Municipal Government

Six-Year Freeze on Wages Accepted at Caterpillar

Six-Year Freeze on Wages Accepted at Caterpillar

August 24, 2012
By Harry Kelber

Caterpillar and the International Association of Machinists announced on August 15 that they had reached a tentative six-year agreement that could end a 15-week strike at the company’s hydraulic parts plant in Joliet, Illinois.

The agreement contains a six-year freeze on wages and pensions, among other concessions that Caterpillar wanted, including a $1,000 extra increase per employee to the healthcare fund.

Caterpillar’s hard-fisted demands were not driven because of financial “bottom line” insecurity. On the contrary, the “Cat” is one of the richest companies in the world. The company reported a record $4.9 billion profit last year, and in the last quarter alone, its profits were $1,7 billion. Caterpillar’s chief executive, Douglas Oberhelman, reported a 60 percent pay increase in 2011, amounting to $16.9 million.

Caterpillar is known as the bellwether company that forces new cost-cutting concessions in an industry that is both rich and powerful. “Caterpillar Capitalism” sets a pattern for other companies to gain new concessions from weakened unions that fear massive layoffs if they don’t comply.

Caterpillar Poses Strong Test for America’s Unions

There was a mixed angry reaction by the 780 Caterpillar employees in the Joliet I.A.M. local who ratified the contract. Those who voted against ratification were demonstrably angry at the company’s profit-greedy behavior. Many who reluctantly voted to accept the contract felt they could no longer continue their opposition after 15 weeks without a pay check. The local’s leadership had recommended rejection, but some argued for acceptance.

The contract is bound to change the relationship between the nation’s business community and the labor movement. It clearly puts the AFL-CIO, with its 12 million members on the defensive. The corporate offensive against unions has never been stronger or more widespread. So how are AFL-CIO leaders responding to the threat of extinction? There have been angry reactions around the country, but very little change of effort from the AFL-CIO headquarters in Washington, D.C.

What is needed is a broad mobilization of union members to run to the rescue of any union under attack. In the Caterpillar situation, such support from AFL-CIO headquarters was lacking.

August 24, 2012

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