Chicago Tribune, December 12, 2004, Sunday

Copyright 2004 Chicago Tribune Company
Chicago Tribune

December 12, 2004 Sunday
Chicago Final Edition

SECTION: BUSINESS ; ZONE C; Pg. 1

HEADLINE: Lockout weapon;
A strike once was a union's most powerful weapon, but employers are trumping that move by keeping workers out and hiring replacements for them

BYLINE: By James P. Miller and Stephen Franklin, Tribune staff reporters.

DATELINE: RACINE, Wis.

BODY:
Outside the chain-link fence that surrounds CNH Global NV's farm-equipment plant here, a dozen men and women in thick jackets and wool caps are wielding bold-lettered signs, stamping their feet and hunching their shoulders against the cold.
When passing cars honk their horns in a sign of support the workers, members of the United Auto Workers union, waggle their signs in return.
At first glance, the scene in front of the looming gray-metal CNH facility appears to be a classic labor strike. But these workers are not on strike. They are unemployed, and none too happy about it.
"UAW LOCKED OUT," their signs read.
The CNH employees want to work, but the company has told them to stay home, without pay, until they agree to a new contract. In the meantime, the Lake Forest-based maker of Case and New Holland brand farm and construction equipment is keeping the production line going with the help of replacement workers it brought in.
CNH's maneuver is known as a lockout. A lockout is essentially the flip side of a strike: Once a labor contract expires, the workers are free to withhold their labor by striking, but the employer is similarly free to close the workplace to the unionized employees.
The owners of the National Hockey League, for example, have locked out NHL players for the past 12 weeks, and many people think the entire season will be lost.
Once a nearly unthinkable management tactic, the lockout gradually has grown more common.
"Clearly, employers are very aggressively using the lockout. They are willing to take on unions," said UCLA labor expert Ken Wong, citing California employers' recent lockouts in disputes with grocery store workers and hotel workers.
Employers frequently hire replacement workers at the same time they impose a lockout, so that they can ride out the labor fight without losing production.
That tactic has proven so successful that many unions have grown afraid to strike.
As the auto workers at CNH have discovered, to their dismay, the strike, once a powerful last-resort weapon for labor, has turned into a dangerous two-edged sword that often does more harm to the workers than to the employer.
Lost leverage
The trend reflects unions' diminishing clout, experts say.
As unions have grown smaller over the past two decades, companies see fewer strikes and are less threatened by the handful they do face, said John Raudabaugh, a Detroit-based management attorney and former member of the National Labor Relations Board.
Companies don't fear employee walkouts as they once did because "there are too many ways to ride out a strike," he said.
In earlier times, when organized labor was more prominent in public opinion, companies shrank from using the lockout for fear that they might be portrayed as bullying workers.
"Lockouts," said Raudabaugh, "for years were not really part of management's arsenal."
They are now. Many experts say that the use of replacement workers lost much of its stigma in 1981 when President Ronald Reagan fired and replaced striking air-traffic controllers who refused to return to work.
And the shift in leverage is apparent in the lockout of 650 workers at CNH's plants in Racine and Burlington, Iowa.
After months of fruitless talks, during which the workers continued to toil under terms of their expired contract, the CNH workers went on strike Nov. 3.
The strike was a surprise to CNH, which has 10,000 employees worldwide and is controlled by Italy's Fiat group.
"They told us at 10 o'clock in the morning they were going out at noon, and at noon they went," said a company spokesman.
Replacement strategy
Twenty or 25 years ago, once the picket lines went up, both sides would have hunkered down to see who gave ground first. The employer would have no product to sell, and the striking workers would get no paychecks. The mutual economic pain ensured that both sides eventually would come back to the table.
But times have changed, and CNH did not hunker down. Instead, it resumed production one week after the strike began, using salaried employees and temporary replacement workers.
And 10 days after buses full of temporary replacements first began rolling through the plant gates, the company declared the contract talks to be at an impasse. Under federal labor law, that assertion allows the company to turn those temporary replacement workers into permanent hires.
An impasse also allows a company to unilaterally impose a contract, putting workers in a take-it-or-leave-it situation.
CNH hasn't made the temporary workers permanent, but it has declared effective some of the terms contained in its unpopular contract proposal. Still, the message was clear: The striking workers' jobs were officially on the line.
