A STRIKE AFTER 35 YEARS: WHY NOW?’
Rodney C. Vandeveer
Purdue University
1420 Knoy Hall
West Lafayette, Indiana 47907-1420
(765) 494-6804
FAX: (765) 496-2519
EMAIL: rcvandeveer@tech.purdue.edu
Michael L. Menefee
Purdue University
1420 Knoy Hall
West Lafayette, Indiana 47907-1420
(765) 494-5612
FAX: (765) 496-2519
EMAIL: mlmenefe@tech.purdue.edu
Primary contact person is:
Rodney C. Vandeveer, Purdue University, 1420 Knoy Hall, West Lafayette, IN 47907
A STRIKE AFTER 35 YEARS: WHY NOW?
Rodney C. Vandeveer, Purdue University
Michael L. Menefee, Purdue University
Case Description and Use
This case focuses on the breakdown in negotiations between labor and management after going
35 years without a strike. The present plant manager and the management staff at this
manufacturing location are young and trained in business and have a strategy to make a
statement to labor and increase management control. The lack of an agreement at the end of the
contract deadline led to a strike. The company had sent all of the employees a letter outlining
their pending action if there was a strike and the employees right to return to work. After seven
weeks without work, over 20 percent of the striking workers had defied the union leadership and
returned to work. The remaining employees were calling for a contract to vote on. The week
before the union had voted down a contract offer by a two to one margin. What actions should
now be taken?
The case is designed to illustrate how multiple issues impact negotiations and the leveraging
dynamics in a labor strike. The case is intended for use in undergraduate labor/management
studies.
Case Synopsis
This UAW labor union has been a part of organization for over 35 years and is now facing its
first strike. The company is experiencing over 300 grievances per year. Labor-management
relations have become strained. Turnover in the 90 person hourly labor force is about two
workers per month. The majority of the labor force is young with less than five years seniority.
In a move to retain the skilled trade workers, the company working with the union leadership
increased pay significantly in the 10-12 skilled positions; however this fueled dissatisfaction
among the rest of the labor force. The company proposed changing the employee’s share of the
medical cost. The union financial secretary-treasurer has been terminated for leaving his job and
the newly elected union president has only two years seniority with the company. According to
management, the labor leadership has lost control and is not demonstrating the needed leadership
for the workers. Will this also be reflected in a strike? The strike begins three weeks before the
Christmas holidays and emotions are high. The company begins to hire replacement workers
and some striking employees are crossing the picket line. After seven weeks, the union
membership wants a contract to vote on and get back to work and try and save their jobs. Is it
appropriate to have the membership vote on a contract offer that has already been rejected by a
two to one margin by the membership? If it is voted on and passed, is the company required to
accept it as a valid agreement?
Contact person: Rodney Vandeveer, Purdue University, Knoy Hall, West Lafayette, Indiana
47907. Phone: (765) 494-6804, FAX: (765) 494-2519. Email: rcvandeveer@tech.purdue.edu
A STRIKE AFTER 35 YEARS: WHY NOW?
Rodney Vandeveer, Purdue University
Michael L. Menefee, Purdue University
Case Description and Use
This case focuses on the breakdown in negotiations between labor and management after going
35 years without a strike. The plant manager and the management staff at this manufacturing
location are young, trained in business, with a strategy to make a statement to labor and increase
management control. At issue are increases in insurance premiums for the membership,
mandatory overtime, attendance policies, and union representation. The labor union has been a
part of the organization for over 35 years and this is the first time there has been conflict to the
level of leading to a strike. The union president is new to the organization; however, two and
one-half years earlier the president of this local union had led his membership through another
strike and eventually a plant closing at another company. He certainly has experience with
turbulent situations. What actions should be taken? What lessons can we learn? The case is
designed to illustrate how outside forces impacting negotiations and the leveraging dynamics of
labor negotiations and a strike.
