two months later, the tension and

acrimony between the parties spilled

over into a 3-day walkout by 12,000

workers at 8 plants in 3 States. The

strike began on November 12 at

Caterpillar’s Mossville, Illinois plant

in protest over the suspension of a

union official for allegedly shoving a

supervisor during an argument at the

plant. It quickly spread to the other

seven plants.

On December 15, the NLRB (Region 33) issued another complaint

against Caterpillar, this time alleging

that the company unlawfully suspended and then fired a union official

who had testified against Caterpillar

during an on-going unfair labor practices trial. The Board also sought injunctive relief to compel Caterpillar to

immediately reinstate the discharged

employee.

1994

Overview. During the year the union

continued its efforts to force Caterpillar to renegotiate a new collective bargaining agreement. It did so primarily through its in-plant campaign and

by filing unfair labor practice charges

with the NLRB, which by January had

issued 62 complaints against the company. As tensions mounted, a rash of

selective, short strikes took place over

alleged unfair labor practices by Caterpillar. These were followed by a nationwide walkout in June, the second

in 3 years. Unlike the 1991 strike,

which was over economic issues, the

union hoped that in this dispute the

unfair labor practice charges would bar

Caterpillar from permanently replacing its striking union workers.

On April 26, about 2,800 workers in

Decatur and Aurora, Illinois, staged a

1-day spontaneous walkout in protest

of the suspension of an employee’s

right to act as a shop steward. Caterpillar alleged it had suspended the

shop steward’s privileges because the

individual had abused the grievance

procedures.

Two weeks later, some 750 employees in Pontiac, Illinois, walked off their

jobs for 2 days when the company al-
8 Compensation and Working Conditions Fall 1998

legedly suspended an employee without the benefit of proper union representation. Just as those workers were

returning to work, some 1,100 workers in York, Pennsylvania, struck over

the alleged mistreatment of a union

steward. The walkout lasted 1 day.

On May 16, a number of workers

on the first shift at Caterpillar’s

Mossville facilities struck over the indefinite suspension of 37 workers who

brought in balloons with union slogans

and refused to deflate them. The 4-day

walkout quickly spread to other Caterpillar facilities in the Peoria, Illinois

area, idling some 7,000 workers.

Meanwhile, on May 13, Caterpillar proposed resumption of contract

talks, but the union rejected the overture because of a condition set by the

company: Caterpillar agreed to withdraw its final contract offer and return

to the bargaining table on the condition that the union agree to a binding

membership vote on a subsequent final company proposal if bargaining

negotiations reached a stalemate. The

union claimed that this would impose

“unprecedented interference with internal union procedures” and suggested that its membership be allowed

to choose between the terms of the

currently imposed contract and the one

in effect between 1988 and 1991.13 If

Caterpillar rejected that proposal, the

union said it would put the company’s

current offer to a vote. Caterpillar rejected that scheme, and demanded that

workers only vote on the currently

imposed contract.

Although nothing came from these

overtures, the parties agreed to continue to seek a resolution of the then

21⁄2-year old dispute, which, since September 1993, had led to eight selected

walkouts by union members over alleged unfair labor practices.14

On June 7, the union conducted its

ninth selected strike, this time in protest over alleged illegal suspension of

four workers at a plant near Aurora,

Illinois, who refused to remove union

picket-type signs from the work place.

Three days later, the union agreed to

end the stoppage. Caterpillar refused

to accept the union’s unconditional

offer to have all 1600 strikers return

to work, but did invite strikers to return to work on an individual basis.

The union then threatened to conduct a company-wide strike if Caterpillar did not agree to hold contract

talks or if the meetings did not lead to

a resolution of the 92 unfair labor practice complaints levied against the company by the NLRB.

Workers walkout. On June 20, Caterpillar and the Auto Workers returned

to the bargaining table—for the first

time in 2 years; but, they only held a

40-minute perfunctory bargaining session. Apparently, the stumbling block

to serious negotiations was the parties’

disagreement over the reinstatement

of 14 union members whom, the union

alleged, had been illegally discharged

because of union activities.

The union had set a strike date for

the third shift on June 21, if an agreement was not reached by then. However, some 7,000 workers at plants in

Peoria and Pontiac, Illinois walked out

early, on June 20. An additional 6,000

workers joined the strike on June 21.

