Daimler drops demand for wage cuts, signs new 3-year contracts

By DON McINTOSH, Associate Editor

Union workers at the Daimler Trucks North America factory in Portland agreed to a new set of three-year contracts in the opening days of July, after the company dropped demands for wage concessions and “two-tier” contract terms that would have provided for less generous treatment of new hires and recalled workers.

The 640 workers — who make Western Star heavy trucks and Freightliner military trucks — are members of Machinists Lodge 1005, Teamsters Local 305, Sign Painters and Paint Makers Local 1094, and Service Employees Local 49. The unions bargain together but ratify contracts separately.

Daimler, formerly known as Freightliner LLC, is a truck subsidiary of German auto-maker Daimler AG.

The contracts held the line on pay, despite hints that Daimler could close the Portland plant if workers didn’t agree to wage givebacks.

“I think management understood that this membership was very united and not in a mood for wage concessions,” said Joe Kear, business representative of Machinists District Lodge 24. Lodge 1005 is the largest of the four union groups at Daimler, with 430 members at the truck plant. Kear said workers had nearly a year to get used to the idea of a closure, because Daimler announced in late 2008 it would shutter the plant when existing union contracts expired June 30, 2010. Once the company cancelled the planned closure, future threats of closure didn’t have the same punch.

Bargaining over new contracts began in November, and broke off in January. Daimler was asking for wage cuts of up to $5 an hour, and $6 an hour less for workers recalled after layoff. At one point the union bargaining team took the unusual step of encouraging Daimler to hold a meeting of employees to explain its proposals for cuts — something not normally allowed during bargaining. Workers made it clear they weren’t pleased.

“It was communicated fairly well that this work force was solid,” Kear said, “not only at the bargaining table, but at work.”

Bargaining resumed June 15, just weeks before the June 30 expiration of the previous contracts. In the end, the company backed away from talk of closure, and gave workers an extra measure of security: If it does close the plant, it will pay severance of two weeks wages for every year of service to all employees who had worked there within a year of the closure. Past pension commitments mean the company would face roughly $150 million termination cost if it closed the plant, Kear said — a factor that would weigh heavily against any decision to close. In the event of closure, Daimler would also negotiate over retiree health coverage.

“I’m very pleased that the company was able to talk about a long-term commitment to the Portland plant,” Kear told the Labor Press.

The new contracts maintain seven sick days per year, and make no changes to the way vacation time is accrued. Daimler had earlier proposed that new hires and recalled workers accrue vacation time at a lower rate.

Daimler also agreed to pay “catch-up” pension surcharges in the amounts recommended by trustees of the Service Employees and Machinists multi-employer pension plans. The additional contributions are to make up for investment value lost in the 2008 financial meltdown. For participants in the Machinists plan, the surcharge will total $577.39 a month by the third year of the contract — 75 percent of the regular pension contribution.

Union members did make concessions on the health benefit: Employees’ share of the monthly premium will increase, to $45 a month for employee-only coverage, $90 a month for employee plus one coverage, and $130 a month for full-family coverage. And in the Machinists’ health plan, co-pays and deductibles will also increase.

In the Machinists contract, Daimler management wanted the ability to cross-train workers within 10-person work teams. The union agreed to that in return for a process of getting input from workers on the shop floor. A joint labor management committee will oversee the cross-training.

Machinists members also agreed to change the rules on how mandatory overtime could be allocated.

Machinists approved their contract by nearly two-thirds. Members of Sign Painters and Paint Makers Local 1094 initially turned down their contract, but ratified it after members declined to authorize a strike.

“Our members now have the prospect of their jobs continuing for three years without a reduction in pay, and the confidence that the Portland truck plant will be operational for that time,” Kear said in an official statement announcing the ratification.

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