Case Synopsis
This UAW labor union has been a part of the Superior Essex organization for over 35 years and
is now facing its first strike. The company is experiencing over 300 grievances per year, a
turnover of about two workers per month in this 90-person hourly workforce, the union financial
secretary-treasurer has been terminated, the union president has only been with the company two
years, and labor-management relations have become strained. The majority of the labor force is
young with less than five years seniority. In a move to retain the skilled trade workers and prior
to the beginning of negotiations for a new contract, the union agreed to an off-line increase pay
for the 10-12 skilled positions; however, this fueled dissatisfaction among the rest of the labor
force. As part of the negotiations the company has proposed changing the employee’s share of
the medical cost, changing the procedure for requiring overtime, and limiting union activities
during working hours. There is a lack of communications between the company and labor.
According to the Superior Essex management, the labor leadership has lost control of its
membership and is not demonstrating the needed leadership.
Abstract
After negotiating for thirteen days over a two-month period, the union has decided to call for a
strike. Pay inequities, increasing medical co-payments, attendance policies, union
representation, termination of key labor leadership, and unresolved grievances plagued the
division leading to a breakdown in negotiations. The union has been a part of this company for
over 35 years. Now, for the very first time, they are on a strike and the Christmas and New Year
holidays are just weeks away. Stronger company leadership and greater management control of
the operation, which the present leadership felt has been deteriorating for the past two decades,
have also become issues. The company threatens to hire permanent replacement workers to
maintain production. Some employees still want to work and are threatening to cross the picket
line if there is a strike and something is not done. A federal mediator has been brought in to help
resolve the dispute.
Superior Essex
Superior Essex is a subsidiary of Fort Wayne based Superior TeleCom Inc. The plant in
Lafayette, Indiana employs about 150 people and operates in a 350,000-square-foot plant
manufacturing wire from solid copper rods, adds insulation and coats it with rubber. In advance
of the negotiations with Local 1497, Superior Essex announced plans to streamline its
manufacturing lines by closing electrical wire facilities in Pauline, Kansas; Glendale, Arizona;
and Tiffin, Ohio by the end of the year. The new Human Resource Manager is Kevin Porath and
he has been with the Essex Group about 18 months. Porath notes the changes in the union
leadership have led to mistrust, miscommunications, and lack of cooperation between the union
and management. This is most evident by having over 300 grievances filed each year. Turnover
is about two employees out of the 90 hourly workers leaving each month. Only 11 employees
have 20 years or more of seniority in the company that has been around for over 35 years. (See
Appendix I)
Introduction
United Auto Workers Local 1497 was founded in 1965 and represents the 90 hourly workers out
of the 140 workers at this location. The current contract expired on December 1, 1999. A
breakdown in negotiations has occurred between United Auto Workers Local 1497 and the
Superior Essex Lafayette Plant management team. The local union is set to strike beginning
Sunday, December 5, at midnight. Members of the UAW 1497 sat up a tent, fire barrel, and a
picket line outside the plant’s Union Street gate. This is the first strike at Superior Essex since
production workers joined the union in 1965. The union leadership wants to maintain solidarity
in the worker ranks, but the Christmas holidays are just weeks away and the weather is freezing.
The company has vowed to keep production with or without the workers and sent a letter to all of
the workers telling them of their plan.
The Union President, Wayne Palmer, lives about 50 miles away in Logansport, Indiana. Palmer
has been with Superior Essex about two years and was recently elected president of UAW Local
1497. Palmer graduated from high school and completed one year of college and had
experienced a similar situation just two years before with another strike. Palmer is expected to
provide the leadership to get the workers through this strike; however, the strike before led to the
eventual closing of the Monon Trailer Company. Brett Maynard, financial secretary-treasurer
for United Auto Workers Local 1497, made one thing clear on Saturday, December 4, to his
fellow union members who are going on strike at the Superior Essex plant. “We’re in it to win.
We mean business.” Palmer echoed Maynard’s words of commitment, noting the strike wheels
are in motion. Palmer reiterated the issues that had prompted the strike to be the proposed 400
percent increase in insurance premiums from $20 to $80 per month, a minimum increase of 50
percent in mandatory overtime, an attendance policy that Local 1497 said allows discrimination
and favoritism, lack of any increases in employee pension plan that is now fully funded by the
company and “the company trying to limit the union’s representation and voice in reconstructing
the grievance procedure in its entirety” remain key issues.
