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UAW retreats at Caterpillar

By Lee Sustar | Janury 7, 2005 | Page 11

THE UNITED Auto Workers' (UAW) massive retreat continues--this time in the union's proposed contract at Caterpillar.

The 9,000 UAW members at the earth-moving and heavy equipment company were set to vote January 9 on a tentative agreement that would allow the company to permanently hire new workers at lower pay--including current "supplemental" workers who pay union dues but don't get benefits or vacation time.

The proposed deal includes some slight improvements to pensions and reduction in retiree health-care premiums to entice early retirements. The agreement would also set the stage for possible company buyouts for early retirees--which would speed the company's transition to a new, lower-paid workforce.

The UAW was defeated in two long strikes in the mid-1990s in a struggle for a new contract that lasted from 1992 to 1998. UAW leaders pulled the plug on the second strike after 17 months in 1995 by withdrawing strike benefits.

This time, union officials put up verbal resistance only, calling for rejection of two previous contract proposals since the old contract expired in April. Now they are backing a six-year agreement that contains most of the concessions that they earlier denounced. They've modeled the agreement in part on the 2003 contract with the Big Three automakers, which cuts pay for new auto parts workers by about $10 per hour.

At Caterpillar, the UAW's proposed givebacks come despite the fact that the company made $1 billion in profits in each year of the union's 1998-2004 contract--and in recent months has been on track to make even more. The company can't point to competitive pressures, either--Caterpillar dominates the world market for earth moving equipment. This has been accomplished despite the loss of 4,000 UAW members' jobs since 1998.

Even so, Cat isn't willing to pay workers regular increases. Instead, the proposed contract includes a $3,000 contract signing bonus and a series of bonuses based on percentages of workers' wages. Regular full-time employees would get bonuses of 4 percent in 2005, 3 percent in 2006, 3 percent in 2007, and 2 percent each in 2008 and 2009. As cash handouts, such pay isn't compounded into annual percentage increases for wages and benefits.

Even worse, new hires would have a pay scale dramatically lower than current workers. Starting pay would range from $11 to $12.50 per hour, compared to about $20 today. Workers in the most skilled positions would see top pay cut from about $25 per hour to a maximum of $17.85. For most production workers, pay will top out between $13 and $15 per hour, Rick Doty, vice president of UAW Local 974, told Socialist Worker.

The agreement would hit the so-called "supplemental workers" hardest--workers who pay union dues but get no benefits or vacation time.

Under the old contract, those workers were hired at 70 percent of regular wages, which gradually increased to full-time pay over six years, or when they were made permanent employees with benefits. Under the tentative agreement, those workers' pay--if they're hired as regular employees, that is--would top out at the new lower-tier rate. They would receive a 2 percent one-time general wage increase in 2008, but this would still leave them far behind the old scale.

What's more, overall pay for all workers would be cut through the elimination of an incentive pay program that boosted workers' income--money that the UAW and the company say would be funneled into a special fund to keep overall health costs low.

Even so, workers and retirees will take a big hit on health care costs. Although the UAW touts the agreement as providing relief for retiree health insurance premium payments, the deal would compel retirees to pay 60 percent of the inflationary portion of health care costs--that is, costs above the overall limit on health care cost payments that management established. But since Caterpillar capped health care costs back in 1992, retirees are being set up to pay for the out-of-control increase in costs.

If the deal provides relief, it's only because the UAW's Voluntary Employee Benefits Association (VEBA) ran out of money in the fall of 2004, causing premium payments to spike. The new deal will cut those payments, but those who retired during the 1998-2004 contract would face co-payments of 10 percent in 2006 and 2007, and 20 percent beginning in 2008, with a maximum out-of-pocket for health care of $1,000 for individuals and $2,000 for a family.

Those who retired in the 1992-1998 period would fare somewhat better, but still have a 10 percent co-pay after 2006--and both groups of retirees will have deductibles of $300 for individuals and $600 for families. Active workers and future retirees will face still higher deductibles, a higher maximum of out-of-pocket expenses, and a $100 prescription co-pay for drugs costing more than $1,000 starting in 2008.

With the bitter experience of the mid-1990s behind them, many workers at Caterpillar will feel pressured into accepting the deal as the best they could get. But Cat workers stunned top UAW leaders in 1998 when they refused to ratify a contract until management agreed to rehire 160 union members illegally terminated during the strike.

A "no" vote on these givebacks would send an even bigger shock wave--and tell union leaders that it's time to organize and fight to make rich companies like Caterpillar pay workers the decent pay and benefits they deserve.

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