The union said it conducted the walkout to pressure the company to resolve

some 150 allegations of unfair labor

practices and to agree to a new contract. The company maintained that

the strike stemmed from the union’s

effort to coerce it into a pattern settlement.

In the wake of the walkout, Caterpillar took decisive action. The company warned strikers that they would

have to pay the total costs of health

insurance during the strike. A couple

of days later, Caterpillar began advertising for new full-time employees

whom, the company insisted, were not

strike replacements. Both parties had

dug in for the long haul.

By October, Caterpillar was staffing its eight struck facilities with a

makeshift work force. The company

had reassigned some 5,000 white-collar employees to work on the factory

floors and hired 1,200 full-time new

hires and 2,500 temporary workers to

make up for the loss of striking workers. These employees were in addition

to some 4,000 workers who crossed

the picket lines, evidence of the wide

crack in the union’s solidarity.

1995

Overview. During 1995, Caterpillar

continued to earn record profits with

its makeshift work force, while some

9,300 strikers held firm on the picket

lines, waiting for some good news. In

June, two of the international union’s

top leaders retired: Owen Bieber,

president of the union, who was replaced by Stephen Yokich; and Bill

Casstevens, Secretary-Treasurer and

chief negotiator for the Caterpillar

talks, who was replaced by Richard

Shoemaker. In December, the strikers returned to work without a contract.

In early January, the union asked the

Federal Mediation and Conciliation

Service (FMCS) to arrange formal

contract talks with Caterpillar. After

sparring over ground rules, the parties agreed to meet on January 20th for

the first formal negotiations session in

6 months. Apparently, one of the

stumbling blocks was the union’s insistence that it reserved the right to

discuss all issues facing the parties,

including some 120 unfair labor practice charges filed by the NLRB.

On February 5, the FMCS recessed

negotiations after 4 days of fruitless

meetings. Caterpillar accused the

Auto Workers of orchestrating “a charade” with meaningless talks. The

company claimed the union had submitted an economic proposal little different from the one it had made in

1991 when the dispute began. The

union disagreed, saying its proposal

contained “significant modifications”

from its previous ones.15

On March 16 and 17, Caterpillar

and the Auto Workers resumed contract talks with the assistance of FMCS

mediators. Unlike February’s meetings, these negotiations centered on

noneconomic issues. The union reportedly amended its position on

some 40 items. According to press

reports, some progress was made in

the talks.
 Compensation and Working Conditions Fall 1998 9

After a 2-month break in negotiaCaterpillar

tions, the union requested that contract

talks be held on May 13. Caterpillar

rejected the overture, saying the proposed meeting was “hastily planned.”

On May 18, an NLRB administrative law judge dismissed several allegations of unfair labor practice complaints levied against Caterpillar.

Among his findings, the judge ruled

that Caterpillar’s union-represented

workers did not have “the protected

right to impair production through

such tactics as work-to-rules.” This

dealt a blow to the union’s future use

of such non-strike actions to pressure

Caterpillar into an agreement. The

union said it was appealing the decision because it “flies in the face of the

facts and the law.”16 In addition, the

judge dismissed several other allegations of unfair labor practices against

the company, including a charge that

Caterpillar illegally fired a union activist who participated in the union’s

in-plant campaign. At the same time,

the judge found Caterpillar guilty of

discharging an employee for conducting union activities that are protected

under the law, and for interfering with

union members’ rights to distribute

and display union materials and to talk

with union officials on the work site.

The next formal negotiation meetings held were on August 29-31. The

contract talks were the first for new

Auto Workers Vice President Richard

Shoemaker. Some labor relations

practitioners felt that the leadership

change of June could affect the strategies used by both parties.

Subsequent national (master) negotiation sessions were conducted on

September 14-15. Based upon the

progress of the national talks, meetings were held by local representatives

of the union and the company at eight

plant locations between September 18

and September 22, sparking speculation that Caterpillar had presented the

Auto Workers with a master contract

offer at the September 14-15 meetings.

On November 7, Caterpillar notified striking workers that it would stop

their accrual of pension credit, retroactive to August 15, 1995. The NLRB

(Region 33) threatened to issue an

unfair labor practice complaint against

the company, which already had more

than 100 filed against it since the dispute began.