The workforce is young with the majority having less than five years seniority. (Appendix)
Palmer’s experience tells him the union must maintain solidarity to be effective. Seventy-eight
of the 81 members present at the meeting signed up for picket and strike duties. One week into
the strike the members of UAW Local 1497 are a cold but determined group. Bill Spicer, who
has worked at Superior Essex for nearly 20 years, vows to stay out “as long as it takes” to get a
new contract. Palmer tempers this by noting “we’re willing to come back to the bargaining table
when management is ready to negotiate with us.”
On Monday, December 6, administrative and management employees were brought to the plant
in vans with dark-tinted windows, and Palmer said he was aware of at least one union worker
who crossed the picket line.
Since the vote for rejection of Superior Essex’s last contract offer, a federal mediator has been in
contact with both sides involved in the strike but no further negotiation sessions have been
scheduled. Company officials have said they will be willing to negotiate if there is any
reasonable chance of success. The company reportedly offered a 20-cent hourly pay increase
during each of the three years of the contract, but union members said a proposed 400 percent
increase in insurance would wipe out their extra earnings. Management now claims six to eight
workers have now elected to return to work and production does continue.
A slightly altered contract offer was rejected Wednesday, January 15, 2000, by the membership
of UAW Local 1497 who remained on strike at the Superior Essex Plant. Maynard, Local 1497
financial secretary-treasurer, said, “Basically the offer stayed the same.” Nearly 65 percent of
the union members voted against this new proposal. Maynard noted, “We have stated to the
company, if they want to attempt to go back to negotiations to contact the federal mediator
handling our case.” After the first month of the strike, Maynard also noted twelve members of
Local 1497 have now defied the union and returned to their production job at the plant.
On Wednesday, January 26, 51 percent of the UAW members who cast ballots authorized
approval of a contract. This is slightly different that the one rejected by the union that triggered
the strike on December 5. The contract offer is the same one that the membership rejected by 65
percent on January 12. Maynard, UAW Local 1497 secretary-treasurer, said, “We’ve contacted
the company and let them know that, as far as we’re concerned, the strike is over. But until they
get back in touch with us and let us know if they accept the ratification, it’s up in the air.”
In a statement from Superior Essex’s corporate headquarters, the contract proposal approved by
the union membership Wednesday had not been re-offered after it was rejected earlier. “Without
notifying the federal mediator or the company, the union leadership offered up the same contract
the membership voted down before. Therefore,” noted the company, “there is a question as to
whether an agreement exists. It is not a valid offer since the last contract offer was refused.”
The company further noted, “Superior Essex is reviewing applicable labor law and maintaining
contact with the federal mediator as well as the union’s international representative.” UAW
Local 1497 notes at least 12 members have defied the union and returned to their production
jobs. The company notes there have been 21 workers to return and the company has kept the
plant operating during the nearly eight-week walkout.
Other Issues
Kevin Povach, Human Resource Manager, feels a lot of the problem stems from the $2.00 per
hour increase in pay for the skilled trades such as electrical and mechanical technicians, and wire
mill technicians. The adjustment in wages made by the company has become an equity issue
with the rest of the employees. The company proposed this adjustment to the union leadership as
a means to try and turn the tide of losing skilled employees to other local firms willing to provide
more pay. The increase affected about 12-15 employees; however, the union leadership agreed
to these increases prior to implementation. Povach also indicated the company started becoming
more strict in the enforcement of the company rules and regulations while trying to return to
consistency in the human relation issue decisions. Povach noted many workers are abusing the
system with grievances and the company has recently terminated the union financial secretary,
Brett Maynard, for walking off the job.
Two unfair labor practices have also been filed with the National Labor Relations Board. One is
the refusal to bargain in good faith by prolonging the strike in order to hire strike replacement
workers and the coaxing of strikers to cross the picket line in an effort to eliminate the union.
The second charge was on the granting of super-seniority to those hired to replace employees
engaged in a lawful strike and for the refusal to bargain in good faith with the elected officials
chosen to negotiate for the membership. This charge noted the company is attempting to tie in
economics to the labor’s reasoning for striking and labor contends this is not the case.
The Lafayette and Greater Lafayette Communities
Lafayette is a city of about 45,000 people and is located in the northwestern part of Indiana.
