Cat, UAW Reach Tentative Agreement on Six-Year Deal

Mon December 20, 2004 - National Edition

EAST PEORIA, IL (AP) Caterpillar and the United Auto Workers union reached tentative agreement Wednesday, Dec. 15, on a new six-year deal for workers in four states on the job without a contract since May, the company said.

Negotiators for the two sides struck a deal after two days of negotiations that included a marathon 14-hour session Dec. 15. Neither side disclosed terms of the agreement, which followed more than a year of negotiations.

The proposed deal would cover more than 9,000 workers in Illinois, Colorado, Pennsylvania and Tennessee.

Talks had stalled over a proposal that would require workers to contribute to their health care coverage for the first time, along with a two-tiered wage scale for workers hired under the new contract.

Peoria-based Caterpillar said in a statement that the tentative agreement includes wage, cash and benefits gains for both active and retired employees.

Caterpillar chief negotiator Chris Glynn called the deal “very fair and reasonable.”

“We faced some complex issues over the past year and through comprehensive discussions with the union have developed solutions that respond to the current and future needs of our employees and retirees while also enabling the company’s long-term competitiveness,” Glynn said in a statement.

Workers had remained on the job under the terms of their old contract. Both sides have said they wanted to avoid a work stoppage after the bitter, 6 1/2-year stalemate with two failed strikes that preceded their last contract in 1998.

Two earlier company offers were overwhelmingly rejected by workers. Union negotiators put both of those deals to a vote without recommending for or against the deal.

Union officials declined comment on whether bargainers will recommend the latest proposal. But Glynn said the tentative agreement is “one that both the union and company believe is worthy of our employees’ support.”

Workers said the company’s earlier proposals to shift health care costs were too steep, especially for retirees on fixed incomes. Caterpillar said costs were approximately a third of national averages, and that nearly 80 percent of U.S. employees now contribute to their medical coverage.

The two-tiered wage scale would pay new hires and current supplemental employees less than veterans doing the same job, which workers argued would create friction in plants. Caterpillar countered that the wage scale is needed to stay competitive in its global market and is above industry standards.

The talks that resumed the week of the agreement were the first since workers rejected Caterpillar’s “last, best and final offer” in August.

After the vote, Caterpillar said it would not modify the failed offer, but later held out the possibility that it might be willing to budge if the union made a counter offer.

After a first deal was rejected in May, Caterpillar added approximately $45 million in pay and benefits.

Hours before the tentative agreement was announced on Dec. 15, Caterpillar shares rose $1.18 to close at $94.88 on the New York Stock Exchange, its highest level in a year.