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Auto Workers Betrayed in Peoria

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The dominant view of labor relations these days is that workers should ask not what their employers can do for them, but what they can give back to their employers. As the pundits see it, organized labor--if it must be organized at all--should cooperate with management to promote our "competitiveness" in the "global economy."

That's exactly what the United Auto Workers at Caterpillar have done for the past eight years. They have given, and they have cooperated. They expected something in return--mainly job security. Instead, when their contract came up for renewal last fall, they got management intransigence and eventually a bitter five-month-long strike, which they suspended in April after their partners in competitiveness threatened to hire permanent replacements for them. Until they manage to negotiate a new contract, they are working under company-imposed terms that they have long rejected.

Caterpillar's threat to hire new workers and get rid of the strikers did not initially break the union's resolve. On April 6, when managers ordered employees to halt their strike and return, a handful of workers went through the picket lines outside plants in East Peoria, Aurora, Decatur, and other Cat factory towns. But the number of crossovers grew slowly over the first week to about 600 (out of 12,600 strikers) by the union's count, somewhat higher according to management. There was fear in union ranks that if Cat began bringing in replacements, the numbers might rise rapidly, effectively breaking the union and putting the strongest union members out of their jobs.

The landmark federal labor law passed in 1935 prohibited employers from firing or disciplining workers for exercising their right to strike. But three years later, with a flick of the pen--in an aside to a decision that was otherwise seen as a victory for organized labor--the Supreme Court effectively eviscerated New Deal labor law by giving employers an option of hiring permanent replacements for strikers. (If the National Labor Relations Board decides the strike is over unfair labor practices, then workers can only be replaced temporarily.) Of course to workers there is no meaningful distinction between being fired and being permanently replaced.

For many years only a few rogue employers, most of them in the south, took advantage of that Supreme Court opinion. It only became a serious practical threat to labor unions after Ronald Reagan fired striking air-traffic controllers in 1981. Reagan broke no new legal ground with that action--as federal employees the controllers did not have any legal right to strike--but he did set a new tone for labor relations, and private employers took his cue: Phelps Dodge, Brown & Sharpe, the Tribune Company, Hormel, International Paper, Eastern Airlines, and many other companies broke strikes or unions by bringing in permanent replacements over the next decade. And many other companies, taking advantage of high unemployment and a generally weakened labor movement, threatened to do so.

Thus has the strike, historically labor's big stick for recalcitrant employers, been whittled down to a puny switch; some managers even aim to provoke strikes so they can break unions, as the Tribune Company tried with the New York Daily News. When a powerful union of skilled workers can't sustain a strike, as at Caterpillar, what hope is there for the unskilled, low-wage, often abused workers who need collective clout the most?

Jerry Brown, the 45-year-old president of United Auto Workers Local 974 in East Peoria, feels especially betrayed by Caterpillar. He was one of the union leaders who had urged cooperation.

Brown came to unionizing only reluctantly, he told me during a recent interview. (He was wearing a red T-shirt that proclaimed "united we bargain, divided we beg.") A Peoria native, he grew up in the shadow of Caterpillar. His father was a farmer, displaced into the city and a job at Corn Products Company, who was a "hard-line union man," Brown said. He recalled that during a particularly tense strike in 1973, his father engaged in some "extracurricular activity" to discourage strikebreakers; the Brown home was firebombed and burned, and the family always suspected that the company directed scabs to retaliate against the elder Brown.

Partly because of the conflicts associated with his father's union activity, Brown at first stayed away from the union when he went to work at Caterpillar after high school. But when he returned from a tour of duty in the Army, he applied to be an apprentice millwright, a skilled job building machines and fixtures. His superintendent was a "real jerk" who reminded him of his Army sergeant; he told Brown to shave his sideburns and "how to walk and talk." At one point Brown was so fed up he asked to see his union steward; the foreman laughed at him, saying he didn't have one. Challenged by a union officer to do something, Brown decided to fill the vacancy himself.

