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Developments in industrial relations.

Developments in Industrial Relations

Aerospace update

In St. Louis, 11,000 workers were covered by a 3-year contract between the Machinists union and McDonnell Douglas Corp. containing terms similar to those the company unilaterally put into effect in March 1987 at three California plants.

The St. Louis accord provides for an immediate 3-percent wage increase and a lump sum equal to 3 percent of earnings during the preceding 12 months. This is followed by a 2-percent lump sum in the second contract year, and a 4-percent lump sum in the final year. Automatic quarterly cost-of-living adjustments now apply to all employees. Previously, adjustments had been denied to employees in lower pay grades to relieve a compression of pay rates between higher and lower grades. Pay averaged $12.95 an hour at the end of the prior contract, according to the union.

Benefit changes include a $3 increase in the monthly pension for each year of service for future retirees, annual payments of $200, $225, and $250 in the respective contract years to current retirees and an increase in the lifetime major medical limit for employees and their dependents.

McDonnell Douglas will continue to pay the full premium cost for health insurance. This is the major difference from the terms the company imposed at the California plants, where employees now pay $2 to $4 a week toward the premium cost.

Elsewhere in the industry, Bell Helicopter, Inc., a subsidiary of Textron, Inc., settled with the Auto Workers, ending a 3-week strike by 3,900 employees in Fort Worth, TX. The stoppage reportedly was triggered by a company demand that monetary gains be limited to lump-sum payments --countered by a union demand that the gains be only in the form of wage increases. The outcome was a compromise: a 3-percent immediate wage increase, accompanied by a lump-sum payment equal to 3 percent of employee earnings in the preceding 12 months, followed by a 2-percent wage increase and a 2-percent lump sum in the second year, and a 4-percent lump sum in the final year. The employees also received an immediate 14-cent-an-hour pay increase under the provision for automatic quarterly cost-of-living adjustments, which was continued.

Bell agreed to continue paying the full cost of the health insurance program, which was revised to give employees a choice of plans. (The company had been pressing employees to assume part of health insurance costs.) Changes also were adopted to hold down health insurance cost increases. Other benefit terms include a $5 increase in the monthly pension for each year of credited service, a $1,000 increase in the $18,000 life insurance coverage, a $200 increase in the $800 annual limit on dental benefits, and a $20 increase in the $170 a week sickness and accident payments.

Rockwell International Corp.'s Aerospace Group and the Auto Workers settled for 17,000 employees in Los Angeles and Santa Susana, CA, Columbus, OH, and Tulsa and McAlester, OK. As in the other settlements in the aerospace industry, monetary gains were a combination of wage increases and lump-sum payments. Effective immediately, the workers received a 3-percent wage increase that ranged from 30 to 55 cents an hour, plus a 15-cent immediate "travel' cost-of-living adjustment to counter the rise in the Consumer Price Index since the last adjustment under the previous agreement. The 3-percent increase and the 15-cent adjustment applied to all steps of the rate ranges for the highest 12 of the 18 pay grades, but only to the top steps of the six other grades.

The first lump-sum payment, in December 1987, is equal to 2 percent of earnings during the preceding 12 months, excluding pay for holidays and other "nonwork' time. The second payment, calculated at 6 percent of earnings, will be in August 1988, and the third, calculated at 5 percent, will be in August 1989.

Because of a higher rate of increase in health care costs in California than elsewhere, the parties agreed to some changes in the health insurance plan, including a new requirement that employees not enrolled in a health maintenance organization must pay a percentage of their covered expenses, up to a maximum of $2,500 for individuals and $5,000 for families. In another change applicable only to employees in California, the possible allowance resulting from continuation of the provision for automatic quarterly costs-of-living adjustments will be reduced if health care costs to the company exceed a target level, and increased if the costs are lower than the target. Possible cost-of-living allowances for the employees in Ohio and Oklahoma are not linked to health care costs.

Other changes included a $4 increase in the $19 a month pension for each year of service, applying to employees retiring on or after July 1, 1987, and flat $200, $225, and $250 payments in the respective contract years to employees who retired earlier; and a $3,500 increase in company-financed life insurance.

