CNH Industrial says it has a contingency plan to minimize impacts on its operations as the strike at its Burlington, Iowa, and Racine, Wisconsin, plants continues.
The manufacturer of Case and New Holland construction equipment is attempting to negotiate a new labor agreement with the United Auto Workers members at the two plants.
“The very nature and purpose of a strike is to disrupt our business and create concern amongst our customers,” said Scott Wine, CNH Industrial CEO, during a conference call reviewing the company's first-quarter financial results.
Despite the intent, he said CNH is determined to satisfy its commitment to its customers, the communities it serves and other employees.
“It is our intent to continue operations; our dealers and customers certainly need us to,” Wine said.
No details were provided as to what the company’s contingency plan is; however, it is common practice for companies to hire temporary or replacement workers during a strike or lockout out employees while continuing operations. During past strikes, CNH has used both options.
UAW did not respond to a request for comment on any concerns related to either of those scenarios. With labor harder to find and replace and supply chain challenges, the current economic climate may give the union more leverage.
“Dealer views on the ag and construction equipment economies generally remain robust and positive, which is validated by our order books,” Wine said. “We endeavor to get them the products they need for our customers and will be judicious in managing their inventories as we do.”
The current six-year labor agreement at both the Burlington (UAW Local 807) and Racine (UAW Local 180) facilities expired at midnight April 30. The agreement covers about 1,100 hourly employees.
Wine said the contract negotiations had “hit a roadblock.”
“We had several weeks of constructive dialogue, but when the contract expired, we remained very far apart on some important issues,” he said.
Negotiations on a new labor agreement at the two facilities reportedly began April 4, although some reports suggest the process had started some months earlier. At the onset, company officials expressed some optimism in reaching a competitive and fair agreement with the workers.
However, after a noon deadline passed May 2 with no agreement, workers at both plants walked out on strike.
“Monday morning, we were advised by the union of their decision to call the representative employees out on a strike,” Wine said, adding that CNH officials were disappointed in UAW’s decision.
“Despite that, CNH Industrial is committed to reaching an agreement with UAW,” he said. “We have made ourselves available to meet at the bargaining table at any time.”
The strike authorization vote, which granted union leadership to call for strike if deemed necessary, was held April 10. Across the two plants, more than 95% of membership were supportive, just days after negotiations had reportedly begun.
Like the John Deere UAW workers who went on strike in October 2021, they are looking for higher compensation related to the company’s success and improved retirement benefits.
The 10,000 UAW members who went on strike against Deere & Company ultimately agreed after a five-week strike to a new six-year agreement that included an $8,500 signing bonus, 20% increase in wages over the lifetime of the contract with 10% of that increase occurring this year, a return to cost-of-living adjustments and three 3% lump-sum payments. Union members also received enhanced retirement options and additional increases in Deere's incentive compensation plan.
UAW members at both the CNH facilities and other manufacturers were paying close attention to that situation. A contract with UAW and Caterpillar reportedly expires in 2023.
The last strike at the two CNH facilities occurred in 2004. At the time, a 72-month contract between CNH Industrial and plants in Iowa, Wisconsin, Minnesota and Illinois expired on May 2, 2004. Although workers overwhelmingly rejected a “final offer” from the company on May 8, no strike was called until November 2004.
After 19 days, UAW workers agreed to end the strike after CNH reportedly said talks were at an impasse and appeared to be willing to continue to negotiate. The company then locked out the workers while continuing operations with temp workers and salaried employees. The lockout lasted an additional 17 weeks and concluded with a new labor agreement that was only slightly adjusted from the company’s original final offer.