South Milwaukee — Union members at Caterpillar Inc.’s plant in South Milwaukee have voted to accept a six-year labor contract that freezes wages and pensions but includes a $4,000 signing bonus and shortens what’s allowed in temporary layoffs.
Tuesday’s vote by United Steelworkers Local 1343 came after the union representing about 800 employees at the mining equipment plant turned down a similar proposed contract in late April.
It was a closely watched decision because it was the first contract since Caterpillar, known for tough labor negotiations, acquired the factory as part of its $7.6 billion purchase of the former Bucyrus International in 2010.
Union officials did not disclose a vote tally but said about 95% of the eligible members cast ballots and the contract was accepted by a majority vote, even if it was a slim margin.
“It was very close, ” said Ross Winklbauer, a Steelworkers subdistrict director.
Compared with the previous offer, the new contract shaves four weeks off the time the company is allowed for temporary layoffs, from 14 weeks to 10 weeks per year.
During those layoffs, employees will get $85 for one day or $170 per week to supplement their unemployment checks.
The contract ratification bonus was increased from $2,500 in the previous offer to $4,000 payable in installments in July and November.
Hourly wages are frozen at current levels, with senior employees earning between $18 and $34 per hour and future hires paid under a separate and lower wage scale.
Employees will be eligible to receive annual bonuses based on the company’s performance. Those bonuses could reach $18,000 per person over the life of the contract, according to the company.
Union leaders said any improvement from the previous offer was a victory, given that Caterpillar has a history of tough bargaining at its plants, and the mining equipment industry is currently in a slump.
“I don’t know if successful is the right word to describe this contract because we aren’t thrilled over it. But we were successful in getting rid of some very major things,” Winklbauer said, including the company’s demand for supplemental workers and changes to work schedules.
The company also wanted unlimited use of layoffs, according to union officials.
“We got them down to 14 weeks and then 10 weeks per year,” Winklbauer said, adding that 52 of the 60 weeks of allowed layoff time over the contract’s duration would be eligible for supplemental pay.
The Steelworkers union has represented employees at the South Milwaukee plant for decades.
“The bargaining committee did a hell of a job. I believe if the committee hadn’t recommended the contract, it probably would have been voted down again,” Winklbauer said.
“This wouldn’t have been a good contract with Bucyrus, but it was one of the best Caterpillar contracts.”
Caterpillar officials said the agreement was fair and comprehensive.
“We won’t speculate on what could have been,” said spokesman Jim Dugan.
Both the company and the union had a lot at stake in the negotiations, considering the contract could become a template for other factories in the Caterpillar system.