Maritime settlements

About 9,000 longshore workers in California, Oregon, and Washington were covered by a 3-year agreement between the Pacific Maritime Association and the International Longshoremen's and Warehousemen's Union. Wages were frozen during the first contract year, but employees who load and unload ships will benefit from a new method of calculating overtime pay. Under the old agreement, the workers were paid $17.27 for each of the first 6 hours of daily work, and time and one-half ($25.90) for each of the other 2 hours of their normal 8-hour shift, for an overall average of $19.43 an hour. Now, all hours will be paid at a flat $19.43 rate; hours worked in excess of 8 per day will be paid at time and one-half, or $29.15. The $19.43 hourly rate will rise to $19.83 in the second year and to $20.33 in the third year.

Reflecting management's concern about possible inroads by lower cost nonunion operators--such as those that have entered the Atlantic and Gulf Coast areas where the International Longshoremen's Association had a lock on work-- the parties agreed on terms intended to moderate labor costs. One such change reduces second and third shift pay to 1.3 and 1.6 times the daytime hourly rate (previously 1.5 and 1.8 times). In another change, casual employees and new regular employees with less than 1,000 hours worked in the industry start at $14 an hour, which will rise by $1 for each additional 1,000 hours worked. Also, employers were given more freedom in scheduling operations.

Under the wage guarantee plan, employees with at least 5 years of service will be assured 38 hours of work per week (previously 36 hours). Other employees will continue to be assured 28 hours of work. The major benefit change was a $4 increase in the monthly pension rate over the contract term for future retirees and a $3 increase for current retirees. The previous rates were $29 and $30 a month for each year of credited service to 33 and 30 years, respectively.

Elsewhere in the maritime industry, 11,000 sailors aboard deep sea vessels were covered by two settlements. The first accord, for 5,000 of the sailors, was between the Seafarers union and the American Maritime Association, which bargains for seven shipping lines operating 100 to 120 ships.

The 3-year accord provides for 2-percent wage increases in each year. The initial increase, effective July 1, 1987, brought hourly rates to $12.30 for sailors, $10.31 for cooks, and $17.99 for engineers. There also is a provision for cost-of-living pay increases if the Consumer Price Index rises more than 10 percent over the term. The companies also agreed to increase their financing of the health and welfare and pension plans to maintain current coverage.

The other accord, also running for 3 years, was between the National Maritime Union and the joint Maritime Service /Tanker Service Committee, which is made up of companies with about 120 ships.

This settlement also provided for 2-percent wage increases in each year, except that the first increase was diverted to help support the union's welfare plan. There also is a cost-of-living clause similar to that of the Seafarers.

Other provisions included a new defined benefit pension plan for sailors on dry cargo vessels (such a plan already is in effect for tanker sailors), and an additional paid holiday.

Air traffic controllers form new union

The Nation's air traffic controllers, engaged in continuing debate with the Federal Aviation Administration over working conditions and the safety and efficiency of the control system, apparently strengthened their position when they voted to form a new union. The tally was 7,494 votes for the new National Air Traffic Controllers Association and 3,225 for no union; there were 41 unresolved challenges. Election of officers is expected to be completed later in 1987.

John F. Thornton, who led the organizing drive, stressed that the constitution of the new union prohibits strikes because "times change, and our experience has shown that strikes against the government are not successful.' He was referring to developments in August 1981, when the predecessor union, the Professional Air Traffic Controllers Organization, went on strike in violation of Federal law, leading to the firing of 11,400 controllers who defied a return-to-work order. Later in 1981, Professional Air Traffic Controllers was stripped of its right to represent the employees and in 1982, it went into bankruptcy.

Federal Aviation Administration efforts to rebuild the system since then have been hampered by ever-increasing air traffic and the high attrition rate among trainees hired to replace the controllers who were fired. Prior to the firing, there were 16,200 controllers; currently, there are 13,665, plus a new corps of 1,467 assistants who perform some duties that controllers handled prior to the strike. The current force of controllers is weakened to some extent because 30 percent are still in training and must be supervised by certified controllers.

The new union is an affiliate of the Marine Engineers' Beneficial Association, as was the Professional Air Traffic Controllers.

Program guarantees 100-percent job security

In agricultural equipment manufacturing, Case IH and the Auto Workers adopted a Competitive and Secure Employment Program guaranteeing that employment in the six covered plants will be maintained at the May 1, 1987, level. Auto Workers Vice President Bill Casstevens said this was the first time the union had achieved its three-decade goal of "100 percent job security.' The union had, in recent years, won 90-percent job guarantees at Deere & Co. and Caterpillar, Inc., but these programs, unlike the Competitive and Secure Employment Program, do not protect employees against job losses resulting from "economic and market-place forces.'

