United Auto Workers Approve Four-Year Contract with Navistar

Deal Provides Workers with a Combination of Wage Increases and Bonuses

Members of the United Auto Workers union have ratified a four-year contract with truck maker Navistar International Corp. that will provide workers with a combination of wage increases and bonuses, while maintaining a two-tier wage scale for new hires and veteran employees.

The deal approved on Sunday covers a total of 1,500 workers at a truck assembly plant in Springfield, Ohio; an engine plant in Melrose Park, Ill.; and parts distribution centers in Atlanta, Dallas and York, Pa. Navistar and the union managed to reach the deal without the acrimony and output disruptions that have marked previous contract talks.

“We found common ground on some difficult issues and we will continue in that spirit of cooperation as we move forward,” said Bill Osborne, senior vice president for manufacturing and quality, in a written statement.

Navistar typically idled unionized plants, laid off workers and shifted production to nonunion plants when the company and the union were unable to agree on a new contract before an old contract expired. But when the contract ended on Oct. 1, the company allowed UAW members to remain on the job under the terms of the old contract while negotiations continued.

“By all means, this contract [negotiation] was different,” said Jason Barlow, president of UAW Local 402, which represents about 1,000 workers at the Springfield plant. “No one had the hardship of being laid off.”

Under former Chairman and Chief Executive Dan Ustian , Navistar had a turbulent relationship with the UAW and repeatedly threatened to close the Springfield plant and move assembly work to nonunion sites in Alabama or Mexico. Current CEO Troy Clarke has been focused on rebuilding the company’s slumping market shares in medium-duty and heavy-duty trucks after a disastrous strategy for complying with federal regulations on engine emissions undermined the reliability of Navistar’s engines, causing truckers to defect to other truck brands.

Mr. Barlow said Illinois-based Navistar pledged to keep the Springfield plant open and has been expanding the size of the workforce. The plant makes 83 trucks a day. About 100 assembly-line support jobs at Springfield that have been performed by nonunion contractors will become part of the unionized workforce under the new contract. Navistar last year moved some engine assembly from a nonunion plant in Huntsville, Ala., to its Melrose Park plant.

In return, the union agreed to give the company greater discretion to schedule overtime and weekend shifts to accommodate the introduction of new truck models or joint ventures. The union also agreed to maintain a two-tier wage scale that pays new employees lower wages than those hired years earlier. The base starting wage under the new contract, though, will increase by $1 to $15.68 an hour.

For ratifying the contract Sunday, UAW members will receive $1,000 bonuses. Production, maintenance and clerical workers will receive 2% wage increases in the second and fourth years of the contract and lump-sum bonuses in the first and third years of the deal. Employees will be eligible for annual profit-sharing bonuses when Navistar makes a profit.

The contract expires Oct. 1, 2018.

The union didn’t provide specific vote totals from the contract ratification, but Mr. Barlow said the deal was approved by three-quarters of those who voted Sunday.

“Everybody is going to make more money,” Mr. Barlow said. “It worked out for us.”

Source: The Wall Street Journal