 Experience …Laborer and Equipment Operator …Education – Business …Caterpillar Graduate Training Program …Caterpillar, Beckwith Machinery and Cleveland Brothers Equipment Company  Vice President …Labor Management Relations  Background  Neutral Position …Stakeholders are more important …Interest Based Bargaining Preference …Understand Traditional Adversarial Approach

 HERE AS A UNION STEWARD  HE IS A LEADER RESPECTED BY HIS CONSTITUENTS AND THE COMPANY ALIKE  A BUSINESS MAN  A FAMILY MAN  A FRIEND (RESPECT)

Resistance to Change can cause you to earn the horse’s ass trophy!

More than 2,000 years ago!

SRC(s)

Rocket Train

Failure to change could earn a person or an entire organization the rear end or horse’s _____ trophy

WHO, WHAT, WHEN, WHERE, HOW + WHY n WHEN – 1998 n HOW - THE IBB PROCESS –MODIFIED TO MEET OUR NEEDS INCLUDING OUR UNIQUE PERSONALITY AND CHARACTERS

n Independently Owned n Exclusive Service Territories n A Typical Model –1500 employees –700 Sales –Parts + Service –Sales –Administrative Functions

The Indiana Plant

You might not want that quick yes n The Business Model is Important to both Sides WHY ?

PICK AND CHOOSE YOUR BATTLES n WORK RULES –OPERATIONAL EFFICIENCY –CUSTOMER SATISFACTION n BOTH MUST ADAPT TO BUSINESS MODEL CHANGES n ECONOMICS

 WAGES  HEALTH INSURANCE  PENSION  BUSINESS CYCLE MANAGEMENT

WAGES

WAGE INFLATION PREVIOUS CONTRACT 20.9% Increase Including production bonus of $ average wage is $ % increase

WAGE INFLATION % Increase 15.3% Increase

WAGES  COMPANY PERSPECTIVE WAGE SPIRAL ABOVE CPI  EMPLOYEE PERSPECTIE: SENIOR EMPLOYEES LESS THAN INFLATION  ALTERNATIVES: …USE A COMBINATION of:  MERIT, ANNUAL and SELF STUDY  ELIMINATE RESTRICTIVE WAGE CAPS  LOWER ENTRY WAGES  NOT PERFECT, BUT SIGNIFICANT IMPROVEMENT

HEALTHCARE

WAGE AND HEALTH INS. PER HOUR > $4.71 / hr. = 25.3% > $3.42 / hr. = 20.9%  $ 1.30 / hr =58% CPI = 15.3%

HEALTHCARE  NOT A SILVER BULLET AVAILABLE  EXPLORE OPTIONS  RETAIN COVERAGE  SHOP PROVIDERS WITH THE AID OF A CONSULTANT  SHARE PREMIUM INCREASE

RETIREMENT

Situation n The Company fears the potential risk associated with Multi-Employer Withdrawal Liability –Will resist any attempt to increase contributions n It appears that employees would improve their retirement funding based upon an actuarial analysis of Multi-Employer benefits compared to alternative investments

Alternatives n What if you represent an employee whose monthly retirement benefit at age 65 would increase from $58.34 per month to $ for a total increase of $ per month n ????? n EXPLORE ALTERNATIVES –401K –PROFIT SHARING

BUSINESS CYCLE ADAPTATION ADJUST EMPLOYMENT LEVELS TO MEET CYCLICAL BUSINESS CONDITIONS.

BUSINESS CYCLE  CONTRACT STATES 40 MANDATORY  DEMAND VARIANCE >50% and < 75%  SENIORITY BASED LAYOFF PROBLEMS …50% of workforce above 50 years old …Was difficult to hire, train and retain new employees …Younger employees will leave if an extended layoff is incurred. …Company will not be able to ramp up production

Early Retirement and Replacement of (4) Employees n Average Wage of (5) Retired$22.78 n Average Wage of Replacement$15.22 –(5) least Senior Employees n Average Wage Savings$ 7.57 n Annual Savings 33.5 % –(5) * 2080 hrs * $7.57 =$79,643 –The allowed time reduction for the less senior employees is not included –One time severance not included

Voluntary Layoff 3 months and 3/1 Week n 3 Month Layoff equates to a 25% pay decrease n 3 week on: 1 week off also = 25% decrease n Assumptions –58 Total Employees –Need to layoff 30% or 17 Employees –Savings for 5 retired employees excluded

Voluntary Layoff 3 months and 3/1 Week Average Wage of senior (41) $21.47 / hr Average Wage of all (58)$19.83 / hr. Difference$ 1.65 / hr. Savings (41) Most Senior Employees$ 1,831,107 (41) Rotating Employees$ 1,690,778 Total Savings$ 140,328

Summary n Early Retirement Savings $ 79,643 n Voluntary Furlough $ 140,328 n Total Savings $ 219,971