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Workers who had been striking at a Caterpillar hydraulic parts factory in Joliet, Ill., voted on Friday to ratify a proposed six-year contract that contained almost all of the concessions the company had demanded.

In ratifying the deal, the strikers acted against recommendations made by leaders of their union local, who had objected strongly to the pact. The agreement was negotiated by union leaders from the district level to end a showdown that had gone on for months without significant progress toward a resolution.

The fight between Caterpillar and the International Association of Machinists was considered a test case in American labor relations, in part because Caterpillar was driving such a hard bargain when its business was thriving.

The strike by 780 members of the machinists began on May 1 as workers rejected Caterpillar’s demand for a six-year wage freeze for two-thirds of the factory’s workers — those hired before May 2005 — at a time when the company was reporting record profits. Caterpillar argued that wages for the higher-paid workers exceeded market levels.

The deal the workers ratified contained far-reaching concessions, including the wage freeze, a pension freeze for the more senior two-thirds of the workers and a steep increase in what the workers pay toward their health care insurance. It also called for a $3,100 ratification bonus, which union officials said Caterpillar agreed on Thursday to increase from $1,000.

“It’s a win for Caterpillar — they achieved their bargaining objectives,” said Michael LeRoy, a labor relations professor at the University of Illinois. “There’s very little good news in this for the union — they have managed to maintain the bargaining relationship. I wouldn’t say it’s a disaster, but it sure is a step back.”

The striking workers had faced a tough choice in the ratification vote: accept a deal that many found unsatisfactory or continue a painful 15-week walkout with no guarantee that they could get Caterpillar to sweeten its offer. About 105 workers had already crossed the picket line and returned to work.

The union’s leaders declined to disclose the results of the vote, which they said was close.

Al Williams, a 19-year employee at the plant, said he voted for ratification even though he disliked the six-year wage freeze.

“I’m glad we’re going back to work,” he said. “I don’t think it’s the best deal, but it’s doable. I voted for it simply because they weren’t able to tell us definitively what we could hope to get other than what was in this offer.”

For the workers, the deal was a slight improvement over what Caterpillar was offering when the walkout began. While the deal kept a six-year pay freeze for the more senior workers, it provided for a single raise during the six years for workers hired after May 2005 — a 3 percent raise at the end of this year. Caterpillar’s previous offer did not promise any raise for that group.

During the negotiations, Caterpillar also stepped back from its insistence that management be able to assign workers new jobs or new shifts indefinitely, outside of seniority. Under the deal approved Friday, workers could still be assigned to new jobs or shifts irrespective of seniority, but for a maximum of 90 days.

Mr. LeRoy said that the deal “does signal continued wage stagnation in the manufacturing sector, not only for unionized, but also nonunion workers.”

Tim O’Brien, president of the striking local, Machinists Lodge Local Lodge 851, called for rejecting the contract, saying the Joliet workers did not walk the picket lines for nearly four months and endure such sacrifice to settle for a stingy deal.

But Steve Jones, the top official in Machinists District 8 in Burr Ridge, Ill., and the union leader who negotiated the settlement with Caterpillar, said the deal was the best the union could get.

“If there was a better agreement out there to be had, we would have taken it,” Mr. Jones said on Wednesday after reaching the deal.

The factory’s top tier, representing two-thirds of the workers, earns an average of $26 an hour, while the lower-tier workers generally earn $12 to $19 an hour. Caterpillar said it had insisted on a pay freeze because it wanted to maintain the factory’s competitiveness and because the top-tier workers earned substantially above the market average.

The contract does not include a cost of living adjustment for the workers, although Caterpillar has said it might adjust the pay of the lower-tier workers upward based on local labor market conditions during the six-year contract.

During the strike, the workers often expressed anger that Caterpillar was insisting on a wage freeze when the company, the world’s leading producer of earth-moving machinery, had a record profit of $4.9 billion last year, with forecasts of stronger earnings this year. The compensation of its chief executive, Douglas R. Oberhelman, increased by 60 percent in 2011, to $16.9 million.


