Health care, Overtime Issues Loom at Navistar

September 23, 2002 (PLANSPONSOR.com) - Health-care costs and work rules are looming large in labor negotiations at Navistar.

As is the case with a growing number of employers, Navistar wants to shift some of its health- care costs to workers, for example, requiring them to shell out co-pays, according to Crain’s Chicago Business. Another growing problem is the company’s post-retirement benefit liability, which last year jumped 5% to $2.12 billion, according to the report.

The company also wants to be able to schedule overtime so it can avoid bringing on more workers for temporary business spikes.    Right now, overtime is voluntary.

Scheduling Issues

Mandatory overtime was one of the issues over which the United Auto Workers (UAW) went on strike for six months in late 1979 against International Harvester, Navistar’s predecessor. That strike helped push Harvester close to bankruptcy, and was one of the factors that triggered a restructuring at the firm in 1981.

Analysts say Navistar is well-positioned to endure a strike.   The slowing economy has slackened demand for new products, for one thing.   Additionally, Navistar now has a truck plant in Mexico, as well as non-union plants in Alabama, Oklahoma, and Texas.

The Warrenville, Illinois-based truck and engine maker’s contract with the United Auto Workers expires October 1.

Hard Lines?

Navistar is only the latest manufacturer able to flex more negotiating muscle because of the weak economy. Earlier this month, Boeing drew a hard line with workers – and survived a strike vote (see  Boeing Workers Say “No” to Contract – And Strike) .

While neither the company nor the UAW would comment on the talks, Crain’s said that union insiders and some industry observers privately expect to see a strike, since the UAW, which doesn’t want to show weakness in advance of talks next year with the Big Three automakers, will likely dig in against major concessions.

Navistar currently has about 7,100 active and inactive UAW employees, compared with 8,000 in 1997 when the last contract was signed, according to the company.

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