As he progressed in his trade, he reluctantly continued as steward, then ran for successively more powerful positions, spending two terms as bargaining chairman during the past decade. But that was a "horrible job," Brown said, fighting the company day after day over thousands of grievances and contending with a membership going through painful convulsions. He suffered a heart attack in 1988. Then his caucus drafted him to run for president of the local, a job that doesn't involve the same unending, day-to-day conflict. Even in the turmoil of the recent strike, Brown was calm, confident, and friendly, qualities he needed to reassure his anguished members. Physically he's no fire-breathing John L. Lewis: he looks like a scoutmaster or well-muscled accountant, clean-cut, open-faced, soft-spoken, without guile.

Brown had been a leader in the union during the 205-day strike against Caterpillar in 1982-'83, the longest multiplant strike in the history of the UAW. Since first being unionized in the late 1940s by the left-wing Farm Equipment Workers, Caterpillar had had a long history of rancorous labor-management relations. But the '82-'83 strike seemed to mark a turning point. Caterpillar's chairman at the time, Lee Morgan, later told union officials that the company had tried to break the union and nearly ended up breaking itself. So management decided that henceforth it would cooperate with the union.

Caterpillar's yellow bulldozers, backhoes, graders, trucks, and other construction equipment are known and used throughout the world. Its products have a reputation for being technologically advanced and extremely durable, and the company prides itself on customer service--promising to deliver spare parts anywhere in the world within 24 hours. Although it has manufacturing facilities overseas, 60 percent of its foreign sales came from its Illinois factories last year. It is the second largest American exporter, after Boeing.

But in the early 80s the dollar was grossly overvalued, making Caterpillar products high-priced and hard to sell. There was also a recession. Foreign competitors, especially Komatsu of Japan, were not only giving Cat a tough run overseas but also trying to invade the U.S. market.

After their 205-day war with the UAW, Cat not only decided to cooperate but also announced that it would invest $2 billion in new technology over the coming decade to make its factories "Plants With a Future." To encourage workers to come up with ideas that would improve products and efficiency, it established the Employee Satisfaction Program: over the years, according to management, their suggestions have saved tens of millions of dollars.

In two subsequent contract negotiations during the 80s, both resolved without strikes, the UAW gave up many rights in order to let management have a freer hand organizing production, shuffling jobs, and subcontracting work. The union reduced the number of job classifications in most plants from several hundred to less than one hundred, knowing full well that such changes would cost jobs. It also gave up some of the rights that senior workers had to "bump" junior workers out of their jobs if there were employment cutbacks. In order to reinforce the Cat Logistics Division's promise on delivery of spare parts, the union surrendered the right to strike in that division--over the loud protests of many members. Employment at the East Peoria local plummeted from 24,000 in 1979 to about 9,000 today with roughly similar production.

These concessions were not easy for the union to make, and Jerry Brown faced opposition within the local to his cooperation. "Every one of those numbers has a face behind it," he said, "and many of them are my friends and neighbors."

Cat has acknowledged that such moves have resulted in huge productivity increases. Last year chairman Donald Fites told Congress that direct labor--production workers--represented only 6.1 percent of the company's costs. The company handed out jackets and prizes to workers in several plants for their ideas boosting efficiency and quality.

With the 1982-'83 strike, Brown said, "We proved we could give the company a strike, and they showed they could take one. We both showed our manhood. I said, 'Let's put this crap aside and join hands.' I looked at Japan: they're tough, aggressive companies. For us to be tough and viable, we've got to work together. I was willing to bend over backward to work with them. . . . Now six years later a new chief executive officer has a new battle plan and he sets it all aside. He took all our willingness to cooperate as weakness." As a result, Brown concluded, "We were stabbed in the back."

"In my heart," Brown says even now, "I still think employee involvement is the right thing to do. We have to work together. But how do I tell that to my members? We're a throwaway work force to Fites."

Brown said he first got inklings of problems to come after the 1988 contract was signed, when Caterpillar's new director of labor relations began reneging on what the union thought were understandings about the meaning of the contract. These problems eroded the trust the company was supposedly still trying to build. Caterpillar so dominates the Peoria area that many blue-collar workers have known management people for years. Brown knew managers who had been high school chums. The wife of one top union official works in an upper-management post; indeed, so the story goes, one foreman ordered her husband, a production worker, to cross the picket line or she'd divorce him.