On November 28, following a series of “discrete,” high level meetings,

Caterpillar presented the union with

a comprehensive proposal to end the

strike. Five days later, the 17-month

strike came to an abrupt end after the

union’s Caterpillar Central Bargaining Committee voted to “recess” the

strike and make union members

“available immediately and unconditionally for return to work,” even

though the rank-and-file rejected the

contract proposal that same day.17 The

union’s offer to unconditionally return

to work was “a significant defeat for

the union” and may have reflected the

union’s view that the strike had been

lost and that it must save its members’

jobs.18

Terms of the rejected settlement

reportedly were substantially the same

as those that were on the table before

the strike began, but were substantially

less generous than those accepted by

Caterpillar’s domestic competitors,

Deere & Co. and J. I. Case, in their

last bargaining round. The 6-year tentative agreement included language

that would have restricted job security

and union activity, required participation in a managed health care plan,

established a two-tiered wage scale,

and allowed the company to implement flexible work schedules. It would

also have frozen wages, reduced costof-living adjustments, capped future

retirees’ medical costs after the year

2000, and allowed Caterpillar to hire

part-time, temporary employees—up

to 15 percent of a business unit’s

hourly employment—at new-hire

wage rates.

Caterpillar had survived the strike

and kept up production and profits.

How? The company had prepared for

a future strike after the Auto Workers’ 1992 walkout. After the 1994

strike began, Caterpillar supplemented

its production workforce with management and office employees (many of

whom had worked in the factories during the 1992 strike), temporary workers, permanent new hires, union members who crossed picket lines, and

skilled workers borrowed from its dealers. The company imported machines

from its plants in Europe, Japan, and

Brazil; shifted work to nonunion

plants; and reaped the benefits of having spent $1.8 billion to automate its

production facilities. Caterpillar also

encountered a rising demand for its

products and avoided massive customer defection during the strike.

Meanwhile, on December 8, the

NLRB (Region 33) moved for the dismissal of charges against Caterpillar

concerning the company’s “permanent

code of conduct,” which regulated

workplace conduct and disciplinary

procedures for employees, because the

company had modified them so that

they would be acceptable under labor

law. The NLRB, however, said it

would continue to press the company

on its “temporary standards,” which,

according to the Board, acted as a

“broad gag rule” and infringed on

workers’ rights of free speech under

the law. These rules, which were to

be in effect for 8 weeks after the strikers returned to work, “forbade the

wearing or displaying of apparel, material, and conduct relating to the labor dispute.”19

1996

Overview. When the strikers returned

to work, they found a new work environment, one in which Caterpillar had

strict “temporary” rules of behavior

which would limit their conduct and

speech. But, even with that, workers

continued their in-plant and work-torules campaigns. The workplace became a battleground between union

activists who complained about the

company’s alleged “arbitrary, often

vindictive management style” and its

“union busting,”20 and management

who felt that union activists would do

whatever it took to “get your goat—to

draw a foul.”21 Meanwhile, Caterpillar continued to roll on. In 1996 the

company earned record profits for the

third year in a row.
10 Compensation and Working Conditions Fall 1998

In early January, the parties met to discuss issues relating to worker discharges and discipline. Apparently,

little or no progress was made in the

talks.

In late January, an administrative

law judge found, among other things,

that Caterpillar discriminatorily disciplined six workers for union activities protected under labor law. This

was the fifth in a series of decisions

issued in the consolidated hearings.

By then, administrative law judges had

issued decisions for 25 of the 196 unfair labor practice complaints filed by

the NLRB.

In June, an administrative law

judge ruled that a local union president had the right to wear a protest

button aimed at Caterpillar CEO

Donald Fites. The action stemmed

from an incident in 1993 in Denver,

Colorado, when the local union president was suspended for wearing the

button and 30 employees staged a

walkout in protest.

Caterpillar declares impasse. On

August 27, because of the union’s position on employee discharges, Caterpillar declared an impasse in negotiations and announced that, effective

October 1, it would unilaterally impose

new contract provisions similar to

those in the contract proposal that had

been rejected by the rank-and-file the

previous December. The union had

proposed that all discharges occurring

before, during, and after the strike be

subject to arbitration, while Caterpillar wanted only those that occurred after the strike ended to go to arbitration.

On the same day, the full NLRB

(three-member board) issued its first

rulings on the various unfair labor

practice complaints that had been filed

against Caterpillar. Among their decisions, the Board found that Caterpillar discriminated against 500 reinstated strikers in violation of the law

by giving union members who crossed

the picket lines preferential treatment

in job assignments. The Board also

upheld several decisions by an administrative law judge involving union

members’ rights to express pro-union

and anti-company sentiments. In addition, the Board overturned the administrative law judge’s ruling that

had sustained management in charges

that they improperly questioned union

members about union activities and

improperly prevented employees from

filing grievances.

