Excessive overtime and an ability to take vacation time on their own schedule are among the key issues driving the strike at two CNH Industrial plants in North America.
More than 1,000 United Auto Workers union members at plants in Burlington, Iowa (Local 807) and Racine, Wisconsin (Local 180) called a strike on Monday, May 2, only about two months after negotiations began with the manufacturer of Case and New Holland construction equipment. (For the latest updates on the strike, check equipmentworld.com.)
Ag Equipment Intelligence reported that UAW Local 807 President Nick Guernsey said he told his members to expect to be out of work for 3-6 months.
“I think what’s going to get CNH Industrial back to the table is when they start losing money, and they’ll probably start feeling it at 4 weeks. I’ve told my membership to expect CNHI to keep us out for 3-6 months,” Guernsey said.
CNH and UAW were apparently not close regarding the economic terms of a new labor agreement which eventually led to the union’s decision strike. Neither side has provided specific details as to where negotiations broke down although UAW workers are looking for increased wages, more flexibility on time off, reduced overtime and more awareness of a safe work environment.
“If we were close, we (UAW) would have granted an extension,” said Yasin Mahdi, president of UAW Local 180 in Racine. “When you're not close it really doesn't make sense to grant an extension. In the negotiations we were making significant strides to try and reach an agreement, and we just didn't sense the same type of movement within the company. We have tried to work with the company and make suggestions to them on how to make this all work for the members.”
For now, negotiations are a standstill, although CNH has indicated it is willing to come back to the table at any time.
UAW Local 180"The strike is very unfortunate, but we knew it was a possibility,” said Scott Wine, CNH Industrial CEO. “We certainly want to get our team in Racine and Burlington back as quickly as we can, but we built our plan so that we can operate.”
He noted that it is 2 of 38 plants, making it well below 10% of CNH’s global production and they are continuing to operate. Forecasts for Q2 of 2022 and beyond are not contingent upon the negotiations although they have factored in higher labor costs.
“We knew there was labor risk, we planned for those contingencies, and we'll continue to work as quickly as we can towards a negotiated settlement that's beneficial of all parties,” Wine said.
Some CNH workers and others see the situation as being like the John Deere strike which ended Nov. 17, 2021, after five weeks when the company agreed to a 20% wage increase over a six-year agreement with 10% occurring this year and a return to cost-of-living adjustments and 3% lump-sum payments.
Mahdi said he believes the agreement negotiated between UAW and John Deere was a fair agreement.
“I'm sure that the powers that be at CNH have studied Deere's agreement and reviewed some things Deere could’ve have done differently,” he said.
However, Wine said the big difference between the two situations is the larger percentage of hourly employees leveraged by the union at the John Deere facilities. For CNH, the UAW union workers represent about 20% of the workforce.
“We've got so many other factories where we can produce from and we’ve got our salaried workforce and contingent labor to help us serve our customers which is our primary goal,” he said.
Within hours of the strike being called, salaried, contingency, temporary or replacement workers were brought in to cross the picket line and keep operations going at both plants. However, with the current labor market and compensation not being comparable to other area manufacturers, Mahdi does not believe CNH will be able to attract the talent they need to keep production at the plants flowing smoothly for an extended period.
“It’s only so long that they can afford to pay scabs whatever they’re paying them that it will be sustainable,” he said. “When you lower the standards so low because you're not paying enough to attract the talent that you need, I don't foresee that ending well.”
Most of the UAW members are highly skilled and often compensate on the job to adjust to what Mahdi said is CNH’s inability to have good work standards or proper tooling. He said it is one of those instances where the members are not “covering up” issues but the company may not be aware of them because the union workers are performing so well that there isn’t an issue.
“Now, with those members being gone I'm sure that they will see these issues that they weren't aware of before,” said Mahdi.
Ultimately, he said, besides the members, it is the end users who suffer from a potentially inferior product being delivered because of the strike.
No matter the ongoing operation of the plants, Wine noted that CNH remains committed to reaching an agreement with UAW.
“We’ve had several weeks of good dialogue with UAW, and we believe we made a very fair offer,” he said. “We're continuing to be willing to negotiate and we're optimistic that we can resolve this. That's what we need to do for our employees and for our customers, but we can't look at Deere situation and say that's the playbook we're going to follow because it's apples and oranges.”