Lafayette has a very strong manufacturing and business base and is supported in part with a
strong university presence in Purdue University located west across the Wabash River in West
Lafayette. The Greater Lafayette community is known for its central location, strong local
economy, educated and skilled workforce, quality of life, good schools, low crime rate and
enthusiastic support of industrial and business development.
Unemployment in the county consistently runs below the state and national averages at 1.7 to 1.8
percent. There are several large employers such as Eli Lilly and Company with 1500, Wabash
National Trailer Manufacturer with 3000 employees, SIA with over 3000, Fairfield
Manufacturing with 1400, Alcoa with 1000, and Caterpillar with 1200 employees. Other
recognizable companies include Great Lake Chemical with their World Headquarters in West
Lafayette, State Farm Insurance, Staley’s North and Staley’s South, TRW, and MedTech. This
diversity of businesses has led to continuous growth for over a decade. The West Lafayette and
Purdue University communities adds greatly through the influence of Purdue’s 12,000
employees, 38,000 students and several high tech businesses that create an increasing demand
for highly skilled workers.
However, several companies within the community are beginning to experience a slowdown as
evidenced by the downsizing of several of the larger companies. Alcoa recently laid off 47
employees, Consolidated Industries decided to close down, leaving 52 people unemployed, and
Fairfield Manufacturing has decided to cut 84 jobs from its production force.
Summary
The strike has been in effect for seven weeks. The last contract offered by the company was
voted down. Two weeks later, without notifying the federal mediator or the company, the same
contract offer was re-voted on by the membership and passed by a 51 percent margin. Now the
company is unsure this offer is legal or the vote binding. Of the 90 hourly workers represented
by Local 1497, 21 have already crossed the picket line to return to work. The company has
continued production with management, replacement workers and those workers crossing the
picket line. The company has requested time to consider the union vote and proposal. The
company had readied a new-last offer that contains language to provide for a “modified union
shop,” whereby the striker replacement workers are given permanent employment status and are
not required to join the labor union. What direction or strategy should management take? What
direction or strategy should labor pursue?
References
Scott, B. (1999, Dec 5). Superior Essex workers primed to strike tonight, Journal and Courier,
Section C, page C5.
Showalter, M. (1999, Dec 13). Local UAW union leader hopeful strike at Superior Essex will
end soon, Journal and Courier, Section C, page C1.
Showalter, M. (1999, Dec 7). Superior Essex says plant unaffected by UAW walkout, Journal
and Courier, Section C, page C5.
Showalter, M. (1999, Dec 8). Essex workers strike remains at impasse, Journal and Courier,
Section C, page C5.
Showalter, M. (2000, Jan 13). Contract rejection extends strike at Essex, Journal and Courier,
Section B, page B6.
Showalter, M. (2000, Jan 21). Alcoa holds layoff to 47 employees, Journal and Courier, Section
A, page A1.
Showalter, M. (2000, Jan 22). Furnace maker to end production, Journal and Courier, Section
A, Page A1.
Showalter, M. (2000, Jan 25). More layoffs: Fairfield cuts 84 positions, Journal and Courier,
Section A, Page A1.
Showalter, M. (2000, Jan 26). UAW votes to accept Superior Essex offer, Journal and Courier,
Section A, Page A1.
Appendix I
Local 1497 Demographics – Bargaining Unit By Age
25
20
15
# of Employees
10
5
0
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-65
Age Group
Local 1497 Demographics – Bargaining Unit by Seniority
50
40
30
# of employees
20
10
0
1-2
3-5
6-8
9-12
Years of Service
12+
Appendix II
The medical plan provides a choice for the employee to select one of two plans. The PPO
provides coverage at a cost of $5 per week per person covered up to a maximum of $80 per
month or a major medical plan that changes the existing 80/20 percent split at a cost to the
employee of $12 per month to a 90/10 percent split at a cost of $20 per month.
The last offer contains language that provides for a modified union shop whereby the striker
replacement workers are given permanent employee status, without any probationary period, and
are not required to join the labor union following an agreement. Anyone being hired after the
contract is signed would be required to join the union after their 90-day probationary period.