Through such associations, Brown said, the union picked up stories of managerial discontent with Fites, who had risen through the corporation's marketing operations, not production. They got a picture of a ruthless empire-builder. Then early last year, long before the contract expired, Caterpillar began running full-page ads in the Peoria Journal-Star, communicating directly to workers at home--and to their spouses--about Caterpillar's need to have a contract different from the one negotiated for the rest of the heavy-equipment industry. Cat needed special treatment to be globally competitive, management contended, even though the company had maintained its market share through very difficult times and was now in a position to benefit greatly from its reorganization and recently completed capital investments.

"The message to us here in Peoria was that they were out to bust us," Brown said. "It was really hard to get people to believe in the beginning what we were talking about. We did everything we could to convince people. Nobody believed Cat could be that rotten. The international [union], their thoughts in the beginning were, 'Well, they just want to buy a cheap contract.'"

There was lengthy skirmishing even over where to have contract talks. Then the few meetings between management and the union were nasty, brutish, and short. Caterpillar contended that the UAW had simply sent a contract it had negotiated without rancor at Moline-based John Deere on Deere letterhead, without taking into account Cat's special needs. Brown showed me a copy of a lengthy, Cat-specific contract proposal the union had made; the union had simply offered a few "side letters" on Deere letterhead as examples of the kind of supplementary agreements they wanted at Cat. One was a pledge not to use permanent replacements.

Debate focused on whether Cat should abide by the industry "pattern" set by Deere and the UAW during their latest contract talks. Unions have traditionally tried to impose uniform wage and benefit costs across entire industries, rather than making separate deals for different companies. Thus an agreement negotiated by the UAW with, say, Ford Motors sets the pattern for contracts at GM and Chrysler. The heavy-equipment pattern was often set at Caterpillar, with other manufacturers following along. This time, when the union wanted Cat to follow the pattern set at John Deere, Caterpillar claimed there was no relevant industry for a pattern, even though it acknowledged Deere was a major competitor in many product lines. This claim turned out to be a stroke of public-relations genius. After nearly a decade of being flexible to the point of offering no resistance to many management changes, the union was criticized for being inflexible in its pursuit of pattern settlements.

Last year Caterpillar ran its factories full blast, using extensive overtime, to build up as much inventory as it could before the strike. Although Brown urged workers to minimize overtime voluntarily, the union had given up the right to restrict it many years earlier. Since the economy was still mired in recession and sales were weak, Cat was well situated to withstand a strike, especially since the union could not strike the one operation that continues fairly strong even during downturns: the Logistics Division, or parts department.

On November 3 the union called out 2,400 workers to strike two factories where they thought Cat would be most vulnerable; Cat turned around and locked out another 5,650 workers. Later more workers joined the strike. Brown asked workers still on the job to "adopt a striker" and to "work to rule, do 100 percent quality" and nothing extra.

The central issue was job security: Caterpillar offered all current workers a six-year guarantee against indefinite layoffs (though the union claims the proposed contract left numerous loopholes). By contrast, the union wanted the company to guarantee a specific number of jobs. That would discourage subcontracting of work, and encourage the company to transfer work from subcontractors back into its own factories if there were big gains in productivity that would otherwise reduce its work force.

The union objected to management proposals that would have established two different levels of pay for the same jobs in some plants, cut pay for workers in some divisions, and frozen wages of less-skilled workers. The company wanted to contend with rapidly rising health-care costs by establishing a network of preferred providers; the union thought the company's plan would unduly shift health costs to workers and retirees. (The UAW has long argued for a Canadian-style national health insurance plan, which would greatly ease the financial pressure on most of the employers with which it bargains--and eliminate the cause of about four-fifths of all strikes in recent years.) But there really wasn't much negotiation over these issues, Brown said--just "two worlds colliding."

Cat tried to run its struck operations with office personnel, supervisors, recalled retirees, and subcontractors, but by March, according to industry observers, inventories were low. By this time also many securities analysts were beginning to question whether Cat could really save enough with its contract to justify the costs of the strike--not just lost sales, an expensive publicity campaign, and the hiring of a notorious strikebreaking security firm, but also the lost goodwill of employees. Cat wages were not out of line with most of its competitors, even the foreign ones; the analysts wondered what was driving the company.

