UPDATE 1-Caterpillar workers strike; rejected signing bonus

Tue May 1, 2012 11:27am EDT

* 800 workers on strike after expired contract

* Caterpillar utilizing replacement workers

* Negotiations off indefinitely

* Offer included $5,000 signing payment, bonus plan

By John D. Stoll

May 1 (Reuters) - About 800 workers at a Caterpillar Inc plant in Joliet, Illinois went on strike early Tuesday morning less than two days after rejecting a six-year contract that included a $5,000 ratification payment and participation in the company's annual bonus plan.

The employees, represented by the International Association of Machinists and Aerospace Workers union, rejected the deal because it did not include sufficient pay raises and called for higher health care costs, a union official said. On Monday, the union and Caterpillar broke off negotiations indefinitely.

Caterpillar has responded to the strike by bringing in replacement workers so that it can continue meeting production schedules as planned, spokesman Rusty Dunn said on Tuesday. The workers on strike produce hydraulic components and systems for a variety of Caterpillar machines, including track-type tractors, wheel loaders and mining trucks.

Steve Jones, an official with the IAM Local 851, said about 50 workers showed up to the picket line in Joliet on Tuesday morning. No further negotiations are scheduled with Caterpillar, he added.

The labor dispute comes as Caterpillar is racing to fill growing demand in North America and in the global mining sector. While the company has experienced a slowdown in China, Europe and Brazil, it is relying on its strength in North America and its mining business to offset that weakness.

IAM's strike also follows a high-profile labor dispute that took place late last year between Caterpillar and the Canadian Auto Workers at a locomotive plant in London, Ontario. CAW workers voted down a Caterpillar offer, and the company ended up closing the plant and moving the work elsewhere.

'THE FINAL OFFER'

Caterpillar posted details of its proposed contract on an informational website: jolietbargainingupdates.cat.com. It listed key terms of the potential deal under the heading "Highlights of the final offer."

The top highlight -- "$5,000 up-front ratification bonus for all employees" -- has been crossed out with a red line because the contract was overwhelmingly rejected during a ratification vote Sunday night.

Last year, workers represented by the United Auto Workers at an Oshkosh Corp plant in Wisconsin rejected a contract offer that included a significant signing bonus. The UAW and Oshkosh eventually came to terms, but workers did not receive the ratification payment.

Other details of the offer that appear to still be on the table include participation in the company's so-called incentive compensation plan and "market-based wage adjustments" for employees hired over the past seven years. Workers hired before May 2, 2005, would have wages frozen.

Under terms of the agreement, Caterpillar would guarantee the Joliet plant would not close.

On Monday, the IAM's Jones told Reuters that Caterpillar's recent offer was rejected because it calls for "wage stagnation" over the next six years and higher health-care premiums.

"We're going to be in a much worse economic position six years from now than we are now," Jones said. Caterpillar has said its proposed deal represented a "competitive contract offer."

Shares of Caterpillar were down 55 cents at $102.22 in mid-morning trading on the New York Stock Exchange.

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