Using the Replacement-Worker Weapon CATERPILLAR

April 19, 1992|By KIM CLARK | KIM CLARK,Kim Clark is a business reporter for The Baltimore Sun.

The United Auto Workers' decision to send strikers back to their jobs at Caterpillar Inc. last week was the labor equivalent of a Dunkirk operation -- a retreat that saved the union to fight another day.

Like Dunkirk, the move was a humiliating education for the retreaters. And like Dunkirk, it will have vast repercussions on people not directly involved in the dispute.

Just ask someone like Rodney Dize. Mr. Dize, who drove car-hauling trucks out of Baltimore before he was elected to a local Teamsters office, said he has now realized that strikes, while occasionally necessary, "don't have a chance." Caterpillar has proven that managers willing and able to use replacement workers can take the sting out of strikes.

Now that workers' most formidable weapon, the strike, has been blunted, many labor strategists say companies have gained an important edge in labor negotiations.

Executives say this reduction in union power is long overdue, good for the global competitiveness of their companies, and will save American manufacturing jobs in the long run.

But at what cost?

Many economists have noted that the rise of much of the American middle class roughly coincided with the ascendancy of unions. And as unions weaken, there is growing evidence that the middle class, too, is shrinking.

The only hope for unions is legislation to ban replacement workers, or new tactics -- tactics such as those Mr. Dize may be among the first to use successfully.

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Although Secretary of Labor Lynn Martin said on Thursday that hiring replacements for strikers wasn't effective, most labor strategists said the Caterpillar outcome has proved just the opposite.

Negotiations are supposed to continue, but UAW members are returning to work under the contract they had struck against since November 1991.

And labor strategists and historians say the UAW simply recognized the obvious: As long as U.S. law allows managers to replace strikers, "the union can never win," says Harley Shaiken, a specialist in labor relations at the University of California at San Diego.

Although replacement workers have been used in only about 4 percent of the strikes over the past 11 years, they have often -- though not always -- proved effective at breaking a strike or a union.

President Reagan started the trend in 1981 when he replaced 11,400 striking air traffic controllers. Later that year, copper producer Phelps Dodge Corp. replaced striking steelworkers. In 1985, Geo. A. Hormel & Co., broke a meat cutters strike by hiring replacement workers. And in March, 1990, Greyhound Lines replaced 6,300 striking drivers. The replacement was costly and forced the company to seek protection from its creditors under Chapter 11 of the bankruptcy code. But the drivers union ended the strike, and Greyhound is still operating. Hormel and Phelps Dodge are currently profitable.

That Caterpillar management now has the upper hand was demonstrated by the way the company behaved the day workers first attempted to return: Peoria, Ill.-based Caterpillar refused to take the workers back right away, saying the company had learned to operate with 15 percent fewer workers than it had before the strike.

Caterpillar changed course on Thursday, saying it would take back all of the strikers, but would reduce its staffing through attrition and an early retirement program.

Nevertheless, Mr. Shaiken said the company's decision to turn away its returning workers for three days was "a very poor sign" for the union. "That has got to win the Frank Lorenzo award for setting the worst possible tone," he said, referring to the head of Eastern Airlines who was so intent on destroying the airline employees' unions that he destroyed the company.

The decline of the union's power will mean lower wages for future generations of American workers, Mr. Shaiken and other economists believe.

Caterpillar Chairman Donald V. Fites said he is trying to cut his company's costs as painlessly as possible for current employees. He has offered annual 3.4 percent increases on top of the average production wage of $16.98 per hour.

Caterpillar has also promised to guarantee the job security for six years of most of its production workers.

But future workers won't be so lucky. The union wanted the company to hire new workers at the regular union wage. Caterpillar said it can't afford to keep some of its parts-making and distribution operations going at that wage.

A little-discussed but important aspect of the dispute was over Caterpillar's insistence on the right to pay new hires in some divisions -- including the York, Pa. parts plant -- as little as $7 an hour.

In fact, the company said it would shut down the 1,900-worker York parts plant unless it could institute a two-tier wage system.

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