Under the program, the initial guaranteed employment level is subject to increases and decreases during the 39-month term of the parties' new labor contract. Generally, the guarantee will be increased by one job whenever a recalled or newly hired employee attains 1 year of seniority and works 26 of any 52 consecutive weeks. Reductions in the guaranteed employment level will usually be at the rate of one for each job lost through attrition, excluding discharges. This is partly offset by a requirement that one person be recalled from layoff or a new person hired for every two jobs lost through attrition. Each year, Case is permitted to shut down all operations for a 4-week vacation period and for up to 6 weeks if required because of reduced sales.

The guarantee does not cover 2,400 jobs at three plants in Illinois, Iowa, and Indiana that are scheduled to close. The initial 3,700 jobs guarantee applies to four plants in Wisconsin, Minnesota, Iowa, and Illinois, and two parts depots.

In return for the new program, the employees agreed to several contract provisions intended to moderate Case's operating costs: more flexible work rules, overtime provisions, job assignments, and job bidding and transfer rules.

The accord does not provide for specified increases in earnings, which averaged $15 an hour, according to the union, but the workers did receive an immediate $250 "special' payment.

Under the Guaranteed Sharing Benefits plan, the employees will receive guaranteed allocations in April of 1988, 1989, and 1990, calculated at 20, 25, and 30 cents for each hour worked during the preceding calendar year. The allocations, which were previously contingent on Case's profitability, will be subject to investment in stock of Tenneco, Inc. (Case's parent firm) or in a tax-deferred savings plan, at the employees' option.

The guaranteed payments will also include a possible share of penalty payments if Case violates a new restriction on overtime work. Under the provision, the company will pay $5 into a fund for each overtime hour worked in excess of 5 percent of all straight-time hours worked during the particular year. Overtime work for plant additions and renovations, installation of machines, and similar operations will not be subject to the penalty provision.

Other terms included continuation of the provision for automatic quarterly cost-of-living adjustments, subject to a 55-cent-an-hour diversion over the term to help finance a training program and to help Case meet the overall settlement cost; improvements in pensions for current and future retirees; continuation of attendance bonuses (without the provision that had allowed eligible employees to take paid days off); and improvements in insurance benefits, including new optional employee-paid life insurance for those wanting to supplement their basic company-financed coverage.

Initial contract for catfish farm workers

In an event the Food and Commercial Workersviewed as a major victory in its organizing campaign in the South, the union negotiated an initial contract with the Delta Catfish Processors, Inc., in Indianola, MS. The settlement came 8 months after the union gained the right to represent the 1,150 workers. (See Monthly Labor Review, December 1986, pp. 36-37.)

The new 3-year contract provides for wage increases of 15 to 35 cents an hour in the first year and 10 to 20 cents in the second and third years. The total increases averaged 65 cents an hour, according to the union. Prior to the settlement, wage rates ranged from $3.35 to $3.95 an hour.

Other terms include adoption of a pension plan, financed by a 5-cent-an-hour employer payment beginning in the first year; an additional week of paid vacation after 5 years' service; two additional annual paid holidays, bringing the total to 7; adoption of a grievance procedure; establishment of a formal wage structure; resolution of various unfair labor practices charges the company and union had filed against each other; and reinstatement offers to 17 employees the Food and Commercial Workers claimed had been illegally fired during the organizing drive.

The company, owned by 160 catfish farmers, produces about half the Nation's catfish.

The union also represents workers at Pride of the Pond in Tunica, MS, who were organized shortly before the Delta Catfish election and for whom an initial contract was negotiated earlier in 1987.

Employees of steel supplier accept compensation cut

The continuing over-capacity and profit problems in the basic steel industry were reflected in a settlement between Eveleth Taconite Co., a supplier to the industry, and the United Steelworkers. Eveleth mines and processes taconite, a type of rock containing iron ore and other minerals.

The agreement followed a company threat to close the Eveleth, MN, operations. It provides for a $1.60 an hour cut in employee compensation--including a 99-cent-an-hour reduction in wages, bringing average pay to $12, and revisions in pay and insurance.

In return for accepting the cuts, the 625 employees won a profit-sharing plan linked to USX's profits or, if USX does not earn a profit, to the stock price of Bethlehem Steel and LTV Steel. A gain-sharing program also was established under which the company and the workers will equally share any savings resulting from cuts in controllable costs. Eveleth Taconite is operated by Ogleby Norton Co. of Cleveland.