TEACHING NOTES
Case Overview
During November and December 1999, representatives of UAW Local 1497 and Superior Essex
met in an effort to negotiate a labor contract. At issue were increases in insurance premiums for
the membership, mandatory overtime, attendance policies, and union representation. After
bargaining for a total of thirteen days to reach a new agreement, the company’s final offer was
not endorsed and the contract expired December 1. On December 2, management sent a letter to
all employees advising them of the company’s intent to continue normal operations during any
strike. This letter noted federal law guarantees a Company’s right to hire striker replacement
workers and a copy of the final offer by the company was attached. At 11 p.m. Sunday,
December 5, the union set up a picket line at the plant gates and a strike was in place for the first
time since the workforce was unionized in 1965. The union released a list of incidents leading to
the end of the talks and decided to strike. Some seven weeks after the strike, 21 workers had
crossed the picket line, striker replacement workers were hired and the workers were now
wanting to have an offer to vote on. The union leadership offers up the same contract previously
voted down and it passes by a 51 percent margin; however, the company refuses to recognize the
offer as being valid since it was previously voted down and no further offer was negotiated or
offered.
Case Objective
The case is designed to illustrate the dynamics of negotiations, the issues in negotiations, the
changing mindset of the membership, and the leveraging dynamics of a labor strike.
Courses and Levels
Based on both library and field research, this case is appropriate for undergraduate and graduate
courses in business, strategic management, and labor/management relations.
Discussion Questions and Answers
What are the issues in the strike?
Answer: First is the issue of whether it is legal for the company to now accept labor’s
acceptance of an offer previously rejected and not re-offered. Other issues were, of
course, the economic issues of health care costs and wages, the issue of mandatory
overtime, attendance policies, off-line pay increases, and the termination of a union
leader.
Were there other issues not directly addressed?
Answer: The issue for greater control of the production operation by the management
team with an underlying issue. This is evident by management’s reservation or stalling in
acceptance of the re-vote of an offer previously rejected. The union was trying to just
reestablish itself as a creditable representative for the membership. Management also
provided off-line increases for its skilled labor and this created some resentment and
division by others in the labor membership holding the union leadership responsible.
This also created perhaps unrealistic expectations of the membership during the
negotiations. For example, the two dollar an hour increase given to the skilled trade
became an expectation of the rest of the membership before negotiations even started.
What can be learned from this strike?
Answer: Timing of a strike is important. Solidarity of the membership is critical for a
strike to be successful. Union leadership must understand the need for open
communications and establish a vehicle for keeping everyone informed. In this particular
instance it would have been better for labor to become more of a partner. As it was, the
union lost membership by having to go to a “modified-shop,” it lost creditability as a
valid representative for the membership, and there became division in the membership
ranks. It had been 35 years since the union became the representative for the
membership. The membership has changed and the wants, needs, attitudes, etc., of the
membership has changed.
What would the union do differently had they known?
Answer: Agree to work without a contract for a short period of time to get the strike date
after the holidays and during less emotional times would be a first step.
What is the leverage of labor?
Answer: The only leverage of labor is the withdrawal of their labor. To make this
effective, the membership must remain to the strike and not allow division in the
membership ranks.
What is the leverage of management?
Answer: The leverage of management is to outlast the strikers by hiring replacement
workers and union defectors.
What outside influences impacted this strike?
Answer: There are several. First is the impact of the timing of the strike. Right before
the biggest holiday of the year Christmas emotions are high and the lack of a paycheck
means fewer presents for the family. Secondly, several of the other local manufacturing
organizations are also laying-off employees. Alcoa lays off 47, Consolidated Industries
is closing with 52 workers being without jobs, and Fairfield cuts 84. A third point
making it difficult for another employer to hire a worker from Essex is knowing they
would probably lose them when the strike is settled.
Analysis
The workers rejected the last offer proposed by the company; however, many of the striking
employees were coming to the union leadership and were insisting on a contract to vote on or
they will also be crossing the picket line. Without notification of the federal mediator or the
company leadership, union leadership offered up the same contract and it was approved by a 51
percent vote.
The union notified the company of its action and the company now noted it was not a valid offer
since the last contract offer was refused. The company counters with a new “last offer” that
contains language providing for a “modified union shop” whereby the striker replacement
workers were given permanent employee status and were not required to join the labor union.