Within hours of the company's "impasse" announcement, the strikers announced that they were ready to return to work. There was no impasse, they argued, because the two sides hadn't explored all options.
But CNH responded by telling the workers, in essence, to stay home until they were ready to accept what the company has called its final offer. And cynics note that the workers' offer to return could bolster a union appeal of the company's action.
Though insisting it is committed to the negotiation process, CNH said, "We do not think it is appropriate at this time to allow striking employees to return to work while the parties remain so far apart."
After the end of all that maneuvering, the striking workers were no longer strikers, because they had asked to come back to work but been spurned. They were unemployed.
Although their applications for unemployment compensation initially were rejected by the State of Wisconsin, the locked-out Racine workers last week received approval to collect jobless benefits.
"I think it's the lowest of the low," John Valko, president of UAW Local 180 in Racine, said of CNH's actions. Valko was sitting in the union hall, where deer-hunting magazines sit on the tables and a sign on the blackboard tells workers that if they're having problems making payments, "Horizon Credit Union will work with you."
Workers manning the union's informational picket line outside the Racine factory feel the same way. It's particularly unfair of the company to take a hard line, they say, because the union has already granted a host of concessions intended to lower CNH's operating costs.
"It's an insult to us," fumed Mike Callahan, who works in the tool room at the factory.
"We've given up so much," said another worker. "It's kind of doggish of them" to lock out the workers, he added.
Doggish or not, the use of replacement workers, coupled with a lockout, has become a potent negotiating tool for employers. Just as union workers typically make a big show of voting to authorize a strike they hope won't be needed, employers often advertise for replacement workers--and sometimes hire and begin training them--while contract negotiations are under way.
Companies shut out their workers, said Rick Hurd, a labor expert at Cornell University, "when they think they have more leverage than the unions." These days, he said, unions much prefer to work without a contract rather than risk a strike, he said.
Such concerns are the reason why 9,000 UAW-represented workers at Caterpillar Inc. are playing it safe, staying on the job even though their old contract expired last spring, and even though the Peoria heavy-equipment manufacturer has refused to alter contract proposals the workers twice have voted to reject.
Caterpillar battle
Indeed, among blue-collar unions, the strike almost has become a mirage, a memento of a time decades ago when dozens of walkouts were staged annually, without fear.
The loss of that former swagger has many causes. The growth of foreign competition changed the economic balance and stiffened many producers' resolve to face off with the unions.
As part of that plan, many major manufacturers have reduced their exposure to union pressure by building factories in non-union Sun Belt states or in low-cost foreign sites. That way, even if their unionized plants walk out, companies can keep customers happy by using those alternative, non-union sources.
Thus, when 14,000 Caterpillar UAW employees struck twice during an epic six-year contract fight during the 1990s, Cat successfully weathered those walkouts by keeping production lines running with replacement workers and salaried personnel, and by relying on output from its non-union facilities.
The UAW's battle with Caterpillar is seen by many as the last of the old-style, large-scale strikes against a major manufacturing company. But Valko argues that it wasn't a mistake to take on CNH.
"Our solidarity is just terrific," he contends. "Our goal is to get back to the bargaining table."
- - -
How a lockout works
If labor-management negotiations haven't yielded a new contract by the time the old accord expires, the situation becomes more volatile: Workers are free to strike in an effort to win better terms, but the employer is free to lock out union workers.
In a lockout, the company can shut down operations to pressure the workers, as the National Hockey League is doing with the players union. Alternatively, it can bring in replacement employees and continue to operate without the union, as CNH Global has opted to do.

GRAPHIC: PHOTO (color): Union workers at the CNH Global plant in Racine, Wis., stage informational picketing Thursday outside the plant's gates. The company last month declared contract talks were at an impasse and locked out workers, who had been on strike since Nov. 3. Tribune photo by Jim Robinson.

PHOTO: John Valko, president of UAW Local 180, which represents CNH union employees, defends the decision to strike. Tribune photo by Jim Robinson.
PHOTO