More than 4,000 UAW members at 11 local unions in six states went on strike againstTuesday at 5 p.m. The strike against , holding company for International Truck & Engine Corp., highlights the growing and contentious issue of cost reduction as U.S. manufacturers seek ways to improve competitiveness.
The primary impetus for the strike was Navistar’s relocation of a portion of its truck production out of unionized U.S. plants to non-union facilities in Texas and Mexico. “International Truck and Engine has shredded our agreement, shipped our work out of the country, and trampled our nation’s labor laws,” noted UAW President Ron Gettelfinger.
The UAW represents employees at nine International Truck and Engine facilities: Indianapolis, IN (engine assembly and foundry), Melrose Park, IL (engine assembly and engine engineering), Springfield, OH (truck assembly), Atlanta, GA, York, PA, Dallas, TX (parts distribution centers) and Fort Wayne, IN (truck engineering).
Navistar, however, sees this as an issue of competitiveness. “Changes we’ve proposed are already in place at other UAW-represented manufacturers in our industry,” said Jeff Bowen, International’s vp-human resources, on Oct. 4 when the union broke off contract negotiations. Bowen said the company and union engaged in various periods of negotiations for more than two years, attempting to reach agreement on changes that would improve the competitiveness of International’s UAW-represented facilities.
Bowen said International’s proposals would maintain a good quality of life for employees and retirees and improve non-competitive issues at its union plants.
Competitiveness and cost reduction were at the heart of labor deals the UAW struck with General Motors earlier this year, also after holding a two-day national strike against the automaker.
As part of its deal with the UAW, GM wanted to cut or erase what it said is about a $25-per-hour labor cost disparity with its Japanese competitors. The OEM got most of what it needed, shifting the majority of its $51- billion un-funded retiree health care obligation to a UAW-run trust. The union will invest the money and take over the health care responsibility for about 340,000 GM hourly retirees and spouses.
According to JP Morgan analyst Himanshu Patel, quoted by Reuters, GM could eventually save up to $5 billion annually under the terms of what he called a “clearly transformational” four-year labor deal. This would allow GM to offer buyouts to UAW workers and then hire new workers at a sharply lower cost of $26 per hour, compared to the $78 per hour it pays for current employees, saving $1.8 billion annually by 2011.