Anyone being hired after the contract was signed would be required to join the union after their
probationary period and those striking workers returning would be allowed to return to the same
job occupied prior to the strike provided a replacement worker was not already in that job. If
that job were now filled, those striking employees would be put on temporary layoff and then
recalled as positions became available.
What action should be taken by labor?
Answer: The labor should end the strike as soon as possible and evaluate options for
future actions for representation of its members.
What position should the company take at this point?
Answer: The company should hold out as long as economic and legally possible. Other
parties impacting the company’s action would be the amount of media coverage and
desire to reflect a positive community image.
Epilogue
Labor and management negotiations failed to reach an agreement on a contract that expired
Wednesday, December 1. On December 2, the company sent a letter to all employees outlining
its plans to continue production with striker replacement workers and with workers that wanted
to cross the picket line. The letter repeatedly focused on what the federal law guarantees them
the right to do in the course of a labor strike. The union went on strike Sunday night at midnight
on December 5 and actually went on strike without presenting the final offer to the membership
for a vote.
By December 8, a federal mediator had been in contact with both sides. The weather was cold
and the Christmas holidays were just a few weeks away. The company contended the plant
operations were unaffected by the UAW walkout and some employees were calling to see if they
could come back to work. On the picket line the place card read, “All I want for Christmas is a
fair contract.” The Fort Wayne-based company reportedly offered a 20-cent hourly pay increase
during each of the three years of the contract, but union members said a proposed 400 percent
increase in insurance premiums would more than wipe out their extra earnings.
On Wednesday, January 12, 2000, a slightly altered contract offer was rejected by the UAW
membership and the decision to remain on strike was made. According to Brett Maynard, Local
1497 financial secretary-treasurer, “basically the offer remained the same. Nearly 65 percent of
the union members voted against the new proposal.” The new offer contained a clause that
would change the union’s closed shop policy specifying that people hired for production at the
wire manufacturing plant and the UAW members who cross the picket lines would not have to
join the union or pay union dues. By this time, twelve members of the Local 1497 had defied the
union and returned to their production jobs at the plant.
The strike continued. With a reported local unemployment rate of 1.7 percent, the striking
employees began looking for work to supplement their income; however, on January 21, Alcoa
announced a downturn in the aerospace industry had triggered a layoff at the Lafayette operation
with a minimum of 47 and a maximum of 110 employees being laid-off. On January 22,
Consolidated Industries announced its decision to close its operation after 56 years and another
52 workers were jobless. On January 25, Fairfield Manufacturing, a company with over 1300
employees, announced a drop in orders would result in 84 union positions being eliminated with
no callbacks expected for at least six months.
By January 24, twenty-one of the union members had defied the union and crossed the picket
line to return to work. With all the announced layoffs and the number of workers now crossing
the picket line, a group of striking employees went to the union leadership on January 25 and
demanded a package to vote on or they (the union membership) were going back to work. The
union offered up the same contract voted down on January 12 and it passed with 51 percent of
the vote January 26. This action was done without notifying the company or the mediator, and
then an interesting turn of events occurred. The company refused to initially accept the vote
noting it was the same one turned down on January 12 and was therefore no longer a valid
proposal. The company countered with language to the contract that would provide a procedure
to provide permanent employee status to the replacement workers with the agreement the
replacement workers and those who have crossed the picket line to return to work would not
have to join the union upon an agreement.
The final settlement also contained some language that changed the union from a “closed shop”
to a “modified shop.” The “new” approved contract contained language by the company on how
it was going to bring people back allowing the company to keep the employees and permanent
replacement workers employed with the returning striking employees backfilling the remaining
jobs. Additional language allowed these employees the freedom of not having to join the union.
This meant there were some striking employees that would not be returning until jobs became
available through attrition or growth. This language provided for the “modified shop”
designation. The strike officially ended on January 26 with the modified shop provisions
accepted by the labor leaders and membership.
The union leadership filed two unfair labor practices with the National Labor Relations Board.
The first dealt with the “super seniority given to those hired to replace employees during the
strike,” and the second charge was for the refusal of the company to bargain in good faith by
prolonging the strike in order to hire strike replacement workers and the coaxing of the strikers to
cross the picket line in an effort to eliminate the union. As a result of their investigation, the
Board did not proceed on any of the charges made against the company by the union due to
insufficient evidence of violation.