The machinists’ defeat suggests that “wages in manufacturing will be flat in the foreseeable future,” says Michael LeRoy, a professor of labor relations at the University of Illinois at Urbana-Champaign.
Analysts say they were surprised by one twist in the dispute: The concessions were demanded not by a company struggling to survive, as US auto makers were in 2008 and 2009 when auto workers agreed to concessions to help keep American car manufacturing afloat, but by a thriving firm. Indeed, Caterpillar is earning record profits, including a profit of $1.7 billion in the second quarter of this year, 67 percent higher than a year ago. Last year top executives also received hefty raises.
The machinists had previously rejected two offers from Caterpillar, but the strike’s length had begun to wear them down. About 780 workers went on strike, and union officials conceded that more than 100 had since crossed the picket line to return to work. Striking workers had received $150 a week in strike benefits from the union.
Caterpillar has been described as a hard-nosed negotiator in labor relations. Experts say it wasn’t always so. Until the 1980s, the company enjoyed fairly amicable relations with workers, says Mr. LeRoy. But the company suffered a long slump and emerged as a much more “aggressive” company, he says. In the 1990s, it fought the United Auto Workers Union – and won. Early this year, Caterpillar shut down a plant in London, Ontario, in a labor dispute that cost 450 workers their jobs.
Caterpillar argued that it needed to reduce labor costs because of the possibility of more difficult times in the future. But such arguments “don’t stand up to logical analysis,” says Robert Bruno, professor of labor and employment relations at University of Illinois at Urbana-Champaign. In that case, he says, workers would never share in their companies’ prosperity.