The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Caterpillar:
Holding retiree health care hostage to take concessions from everyone

Feb 7, 2005

UAW negotiators reached an agreement last month on a new contract with Caterpillar. The contract contains major concessions. It includes an even worse two-tier wage scale than the one Caterpillar workers accepted in 1998. New hires will start at $12.24 per hour compared with $21.79 per hour for older workers. What's worse is they will never reach the full wage scale, as they could under the previous contract. Workers will also give up certain bonuses they received under the previous contract.

This is the third agreement union negotiators have reached with the company. The two previous times, while some local officials were ready to oppose the contract, representatives of the UAW International took a hands-off approach. Both times there was a big vote against the contract.

So in September, Caterpillar upped the ante, suddenly announcing that the fund that it pays into for retiree health benefits was out of money. It unilaterally imposed health care premiums on retirees of $270 per month!

The company then came back with essentially the same contract. This time, the International reps who went to the locals argued there was no choice. If workers did not accept the concessions, it would mean that retirees would have to keep paying high premiums for their health care.

The new contract will not save retiree health benefits. It's true that under the new contract retirees will "only" pay $118 a month in premiums – to start. But because of language in the contract it is estimated that people already retired will pay $332 per month by 2010.

Active workers will also have to pay health care premiums for the first time, $66 per month.

In exchange for supposedly bailing out current retirees – which it really doesn't – this contract drives a wedge between older and younger workers. Who's to say that the next time the company attacks the wages and benefits of older workers and current retirees that the younger workers won't ask, "Where were you when I was under attack?"

If there's anything positive to come out of this contract, it's the fact that the Decatur local voted it down 2 to 1. Given that the overall vote was only 59% in favor, in a vote that is never closely monitored, it shows there are some more workers who are ready to say NO to demands for more concessions.

They are right to say NO. Caterpillar has plenty of money to pay for retiree health benefits. It made a billion dollars a year in profit during the previous six-year contract.

If this major company, which is not even claiming bankruptcy, gets away with these kinds of cuts, we are only a few years away from companies doing away with retiree health benefits altogether. This contract is a warning to every worker who currently has medical benefits on their pension – they're coming for you next!