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CATERPILLAR MODIFIES FINAL CONTRACT OFFER TO SPAN SIX-YEAR PERIOD, EXTENDS CONTRACT BENEFITS

 CATERPILLAR MODIFIES FINAL CONTRACT OFFER
 TO SPAN SIX-YEAR PERIOD, EXTENDS CONTRACT BENEFITS
 PEORIA, Ill., Sept. 2 /PRNewswire/ -- Caterpillar Inc. (NYSE: CAT) said today it has informed the leadership of the United Auto Workers (UAW) that it is modifying its final contract offer to cover a period of six years. The contract offer had specified a three-year term.
 The modifications mean the proposed contract's cost-of-living adjustments, as well as improvements in pensions and other benefit programs, would be continued for six years, through Sept. 30, 1997, rather than for three years.
 Gerald S. Flaherty, Caterpillar group president, said the company modified the final proposal as a result of events during the nearly 12-month period since the expiration of the previous contract.
 "The passage of time, changing business conditions and altered internal operating procedures made the modifications necessary," Flaherty said. "Also, a six-year contract offers continuity and stability to our employees and to the company. It means the proposed contract would have the same term as the six-year job security we have offered UAW-represented employees and the moratorium on plant closings," he said.
 "A three-year contract would expire in 1994," Flaherty said. "We don't believe that anyone wants to face another round of negotiations with the possibility of another confrontation between the UAW and the company that soon."
 Under the extended contract proposal, UAW-represented employees would continue to receive quarterly cost-of-living increases that are projected to raise average hourly pay from $17.80 currently to more than $21 by June 1997.
 The modified proposal also includes a new incentive compensation plan beginning in 1995 that nearly triples the level of payouts available under the plan it replaces.
 The modified proposal no longer includes the Employee Satisfaction Process.
 "Employee involvement is fundamental to the success of any business, and we value the participation of all of our employees," Flaherty said. "But, by discouraging the participation of UAW-represented employees in the program and using it as a bargaining chip, the UAW leadership has in effect canceled the ESP program.
 "We will replace ESP with programs tailored to meet the needs of each of our business units," he added. "The company fully intends to continue to involve employees in efforts to make improvements in methods, quality, and other work-related issues not involving terms and conditions of employment."
 Flaherty said he hopes the UAW will offer a reasonable and comprehensive response to the modified proposal, and will abandon its insistence on outmoded "pattern" bargaining.
 "We believe this proposed contract is fair to our employees and at the same time, if everyone works together, will enable Caterpillar to remain globally competitive. We would like nothing better than to reach an agreement with the UAW on a contract incorporating the terms of our final offer," he said.
 "Caterpillar employees, both union and non-union, have demonstrated their commitment to the company and to their future by meeting challenging production schedules and producing quality products since the strike ended in April," he said. "Our final contract offer is the best in Caterpillar's history. We believe our employees will welcome these proposed contract modifications and the stability they would provide."
 The proposed contract modifications do not apply to Caterpillar's York Precision Bar Stock Plant. Flaherty noted that appropriate modifications have been made to the proposed York plant contract.
 -0- 9/2/92
 /CONTACT: Bill Lane of Caterpillar Corporate Public Affairs, 309-675-5813/
 (CAT) CO: Caterpillar Inc. ST: Illinois IN: MAC SU:


PS -- NY058 -- 6016 09/02/92 15:09 EDT
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Date:Sep 2, 1992
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