While every other UAW corporation is on the brink of collapse, one has prospered right here in Central Illinois: Caterpillar. While the US automakers are on their hands and knees begging for a taxpayer bailout, Caterpillar announced it will reinvest $1B into Illinois infrastructure.
They will write a book about Don Fites one day. To appreciate his impact, all we have to do is imagine what Caterpillar would be like if he didn't take on the UAW in 1992/1994. Very few (and I can't think of anyone better at the moment) possessed the managerial greatness and leadership to pull it off. Given the monumentus challege he faced, it is truly one of the greatest business accomplishments in the past 1/4 century. Unfortunately we haven't been able to fully appreciate the accomplishement until imagining Peoria in the same situation as Detroit.
Is Caterpillar different than the auto industry? It appears Cat had similar challenges: Like many U.S. companies, it operated for decades in an ideal environment in which demand exceeded capacity. But by the 1980s, higher interest rates and a pummeled dollar combined with closing mines and fewer highway construction projects to expose weaknesses. Costs were too high. Non-U.S. competitors, such as Japan's Komatsu Ltd. and Hitachi, had as much as a 40 percent cost advantage in some product categories. Komatsu's ambition was summed up in "maru-C" - to encircle Caterpillar by picking off product and market segments where it was said to be weak.
From that same1995 article, I find this amazing. It is as if they had been preparing in advance for the 1994 strike: As if Fites hadn't enough on his plate, in June 1994, 11,000 UAW workers, mostly in Peoria and Decatur, walked off their jobs over job security and work-rule changes. (An earlier five-and-a-half-month strike in 1991 and 1992 was settled.) The company countered by hiring temporary workers and reassigning 6,000 white-collar staff Lawyers welded. Secretaries operated assembly-line process controllers. Today, the number of reassigned employees is down to 500 as more union workers have crossed picket lines. The company asserts that the dispute has had no material impact on manufacturinG quality or financial results. (With an average hourly wage rate of $18.70, a typical Caterpillar employee earns $55,000. When first-dollar health and dental coverage are added, the hourly rate comes to $39.)
This 1997 article is even more amazing and provides a better picture from the 1995 article I referenced: Today - after two major strikes, dozens of brief walkouts and endless negotiating sessions - Caterpillar and the union still have not agreed on a new contract. Insiders say Fites became the driving force behind the company's decision to oppose the union's practice of ''pattern bargaining'' - a process in which the UAW wanted all companies in an industry to adopt essentially the same contract. Caterpillar refused. A strike followed, and it ended five months later when the company threatened to hire permanent replacements. ''That was a momentous decision,'' Helmerich, the former board member, said. ''Year after year, whenever the contract came due, we just knuckled under and paid the union whatever they demanded. ''That was such an extremely dangerous move that he had to get the directors on board. We talked about it for a year, maybe a year and a half.'' The union walked again in June 1994. This time Caterpillar was prepared. It hired temporary workers, asked retirees to return and put an army of white-collar workers onto the factory floors. Caterpillar kept operating - and smashed its profit records. After 17 months, the union abandoned its strike. Fites has pushed for a contract that would give Caterpillar the flexibility to thrive in times of boom and bust, including lower starting pay for some workers, less overtime and greater use of temporary workers, who receive fewer benefits. The feud has led to bitter feelings, with union members directing much of their anger at Fites. His name has appeared on derisive T-shirts and buttons almost as often as the company moniker.
Read about Fites in a 1992 interview at the time of the first strike referenced:
Staring down the union--if it came to that--was merely a logical extension of Fites's drive to remake Cat. Years spent overseas, particularly in Japan, convinced him that America's manufacturers are hog-tied by inefficiency, including labor relations. "In Japan," he says wistfully, "unions are deeply dedicated to the success of a company, and Japanese companies have been very successful." Cat railed on about wages during the strike, but the real clash was over power. In the face of the UAW's insistence on "pattern bargaining"--a process whereby all companies in an industry accept similar union contracts--Fites was bent on reasserting the company's "right to manage."
What's most amazing to me is that Don Fites is not famous. I suspect we'll hear his name more in the coming years. He is likely notorious in the UAW circles. Only now can we really appreciate and give credit to him for keeping Caterpillar competive and keeping jobs here in central illinois.
If only the auto makers had Don Fites...
I remember driving through Peoria around 2000 (approx) and seeing a sign informing me I was entering a "war zone" with a big UAW logo on it. Based on what we're seeing in Detroit, I would conclude that the UAW workers won the war and they didn't even realize it. They have their jobs and they are not sweating bullets like UAW auto workers.
In a recent thread someone claimed that everyday workers are heroes. I certainly have nothing but respect for the American worker. If the everyday woker is a hero, then Don Fites is a god. Whatever they paid him, they should have tripled it. Most imporantly, there are american workers earning a good wage with good benefits, and the company is likely to endure through a sharp economic downturn.
One of the best quotes I found was from the 1997 article, 'It's nothing but greed,'' counters Larry Solomon, former president of the UAW local in Decatur. ''Fites is responsible for what happened at Cat. It will come back to haunt him.''