	Caterpillar Workers Ratify Deal They Dislike
	By STEVEN GREENHOUSE, The New York Times, August 17, 2012
	Workers who had been striking at a Caterpillar hydraulic parts factory in Joliet, Ill., voted on Friday to ratify a proposed six-year contract that contained almost all of the concessions the company had demanded. In ratifying the deal, the strikers acted against recommendations made by leaders of their union local, who had objected strongly to the pact. The agreement was negotiated by union leaders from the district level to end a showdown that had gone on for months without significant progress toward a resolution. The fight between Caterpillar and the International Association of Machinists was considered a test case in American labor relations, in part because Caterpillar was driving such a hard bargain when its business was thriving. The strike by 780 members of the machinists began on May 1 as workers rejected Caterpillar’s demand for a six-year wage freeze for two-thirds of the factory’s workers — those hired before May 2005 — at a time when the company was reporting record profits. Caterpillar argued that wages for the higher-paid workers exceeded market levels. The deal the workers ratified contained far-reaching concessions, including the wage freeze, a pension freeze for the more senior two-thirds of the workers and a steep increase in what the workers pay toward their health care insurance. It also called for a $3,100 ratification bonus, which union officials said Caterpillar agreed on Thursday to increase from $1,000. “It’s a win for Caterpillar — they achieved their bargaining objectives,” said Michael LeRoy, a labor relations professor at the University of Illinois. “There’s very little good news in this for the union — they have managed to maintain the bargaining relationship. I wouldn’t say it’s a disaster, but it sure is a step back.” The striking workers had faced a tough choice in the ratification vote: accept a deal that many found unsatisfactory or continue a painful 15-week walkout with no guarantee that they could get Caterpillar to sweeten its offer. About 105 workers had already crossed the picket line and returned to work. The union’s leaders declined to disclose the results of the vote, which they said was close. Al Williams, a 19-year employee at the plant, said he voted for ratification even though he disliked the six-year wage freeze. “I’m glad we’re going back to work,” he said. “I don’t think it’s the best deal, but it’s doable. I voted for it simply because they weren’t able to tell us definitively what we could hope to get other than what was in this offer.” For the workers, the deal was a slight improvement over what Caterpillar was offering when the walkout began. While the deal kept a six-year pay freeze for the more senior workers, it provided for a single raise during the six years for workers hired after May 2005 — a 3 percent raise at the end of this year. Caterpillar’s previous offer did not promise any raise for that group. During the negotiations, Caterpillar also stepped back from its insistence that management be able to assign workers new jobs or new shifts indefinitely, outside of seniority. Under the deal approved Friday, workers could still be assigned to new jobs or shifts irrespective of seniority, but for a maximum of 90 days. Mr. LeRoy said that the deal “does signal continued wage stagnation in the manufacturing sector, not only for unionized, but also nonunion workers.” Tim O’Brien, president of the striking local, Machinists Lodge Local Lodge 851, called for rejecting the contract, saying the Joliet workers did not walk the picket lines for nearly four months and endure such sacrifice to settle for a stingy deal. But Steve Jones, the top official in Machinists District 8 in Burr Ridge, Ill., and the union leader who negotiated the settlement with Caterpillar, said the deal was the best the union could get. “If there was a better agreement out there to be had, we would have taken it,” Mr. Jones said on Wednesday after reaching the deal. The factory’s top tier, representing two-thirds of the workers, earns an average of $26 an hour, while the lower-tier workers generally earn $12 to $19 an hour. Caterpillar said it had insisted on a pay freeze because it wanted to maintain the factory’s competitiveness and because the top-tier workers earned substantially above the market average. The contract does not include a cost of living adjustment for the workers, although Caterpillar has said it might adjust the pay of the lower-tier workers upward based on local labor market conditions during the six-year contract. During the strike, the workers often expressed anger that Caterpillar was insisting on a wage freeze when the company, the world’s leading producer of earth-moving machinery, had a record profit of $4.9 billion last year, with forecasts of stronger earnings this year. The compensation of its chief executive, Douglas R. Oberhelman, increased by 60 percent in 2011, to $16.9 million. Issues: How did Caterpillar's capital structure affect its negotiations with labor?

Caterpillar Workers Ratify Deal They Dislike