The union did a poor job of getting its message across. It took out some newspaper ads, and just before the strike was suspended bought a half-hour of television time to present its side. Although the union demand for job security could have been the basis for organizing community support, "The company did a good job of turning the community against us at first," Brown said. "It took a long time for us to get our story out. We should have done more [television]. A lot of people didn't understand what was going on. If we'd got that stuff out months ago, it would have helped a lot. I wished we'd had more professional public relations people sooner." The UAW international assigned only one overworked person in Detroit to do publicity until another person was placed in Peoria a few days before the strike was suspended.

Cat workers agonized over whether to cross the picket lines. Many were concerned about specific contract issues, especially job security, but they also saw the dispute as a test of their union solidarity: the union had protected and provided for them, and thus they were fighting for it as much as anything. Some were motivated by even more basic notions of right and wrong: the company should acknowledge their past contributions and sacrifices; employees had an obligation to stand up for their fellow workers and for retirees and future workers.

But most workers admitted they were scared: They knew Cat would suffer if management tried to replace them with less experienced workers, but maybe Fites would try even if it didn't make sense. They were skilled, and perhaps they could get new jobs, but they knew that unemployment was high and that many employers would view them as old, and they had children going to college and other responsibilities that would be jeopardized if they lost their jobs. Some of those people, and a few who would probably act on their own individual interests in any circumstance, trickled across the picket line.

When management and the union met before Easter with federal mediator Bernard DeLury, they rehashed the issues. Then on the afternoon of the second day, DeLury suggested a 90-day cooling-off period during which the union would return to work and the company would suspend the hiring of permanent replacements. The union bargaining committee had felt "ungodly pressure" to come up with something as they entered mediation, Brown said, and despite their reluctance they unanimously agreed to return.

Brown believes--partly because of the shouts he heard coming from down the hall in the room where Cat managers had gathered--that Cat was caught off-guard by the union's willingness to return. "We threw them off their game plan," he said. Cat, he's convinced, hoped to break the strike. Although management had for weeks been begging--and threatening--strikers to return to work immediately, when workers showed up at factory gates the day after the agreement, they were turned away. They took this rejection as an example of corporate effrontery and insincerity.

The next week the company gradually began calling workers back but warned that it would eliminate about 1,350 jobs, through early retirement incentives or attrition. That's what the union had hoped to prevent, by encouraging Cat to bring back into its plants work that had already been subcontracted to other lower-wage companies, some of them run by former Cat managers.

Did Caterpillar win? Not in Jerry Brown's view. "I'm just a peon, but we estimate this strike has cost them $200 to $250 million," Brown said. (Despite reporting big losses last year and in the first quarter of this year, Cat continues to insist that they lost no sales due to the strike.) "If you're Fites or [Cat president Jerry] Flaherty, what have you got to show for it? You poured money down a black hole. You've alienated your work force, tore their guts out, turned father against son. There's bitterness out there that won't go away. They can't be too pleased."

Brown is still determined that the union will win a "fair and equitable" contract. "There are other ways to fight," Brown said. "We're not going to quit. We'll do what we have to do." If the NLRB supports the union's charges of unfair labor practices, workers could resume their strike without fear of permanent replacement.

Or the union could organize an "in-plant" campaign. In the most potent form of this tactic, developed by UAW dissident leader Jerry Tucker (who is challenging incumbent president Owen Bieber in the June election), workers on the job form "solidarity committees" and do only precisely what the job entails, insisting that every rule be enforced and every safety measure followed. This pressures management by slowing down production, but workers continue to get paid and can't be replaced.

The mood may be right for such an action. After his first day back at work, Dan--who like many Cat workers is now reluctant to give his full name for fear of retaliation--discovered that management's new terms are "worse than expected." His health-care costs may soar, he said, and he's been told that the promised job security comes with conditions and exceptions attached. "There was a lot of animosity in there today," Dan said after leaving work. "People weren't satisfied with the contract we got. I'm afraid there's a lot more [bad news] to come." Such dissatisfaction will hurt Cat, but to be really effective, dissident Tucker argues, an in-plant campaign must be well organized; spontaneous alienation isn't enough. Brown and other union leaders have called on workers to stop all cooperation with the company, such as the Employee Satisfaction Plan, but haven't yet pressed forward with a full-scale in-plant attack.