On August 30, the NLRB (Region

33) issued a consolidated unfair labor

practice complaint against Caterpillar,

alleging that the company violated labor law when it disciplined almost 100

workers following their return to work

in December 1995. The company said

the actions were justifiable under its

new temporary code of conduct. As

of that date, the NLRB had issued

more than 300 unfair labor practice

complaints against Caterpillar.

On October 1, Caterpillar announced that it decided not to impose

new terms of employment on its unionrepresented workers, because it intended to meet with the union to discuss the issue of employee discharges.

The parties met on October 7, discussed various options, and recessed

the talks without coming to an agreement.

On October 31, an administrative

law judge issued two sets of decisions.

The judge ruled, among other things,

that Caterpillar committed an unfair

labor practice when it refused to participate in one of the steps in the grievance procedures in a June 1993 dispute at an East Peoria, Illinois, plant.

In a second opinion, the judge found

Caterpillar guilty of bad faith bargaining when it instituted an incentive program at another East Peoria, Illinois,

plant in June 1993, without bargaining with the union.

On December 10, the full Board

issued two rulings relating to decisions

made by administrative law judges in

June. In the first, among other things,

the Board reversed the decision of an

administrative law judge and ruled

that Caterpillar had unlawfully fired

a Mossville, Illinois, plant union activist who was involved in the workto-rules campaign and was disciplined

under the company’s gag rule. In the

other ruling, the board upheld the

judge’s findings on several other violations of employees’ rights to free

speech. But, the Board declined to issue a ruling on whether the work-torule campaign was a protected activity under the law.

1997

Overview. The momentum in the dispute shifted perceptibly during the year

because of two events. First, the NLRB

issued a complaint against Caterpillar alleging that the 17-month strike

resulted from unfair labor practices

committed by the company. Second,

Federal Mediation and Conciliation

Service director John Calhoun Wells

entered into the dispute, which put

more pressure on the parties to reach

an agreement.

On January 16, the NLRB (Region 33)

issued a complaint against Caterpillar, alleging that the 17-month strike

was based on a pattern of unfair labor

practices committed by the company,

as evidenced by the 92 unfair labor

practice complaints that were filed

before the strike began. In the complaint, the NLRB also alleged that the

strike was prolonged by the unfair labor practices committed by the company since the strike began. This was

important to the union because, under

the law, when a strike is caused by an

unfair labor practice, strikers must be

reinstated; and, in this instance, they

were not.

On May 2, FMCS director Wells

announced that he would become personally involved in efforts to resolve

the long-standing dispute. The director, along with FMCS regional director Scott Beckenbaugh and the director of mediation services Dan O’Leary,

met individually and jointly with company and union leaders seven times

during the year to discuss the major

issues in dispute and search for common ground. Their last meeting was in

mid-December, at which time the parties agreed to resume local bargaining.

Meanwhile, on May 28, the NLRB

(Region 33) issued another unfair labor practice complaint against Cater-
 Compensation and Working Conditions Fall 1998 11

pillar, alleging, among other things,

Caterpillar

that the company delayed the return

of strikers by up to 26 weeks, while

retaining some 1,200 replacement

workers. In addition, the Board alleged that Caterpillar discriminated

against strikers in terms of shift

changes, job assignments, and transfers.

On November 7, tension boiled

over at Caterpillar’s Mossville, Illinois

plant, leading to a brief walkout by

several hundred workers in protest of

the company’s alleged refusal to deal

with their concerns over issues such

as work schedules, overtime, and the

number of hours of work.

1998

Overview. In mid-February, the union

and the company finally reached an

agreement with the help of the director of FMCS. But why would Caterpillar be willing to agree to a new contract? After all, the company was in

control; it had earned record sales and

profits with or without the strikers.

But, Caterpillar needed to satisfactorily settle the 440-odd unfair labor

practice charges which had by then

been filed against it by the NLRB.

Besides being costly to defend, the

company faced huge liabilities if the

NLRB found for the workers; and one

of the company’s demands in any

settlement would be the dropping of

these charges. Besides, Caterpillar’s

sales and profits were declining because of a stronger dollar and a slowdown in growth abroad. The company

needed a flexible collective bargaining agreement and a less hostile

workforce to sustain itself in the next

downturn.