Weyerhaeuser accord

The lead-off agreement in the round of bargaining in the West Coast pulp and paper industry froze wages for 2,000 Weyerhaeuser Co. employees in Oregon and Washington, but provided for an immediate $650 lump-sum payment and for possible annual incentive payments. The payments, ranging up to 4 percent of the employee's earnings during the preceding 12 months, will be calculated separately for each of the five mills and will be based on quality, output, safety, and production costs.

The 2-year contract, negotiated by the Association of Western Pulp and Paper Workers, also provided for improvements in pension and health and welfare benefits.

The incentive pay approach comes 1 year after Weyerhaeuser and the Woodworkers and Lumber Production and Industrial Workers unions negotiated a profit-sharing plan for 7,200 lumber and plywood workers in 2-year contracts that cut pay and benefits an average of $3.90 an hour. According to a Woodworkers' official, most employees have benefited from the plan but the payout has varied among mills.

Elsewhere in the forest products industry, work stoppages involving more than 3,000 workers began at International Paper Co. mills in Jay, ME, Mobile, AL, DePere, WI, and Lock Haven, PA, as the United Paperworkers union resisted demands for compensation cuts the company claimed were necessary to aid in countering increasing international competition. Previously, International Paper had negotiated with the union on a plant by plant basis, but the union said it will now coordinate bargaining at all locations on key issues and combine the results of contract ratification votes into a single total.

Employers in Maine must pay severance benefits

In a 5 to 4 decision, the U.S. Supreme Court upheld a Maine law requiring employers to pay severance benefits. Under the law, owners closing plants employing at least 100 workers or relocating such operations more than 100 miles away must provide 1 week's pay for each year of service to employees who had worked at the affected plant for at least 3 years. The law does not apply to employees who accept jobs at the new location or to employees covered by a labor contract that deals with severance pay.

The case, Fort Halifax Packing Co. v. Coyne, arose in 1981 when the company closed a poultry processing plant and did not distribute severance pay to affected employees.

In its appeal to the Supreme Court, Fort Halifax Packing, joined by the U.S. Department of Justice and the U.S. Chamber of Commerce, argued that the Maine law was preempted by a Federal law, the Employee Retirement Income Security Act of 1974 (ERISA) which broadly regulates severance and other employee benefit plans. The company also contended that the Maine law was preempted by the National Labor Relations Act, which regulates collective bargaining.

Writing for the majority, Justice William J. Brennan, Jr. said that the Maine law did not fall under the preemption clause of ERISA because the severance payments are made on a one-time basis, rather than being part of a plan providing for "ongoing benefits on a continuous basis.' Justice Brennan also found no conflict with the National Labor Relations Act, rejecting company arguments that the State requirement interfered with collective bargaining by undercutting an employer's ability to withstand a union's demand for severance pay.

Writing for the minority, Justice Byron R. White said that the Court's decision had created a "loophole that will undermine Congress' decision to make employee benefit plans a matter of exclusive Federal regulation.'

Court upholds decision on incumbent unions

The U.S. Supreme Court approved the National Labor Relations Board's broad interpretation of a 1972 decision by the Court making it difficult for companies that acquire the assets of another company to avoid dealing with incumbent unions.

The case, Fall River Dyeing v. NLRB, began in 1982 when Sterlingwale Corp., an unprofitable Massachusetts textile firm closed. Seven months later, a former vice president and a former customer of the firm acquired the plant and equipment and formed the Fall River Dyeing and Finishing Corp. The new company refused to bargain with United Textile Workers Local 292, which had represented employees at Sterlingwale. The union then complained to the National Labor Relations Board, which ruled that the union had retained the right to represent workers at the new company.

Responding to Fall River's appeal, Justice Harry A. Blackmun, writing for the majority, said that the company was a "substantial continuity' in operations, and was obliged to bargain with the union when it started operations because a majority of its employees were formerly with Sterlingwale.

In dissent, Justice Lewis F. Powell, Jr., joined by Chief Justice William H. Rehnquist and Justice Sandra Day O'Connor, said that the new company was "a completely separate entity' from Sterlingwale, and that requiring Fall River to recognize the union at the beginning of operations deprived employees of the right to select their union.
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes aerospace, maritime, air traffic controllers, catfish farm workers, steel industry, and others
Author:Ruben, George
Publication:Monthly Labor Review
Date:Sep 1, 1987
Previous Article:Strong employment growth highlights first half of 1987.
Next Article:The responsive workplace: employers and a changing labor force.

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