UAW Local 180
“We would like to say to CNH, we will be going in hard in these negotiations during the strike,” Mahdi said. “We don’t ever want to be unreasonable with what we’re asking for.”
Unlike the John Deere workforce, he said the CNH members are a bit younger, so retirement benefits, while significant are not one of the primary issues. Time off and health and safety remain near the top.
“We just want the members to be able to take time off when they need it from a vacation standpoint or to not work excessive overtime,” Mahdi said.
He recalled how during the pandemic, CNH was labeled as an essential business, meaning that allowed the workers to come to the plant and work while many other places were shut down.
“They were able to make that adjustment for the members and ensure that they could come to work during that time,” Mahdi said. “Now when it comes time to ensure that the members can take time off when they want, they have a problem with that. It's very sad when you work at a place for five years and get two weeks’ vacation, only for them to be able to dictate how you can use the vacation. It's things like that the members want changed.”
In terms of wages, union leadership has done some research into area manufacturers to learn more about wages and benefits within the area.
“We try not to look back in the past, but for some reason the company wants to keep us in the past with the compensation,” Mahdi said.
Despite inflation rising to record highs and prices for general goods matching those increases, the workers’ wage increases have not matched that. There is apparently no cost-of-living adjustment within the existing contract to ensure it adjusts with the market.
There are numerous jobs in the area that don’t require heavy assembly as is required at the CNH plants that offer better pay and benefits.
“There are definitely places where there's not any heavy manufacturing going on and they are being compensated more than our members,” Mahdi said, noting that from their research they found a janitorial position at one manufacturer in the Racine area that would be starting at more than one of CNH’s assemblers.
While unwilling to specifically state current starting wages Mahdi said based on current advertisements, Target is offering higher starting hourly rates for certain positions than is available at the CNH plants. Recent ads for Target have posted starting rates up to $24 per hour for certain positions.
“We just want to be comparable,” Mahdi said. “We always want to be fair; we don't ever want to be unreasonable with what we're asking for.”
He said in the past, working at Case’s Racine plant was a career choice. Families have long history at the plant and with the company. UAW would like to keep the plant as a premier place of employment.
"It was once thought that once you got in Case, it would be the place you would retire from,” Mahdi said. “It appears as though the company has no interest in making this place a career choice. I hope I'm wrong about that because we really want to maintain that. It ensures that quality product is going out the door because people have a vested interest in making sure that the doors stay open by building a quality product.”
The Local 180 president said they union leader just want to members to be paid appropriately, be able to take time off when they need it and not be working excessive overtime.
Those on the picket line remain in good spirts and appear ready to continue the fight for a fair agreement.
“I think the membership has complete faith in the leadership that they've elected and when we have met with the company, we have carried the memberships demands forward and did our best to try and come to an agreement with the company to satisfy the members requests,” Mahdi said. “I think as long as they have the faith in us that they have, I think they will remain strong.”
During the strike, the UAW does provide a weekly strike payment to members who are performing their strike duties. In addition, for now, the workers remain under the CNH health insurance plan. Some companies have been known to remove the union members from the plan during a strike. Should that occur, UAW does have a plan available. Although John Deere did not remove health care coverage, Mahdi believes CNH may take that action.
Despite the lack of current bargaining, there remains a strong belief among the union members that CNH will come around and at least try to meet some of their demands.
“I’m sure there are going to be things we’re unhappy about, however, there are some things we just can’t accept,” Mahdi said. “Nobody is looking to go buy a Rolls Royce after this agreement is ratified, we just want a fair agreement. We want to make sure that this is a place that's considered a career and not just a stopping point in somebody's life or something that they can just add to their resume and keep moving.”
Ultimately, he suggested that if CNH and UAW can come to a fair agreement, it would save CNH money from a warranty standpoint.
“The quality goes up and the defects go down,” Mahdi said. “It’s a win-win. When you have a happy employee, they’ll over deliver for you. Trust me, I understand that the company's got things that they had to look at to as far as cost.”
Mahdi added that if CNH pays now, it will likely pay dividends later. If the company doesn’t pay now, it is going to cost more down the line.
“The longer that they try and kick that can down the road the more money it’s going to cost,” he said. “I hope that the company comes to the senses and really takes some deep thoughts about what's fair.”