Formal Bargaining resumes. On

February 1, Mr. Wells and the parties

met for a 12-hour bargaining session,

the first formal joint negotiation session between the parties since November 1995. At the request of Mr. Wells,

the parties returned to the bargaining

table on February 12, worked through

the day and into the early hours of the

next day, and struck a deal. A 30-

member bargaining committee from

Caterpillar and 54 representatives

from the Auto Workers’ local unions

participated in the meetings.

The 6-year tentative agreement included several terms that proved to be

too hard to sell to the rank-and-file.

As part of the deal, the union agreed

to drop more than 440 unfair labor

practice complaints filed with the

NLRB since 1992. Some of the complaints had already reached the advanced stages of processing in the

NLRB and had even been submitted

to the courts. Another provision would

have allowed 110 of the fired strikers

to immediately return to work but

would have required arbitration to determine the fate of 50 others. But,

perhaps the most politically sensitive

concession agreed to by the Auto

Workers was the granting of amnesty

to some 4,000 union members who

crossed the picket line during the

strike. The rank-and-file rejected the

tentative accord, by a 58-percent majority in voting held February 20-22.

On March 16, Mr. Wells arranged

a telephone conference call between

the parties; another tentative agreement was struck, letting the 50 fired

employees return to work. A week

later, the rank-and-file approved the

agreement by a slim 54-percent majority. The moment was succinctly

captured by George Boze, vice-president of Auto Workers’ Local 974, who

said, “The real victory in this struggle

is the fact that after 61⁄2 years, the

membership was able to stay together

well enough that the company had to

come back to the table to bargain.”22

Legacy of the dispute

Leaving aside its symbolic significance as a test of organized labor’s

strength in a highly visible dispute,

the long-term ramifications of this

strike are less certain. It may weaken

the solidarity and unity of the Auto

Workers, as well as the resolve of other

unions to use strikes to enforce contract demands in the face of employers’ threats to use strike replacements;

or it may only be another sad and bitter chapter in the sometimes tumultuous bargaining history of Caterpillar and the Auto Workers. It may

redefine workers’ speech and strike

rights and reshape labor relations, or

it may only be a footnote in the history of labor relations.

1

 Wall Street Journal, February 23, 1998, p.

A3.2

 Los Angeles Times, May 15, 1995, pp. A14-

A16; May 17, 1995, pp. A9-A10. 3

 Los Angeles Times, May 14, 1995, pp. A1,

and A15-A16. 4

 Daily Labor Report, No. 35, February 21,

1992, p. A-9. 5

 Daily Labor Report, No. 65, April 3, 1992,

p. A-4. 6

 In a work-to-rules campaign, employees

precisely follow the language of the collective

bargaining agreement in an attempt to slow or

impede production. 7

 The procedures for review of an unfair labor practice charge are as follows: After a charge

is made, a field examiner in a regional office investigates it. If the case goes forward and the

charge is found to be well grounded, a formal complaint is issued by the regional director. The case

is then sent to an administrative law judge who

holds public hearings on the complaint. The administrative law judge issues findings and recommendations that are sent to the parties and to the

full (three-member) Board in Washington, DC.

The full Board reviews the case and issues a decision and order. 8

 Star Journal, July 25, 1992, p. A1. 9

 Daily Labor Report, No. 18, September 18,

1992, pp. 1-2. 10 Star Journal, December 1, 1992, p. A1. 11 Daily Labor Report, No. 39, March 2,

1993, p. A-8. 12 Daily Labor Report, No. 43, March 8,

1993, p. A-17. 13 Daily Labor Report, No. 92, May 16, 1994,

p. A-11. 14 The author was unable to identify one of

the stoppages; the other eight are identified in the

text.15 Wall Street Journal, February 6, 1995, p.

B2. 16 Daily Labor Report, No. 100, May 24,

1998, p. A-11. 17 AFL-CIO News, December 15, 1995, p. 1. 18 Detroit News, December 5, 1995. 19 Daily Labor Report, No. 170, September

3, 1996, p. A-4. 20 Union Solidarity, September 1996, p. 1. 21 Los Angeles Times, May 16, 1995, p. A10. 22 Daily Nonpareil, March 23, 1998.