Two-Tier Contract at Caterpillar Worsens; Retirees Stiffed

Editor’s note: After rejecting two agreements in the last nine months, 9,000 United Auto Workers members at heavy-equipment manufacturer Caterpillar voted by 59 percent for a concession-filled contract January 9. Caterpillar is making record profits.

Current regular workers, so-called supplemental workers, future hires, and retirees will all suffer cuts under the six-year contract. Bargainers said concessions were necessary to pay for part of retirees’ health insurance.

Most current assemblers now make $21.79, and skilled tradespeople $24.41. New-hire assemblers will start at $12.24 and top out at $14.34 after three years. Skilled trades will top out at $17.85. New-hires will get 401(k) plans instead of pensions and receive no cost-of-living adjustments until 2010.

Of the 9,000 Cat workers in the U.S., 2,930 are in a category called “supplemental,” hired in at $14.87 (for assemblers) and receiving no benefits. Seventeen hundred of these workers will get the chance to become regular employees with benefits and a one-time bonus—but at the new-hire pay rate.

Retirees face premiums that will rise over the course of the contract, as well as co-pays and deductibles. They will pay 60 percent of the cost of medical cost inflation.

Current workers will receive annual bonuses rather than wage increases and give up a number of existing bonuses and an incentive program. They will pay health care premiums for the first time.

UAW bargainers told members they would get nothing better without striking, and that if they did strike, Caterpillar would use permanent replacements, as the company did when it defeated two strikes in the 1990s. Caterpillar had also threatened to move jobs to right-to-work states or Mexico.

One local, 751 in Decatur, Illinois, rejected the contract, by 65 percent. Here that local’s retired president reports on the mood in Decatur.

On January 9 I attended the membership meeting where the UAW presented the tentative agreement. Similar proposals had been voted down twice, and this one still had the same smell to it.

International Rep Jim Clingin said that Cat would most likely implement its own offer if this one was not accepted. The local president said, “This is the worst meeting I’ve ever had to attend.”



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This agreement did not pass at Decatur, and since Decatur voted down the local agreement as well, another vote will be taken to convince the members to buy the local agreement so they can get their $3,000 signing bonus.

Retirees will have money taken out of their pensions for insurance premiums and money out of their pockets for co-pays and deductibles that had never been part of any contract before. This could mean thousands of dollars from retirees that are now on limited income.

I knew I had paid for my lifetime health care coverage through the wage and benefit structure of all the previous contracts I worked under, but this agreement vetoed all of them. My wife and I will be paying $118/month premiums in 2005, and these will increase each year to a projected $332 by 2010.

If you had told me 15 years ago that the UAW would be offering a proposal that contained so much poison without putting up a fight, I would have called you a liar.


Active workers, supplementals, and retirees expressed their outrage with this agreement. One of the supplementals was referred to as a brother, and he replied, “Don’t call me brother. A brother does not do this to another brother.” I am proud of these supplementals because they have a clear understanding of how bad the situation is for them. They will be good support for one another.

One supplemental went to the mike and said, “Under this agreement I will be losing from $8,000 to $10,000. I respect all you old-timers, but I’m voting NO.” Another supplemental went to the mike and said, “I’m getting screwed.” Jim Clingin replied, “A lot of people are getting screwed.”

One of the active workers said, “Supplementals should be paid the same wages as I am paid.” A retiree got up and said, “Walter Reuther would never have agreed to different wages for the same work.” Another person said, “Let them go ahead and implement, we’ve worked without a contract before.”

One lady said, “We have not used any tactics against Cat. There has been no one-day strikes. We could just not show up. We should not just lay down and die.” Right after she spoke someone said, “What can we do to hurt them?”

But the words of one of the supplementals stuck with me. He said, “My generation is ready to go to bat for better wages and benefits; let us know when somebody is ready to do something about it.”

I told the audience that we had veered off course with the 1998 agreement and that this 2004 agreement has made a U-turn and we are headed to the bottom. I said, “When you see you are being raped, you should resist.” Two-thirds of them resisted through their vote.

It is one thing for the UAW to buy a truckload of concessions at Cat, but it is another when we are buying it for other sectors of our union in their next bargaining sessions.