Caterpillar: Labor's metamorphosis


PEORIA, Ill. -- Ten times in 2 1/2 years the United Auto Workers struck Caterpillar Inc., but with no visible effect on the company.

Now as the union enters the third week of yet another walkout, many believe the outcome of the 11th will be different.

The company and the strikers are in the midst of a battle that could redefine all American workers' speech and strike rights.

Although the two sides are deeply divided, they do agree on one point: Whatever the outcome, this latest strike by 14,000 UAW members could set a new tone for labor-management relations nationwide.

"I think it's of epic proportions because of the implications," said Raymond Hilgert, professor of industrial relations at Washington University's business school in St. Louis.

The reason this strike may be so important: timing. The strike comes as:

* An administrative law judge is set to make a potentially precedent-setting decision on whether Caterpillar broke laws protecting workplace speech when it fired more than a dozen workers for sporting pro-union buttons, T-shirts, balloons and signs.

* The U.S. Senate is set to vote on a proposal to ban companies from permanently replacing strikers.

* The company is expected to report another highly profitable quarter despite its union troubles, and while the union tries to combat indications that hundreds of its members, apparently fed up with the union's continuing demands for sacrifices, are crossing the picket line.

Peoria-based Caterpillar broke a 5 1/2 -month strike in 1992 by hiring replacement workers. This time, it has placed ads in newspapers, including The Sun, offering $17 an hour to anyone who will work "in place of" strikers. Caterpillar insists those workers are not permanent replacements but new hires.

But if the UAW succeeds and forces the heavy equipment maker to rehire some fired workers and stop giving preference to previously hired replacement workers, other unions are likely to follow the UAW's unusual tactics, union strategists say.

However, if this strike too ends like the others did, managers at other companies "might decide it is time to take a hard line against their union," said Steven Colbert, a heavy industry analyst for Prudential Securities in San Francisco.

Today's labor dispute has its roots in the bitter 163-day strike in 1992.

After 13 years of layoffs -- when UAW employment at Caterpillar fell by more than a third from the high of nearly 40,000 in 1979 -- Caterpillar refused to sign a UAW contract patterned after one already negotiated with competitor Deere Inc.

The company offered small raises and some job security, but refused a union demand to guarantee the 14,000 UAW jobs.

So the UAW struck. But members started crossing the picket line when they saw applicants lined up for replacement jobs.

The union called off the strike and began plotting alternatives to pressure the company to sign a more union-friendly contract.

One tactic was an inspiration of a soft-spoken machinist at the York, Pa., plant.

Ken Meyers, a machinist who said he had never before protested anything, said he became fed up in April 1992 when Caterpillar chairman Donald V. Fites announced he would replace workers who were striking at other plants.

Mr. Meyers thought that was unfair, so, on an impulse, he pinned a union placard reading "Permanently replace Fites" to his shirt and walked in to work.

He was fired when he refused his foreman's order to take the sign off, but United Auto Workers officials quickly won him reinstatement.

As he walked back into the plant, this intensely shy man was greeted by a roar of applause from the other workers. "I surprised everybody," he said. "Even myself."

And he sparked a war of words inside Caterpillar plants across the country. More than two dozen workers were suspended from the York plant for wearing T-shirts in support of Mr. Meyers.

In Illinois, workers were fired for refusing to remove buttons, balloons or signs with phrases like: "Stop scabs," or "Cat treats workers like dogs."

To protest the firings, the union started filing unfair labor practice charges with the National Labor Relations Board.

Although some of the firings were legitimate, NLRB investigators found at least a dozen cases in which the evidence indicated the company violated federal laws protecting workers' rights to express themselves during a labor dispute, said Glenn A. Zipp, director of the NLRB's Peoria office.

Mr. Zipp said the NLRB usually rejects about two-thirds of the complaints it receives, but it has agreed to proceed on 92 unfair labor charges -- half of those filed by the UAW against Caterpillar because of evidence that the company has acted with "extreme unreasonableness" in harassing union officials and giving preferential treatment to replacement workers.

Jerry Brust, director of labor relations for Caterpillar, said the union members have been "baiting and taunting supervisors until somebody does something that they can claim is an unfair labor practice."

He said the company has offered to arbitrate the dismissal cases but the union has refused.

