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UAW Dispute With Caterpillar Just Crawls Along : Labor: Strike at maker of earthmoving equipment exemplifies simmering battles between old-line unions and industrial behemoths.


EAST PEORIA, Ill. — On the picket line outside Caterpillar's sprawling tractor plant, John McCoy uses his head to display his disdain for his employer of 29 years: He wears a John Deere cap.

Just up the street, a union billboard painted in Caterpillar's bold yellow colors announces: "You are entering a war zone. Caterpillar vs. its UAW employees."

Such are the symbols of the nation's longest ongoing labor confrontation. Caterpillar and its 14,000 United Auto Workers union members have been at a bitter impasse for nearly three years. And there is no end in sight.

The labor strife escalated last month when the UAW announced a nationwide strike affecting 12 plants in Illinois, Pennsylvania and Colorado.

In part, the walkout appears timed to focus attention on Caterpillar just as the U.S. Senate is considering legislation--already approved by the House--that would bar companies from hiring permanent replacements for striking workers. The UAW ended a 163-day strike in 1992, when Caterpillar threatened to do just that.

But the strife at Cat--the world's largest producer of earthmoving and construction equipment--has deeper roots.

It exemplifies the long-simmering battles between powerful old-line unions that want to keep hard-earned wages, benefits and protective work rules and industrial behemoths seeking the cost controls and flexibility to be globally competitive.

Over the last decade or more--with the UAW's complicity--Caterpillar has modernized its factories, reorganized operations to improve efficiency, boosted exports and earned record profits. But those gains could be fleeting unless the company achieves a lasting labor peace.

While the dispute is centered in Peoria--the world headquarters of Caterpillar and a working-class city that has long symbolized Main Street, U.S.A.--the outcome will have a much broader impact, particularly for organized labor, whose clout has declined dramatically in the past 20 years.

The standoff is unusual--not only for its length and complexity, but also because it seems a throwback to another era, when contract disputes led to long strikes with macho displays of raw, muscular power. Labor experts say the trend today is toward labor-management cooperation, not confrontation.

Indeed, Caterpillar workers, even those on the picket line, do not come across as firebrands. Many have grown weary of the dispute and complain of being pawns in a power struggle between union leaders and company management.

Caterpillar has a long history of poor labor relations. In 1982, the UAW struck for more than 200 days.

But as the industrial Midwest was decimated by recession and foreign competition in the 1980s, labor and management at Caterpillar made a major effort at teamwork. One example: an employee involvement program in which management solicited the ideas of shop-floor workers to improve factory operations and efficiency.

Such cooperation, however, halted in 1991 when contract talks broke down. The reason: Caterpillar refused to accept a "pattern" contract that the UAW had negotiated with competitor John Deere & Co. and expected to impose on Cat.

In November, 1991, the UAW struck Caterpillar plants in East Peoria and Decatur, Ill. The strike eventually spread to other plants, with salaried workers stepping in to run production lines. By the following February, the company had declared an impasse and implemented its last contract offer. Caterpillar told all workers to return, saying it would replace those who did not.

As thousands of applications poured in for replacement jobs, about 1,000 UAW members crossed the picket lines. The union ended the strike.

The two sides still have not returned to the bargaining table. Up until the recent walkout, an unstable peace existed in the plants. The union had urged employees to "work to rules," doing no more than required to keep one's job. Managers were vigilant of any attempts to disrupt operations.

Despite the labor strife, Caterpillar has flourished under the leadership of Chairman Donald Fites.

The company spent nearly $2 billion in upgrading its plants in the last seven years. It expanded overseas, with half its sales coming from abroad. It reorganized into 13 product centers that have improved its ability to respond to market changes quickly. Last year alone it introduced 46 new products. Manufacturing time was cut four-fold in six years.

Profits soared in 1993 to $652 million, after two years of losses. Cat's revenues were $11.6 billion, up from $10.2 billion in 1992. In the first quarter of 1994, Caterpillar earned a record $192 million, its sixth consecutive quarter of higher profits.

The company is clearly concerned about the lingering labor conflict. Both the company and union agree that the strife has not hurt quality, but productivity has suffered.

"We've taken the steps necessary to compete globally," said spokesman Terry Thorstenson. "We are quick. We are agile. The only unresolved issue is a signed labor agreement."

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