A Cat Fight With No Winners

The clash between Caterpillar Inc. and its unions is a needless mess. With its Japanese archrival Komatsu Ltd. eating dirt worldwide, thanks partly to the high yen, Cat's business is booming, and its employees are earning up to $40 an hour, some of the best pay in the country. Yet instead of being a great success story, this is a petty tale of managers firing employees for wearing buttons and of workers launching guerrilla strikes shutting down critical production. If this were a sandbox with two kids screaming at each other, it would make more sense.

The fact is, the Cat fight is a brutal battle for control. Compromise appears to be the last thing either side desires. Before the 14,000 United Auto Workers walked out on June 21, sales were soaring and workers were being added to the assembly lines. Now, an atavistic labor-management shoving match threatens everything.

Cat Chairman Donald V. Fites certainly had a powerful case when he began bargaining with the UAW three years ago. It made no sense, he argued, for Cat to adopt blindly the "pattern" contract the UAW had won at Deere & Co.--as Cat had done in the past. Why? Cat was a construction- equipment company competing around the world, while Deere was a mostly domestic farm-machinery maker. The union disagreed and proceeded with a strike of more than five months, which ended only when Cat threatened to hire permanent replacements. The workers got zilch toward their demand for job security, alienating them from the union.

Now the union is back, again asking for job security. This time, Cat, which has just hired 1,000 new workers to keep up with demand, appears in a position to grant it--but won't. By firing a stream of employees for wearing buttons and T-shirts that attack Fites, Cat has driven many members back into the arms of the UAW.

The union isn't behaving much better. It has refused to bargain seriously and has called a strike that seems as much motivated by macho posturing as does Fites's behavior. The discord at Cat is more about ego and power than labor costs or pattern bargaining. This is something no one--Cat, the union, or shareholders--can afford. Both sides should climb down from their high horses and get on with the business of making great equipment for which customers around the world are willing to pay big bucks.

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