Caterpillar's policy is to tolerate workers' speech, but it draws the line at balloons, three-foot signs and threatening or insulting messages, Mr. Brust said.

To put further pressure on the company to rehire the workers, the union held a total of nine brief one-to-three-day strikes -- always returning to work as soon as the company threatened to hire replacements.

Although the sloganeering and stoppages clearly annoyed managers and hurt production, the tactics had little visible effect on company profitability, which has soared over the last 18 months.

Caterpillar reported its first annual profit in three years last year. And in its most recent quarter, the first three months of 1994, Caterpillar reported record sales of $3.3 billion, up 22 percent from the year before, and profits of $192 million, more than quintuple the previous year's first-quarter profit. And in early June, Caterpillar announced that its finances are so strong it was considering doubling its dividend.

Caterpillar said the profits were evidence that most of its workers are happy and productive. Only a small minority of the UAW -- which represents only about a quarter of Caterpillar's 53,000 workers worldwide -- cause problems, said Caterpillar spokeswoman Marsha Hausser.

But UAW officials figured the strong demand for earth-moving equipment meant Caterpillar would be especially vulnerable to another strike.

So, on the night of June 21, UAW members walked out of 12 Caterpillar plants in three states, demanding that the company resolve some of Caterpillar's outstanding unfair labor practice charges.

While allowing replacements in strikes over economic issues, federal labor law bans permanent replacements in strikes over unfair labor practices.

But Caterpillar officials said last week they may replace the strikers because they believe this is really an economic strike. "These [charges] are just symptoms of the fact that we don't have a signed labor agreement," Mr. Brust said. Replacement "is obviously an option still available to Caterpillar," he added.

And last week, it was clear that the workers felt torn between their loyalties to an employer whom they describe as generous but high-handed, and a union which has protected them in the past but, they fear, this time may be risking their jobs to make a larger point.

In Peoria on Wednesday, the union held a protest outside Caterpillar headquarters, but only union supporters showed up in an area with about 7,000 UAW members.

And by the end of the week, the company said about a quarter of its UAW workers were crossing the picket line to go to their jobs. Although union officials insisted the company was exaggerating, they conceded that some -- perhaps a couple hundred -- workers had crossed the line.

The strikers gathered under tarps outside the Caterpillar plants said they are angry that both sides appear to have dug in their heels, and that no meeting between the two sides has been scheduled. They also worried about the company's announcement that it is issuing new identity cards to all those who show up to work -- a potential precursor of a lockout.

Fay Wadsworth, a 13-year veteran of a Peoria-area plant, said she and many others are torn over whether to stay on strike and collect $100 a week in strike pay, or cross the line for their $19-an-hour jobs.

The mother of two wants to back the union, which negotiated her good pay and benefits. But if she loses her job she'll be lucky to find a $5-an-hour job and will probably have to go back on food stamps.

She's idealistic and wants to ensure the right of her children to earn good wages. But, she adds, "I'm selfish, weak and afraid."

"I don't see the union as winners," she said.

"I don't want to be Joan of Arc. I don't want to burn at the stake."

Whatever Ms. Wadsworth and thousands of other workers decide, the UAW-Caterpillar fight has served as a testing ground for a new union strategy, labor historians say.

The issues that sparked the firings and retaliatory strikes may seem petty -- balloons and T-shirts -- but they're not, says Wayne State University labor historian Steve Babson. "These are fundamental issues, they are basic to freedom of speech and the right to organize," he said.

And, he predicted, if they work, U.S. workers will increasingly use such "wars of words" and other alternative tactics to pressure their employers. "The legal right to strike has been so diminished by replacement workers that there is much more reliance on in-plant actions and words," Dr. Babson said.

But Dr. Babson notes that Caterpillar's recent financial success may be an indication that such alternative tactics don't work, at least in the short run.

As manufacturers replace workers with machines, labor disputes become increasingly irrelevant to a company's profitability. At Caterpillar, for example, direct labor represents only 13 percent of their bulldozers' and engines' total cost.

"Automation changes the calculus," he said. While he believes labor peace is needed for long-term financial stability, Caterpillar's experience shows: "In the short term, you can demonstrate sizable profits" despite labor unrest.

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