Brown says the union will also launch some kind of "corporate campaign," a tactic developed by union strategist Ray Rogers. This sort of campaign attacks the company's sources of financial support and drags outside directors--and the banks or corporations they may serve--into the fray. Rogers observes, for example, that Cat and Anheuser-Busch share a director, and that Budweiser might not want bad publicity spilling over from the Cat conflict.

Critics of the UAW international union strategy, including Tucker and Rogers, believe the union should have been using a corporate campaign, in-plant actions, and other tactics from the beginning to bolster the strike. They argue that strikes can no longer succeed without becoming political and community-wide efforts.

The Caterpillar strike has heightened awareness of a proposed ban on permanent replacements that the Senate is expected to begin debating soon. Although the bill passed the House last year and appears to have a majority in the Senate, supporters may not have enough votes to stop a filibuster. They almost certainly do not have enough votes to override President Bush's promised veto. But his veto could give the Democratic nominee an issue for the election; both Clinton and Brown have promised to sign the bill.

Ultimately organized labor may have to campaign for its rights much as the civil rights movement did. That was the conclusion of Mineworker leaders who successfully fought Pittston Coal's 1989 attempt to run their mines with permanent replacements: miners blocked highways, occupied a coal-processing plant, organized national and international solidarity actions, ran one of their own members successfully for the legislature, and much more, despite injunctions and fines totaling many millions of dollars. If the rest of the labor movement and its allies had built their support for Cat strikers earlier and had been willing to bring tens of thousands of people to Peoria to sit in the streets to prevent permanent replacements from entering the plants, perhaps Peoria would have been to labor rights what Selma, Alabama, was to voting rights.

Without a ban on permanent replacements, the strike, now as infrequent an event as it ever has been in American history, will become even rarer. But it would be a mistake to think that corking the bottle takes out the fizz. Collective bargaining was legitimized during the Depression in part to provide channels for the inevitable conflicts of the workplace. If workers do not have such channels, conflict may explode eventually in other ways. The union worked hard at Cat to keep the strike peaceful, but if permanent replacements had gone in, there's a good chance that violence would have followed. Workers see such replacements as scabs, indistinguishable from thieves sneaking into the factory to steal their jobs.

Yet even if the right to strike is protected, unions will need far more creative, aggressive strategies to effectively represent the workers of the future. If they decide to cooperate with management for what they see as mutual goals, Brown warns, "you just can't ever let your guard down. You've got to think another manager could step in that place and let you down."

At some point, maybe before it's too late, American managers will realize that they can compete better in the world market if they stop regarding their employees as the enemy. If they stop viewing them as disposable costs, they may instead recognize them as valuable assets. And at some point, maybe public opinion leaders will begin to realize that the whole reason for companies becoming competitive is to provide good jobs with high wages. Competitiveness for its own sake, especially when won by driving down workers' wages and working conditions, may benefit a few managers and stockholders for the short term, but not society as a whole.

The public must recognize its own stake and its own role in these conflicts. The downward spiral in blue-collar benefits and wages will also drag down many white-collar workers who don't now realize that they are the indirect beneficiaries of union victories. Already the weakening of unionism has contributed to the growing inequality of income and decline of the middle class over the past decade. Those changes undermine both the economy--by reducing the disposable income of the vast middle class--and our democracy, by dissolving the already fragile sense Americans have of sharing a common destiny as a society.

If the government had taken stronger measures to fight the lingering recession and had invested more heavily in the infrastructure, such as roads, railroads, bridges, and sewers, then Caterpillar might not have felt the economic pressures that led it to attack the union so ruthlessly. If there were national health insurance, the company would not be suffering such a cost disadvantage in competition with countries that do have national health plans (which includes every industrial country except the United States and South Africa). If giving workers a voice on their jobs was once again part of national social and economic policy, then Caterpillar would not have felt so emboldened to attack its workers and would have been pushed to figure out yet better ways to work with them.

Caterpillar still has to learn many of these lessons. The union still hopes to teach them. The suspension of the strike marked the end of one phase: advantage Caterpillar. But the company now must contend with the workers it attacked. "I don't think they're demoralized," Brown said. "I think they're mad."

Art accompanying story in printed newspaper (not available in this archive): photos/Nathan Mandell.

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