The International Harvester strike of 1979–1980 was a strike by the United Auto Workers (UAW) against the International Harvester (IH) company over work rules. The strike began on November 1, 1979,Flamholtz and Randle, Changing the Game: Organizational Transformations of the First, Second, and Third Kinds, 1998. and ended after 172 days on April 20, 1980.Ring, "McCardell's Reign as IH Boss Wasn't Dull," Quad Cities Dispatch, July 16, 2008. As of May 2008, it was the fourth-longest strike of national importance ever held by the UAW.Morath, "Axle Strike Mirrors Pain of 1970 Walkout at GM," Detroit News, May 3, 2008.
Background
Previous bargaining history
The UAW first negotiated a master contract with International Harvester in 1950. At the time, there was no mandatory overtime and both management and the union believed that the company could not request mandatory overtime.Loomis, "The Strike That Rained on Archie McCardell's Parade," Fortune, May 19, 1980. The 1950 master contract also codified an existing practice whereby a worker could transfer to any other job in the company provided he or she was the most senior applicant for the position.
During the 1958 contract renewal talks, International attempted to restrict job transfer rights. The union struck for nine weeks, and IH dropped the demand in exchange for other concessions.
Between 1961 and 1976, four of the six 3-year contracts were signed only after the union struck—although each of the strikes was short, lasting from two hours to two and a half weeks. There were also a large number (more than 100) wildcat strikes during this period. After a 15-day strike in 1973, the union agreed to include a side letter into the contract in which the union agreed to encourage employees to voluntarily agree to work overtime (with advance notice, and only up to seven Saturdays a year)—although few employees ever volunteered.
By the late 1970s, International Harvester had come to believe that unlimited transfer rights were being abused and creating productivity problems. The company also instituted a new disciplinary program to crack down on wildcat strikes, and outlasted one UAW local when it engaged in a five-week-long wildcat strike in 1978 in an attempt to have the program withdrawn.
McCardell takes over In 1979, International Harvester was the fourth-largest company in the United States.Zimmerman, The Turnaround Experience: Real-World Lessons in Revitalizing Corporations, 1991.
Archie McCardell was appointed president and chief operating officer of International Harvester in August 1977, named chief executive officer in January 1978, and chairman of the board in June 1979.Martin, "Archie McCardell, Harvester Chief Who Clashed With Union, Dies at 81," New York Times, July 16, 2008. He was charged with shaking up the family-run company to increase profitability."Hard Times at Harvester," Time, May 25, 1981. He received a then-exorbitant salary of $460,000 (making him one of the highest-paid CEOs in the country), a $1.5 million signing bonus and a $1.8 million loan at 6 percent interest.The loan was to be used to buy Harvester stock. The company promised to forgive the loan if McCardell increased International Harvester's financial performance beyond the average of its six main competitors. "Hard Times at Harvester," Time, May 25, 1981. He instituted an aggressive cost-cutting program which immediately cut spending by $640 million and a modernization program which poured $879 million over three years into the company's plants. His actions boosted market share, and led to record sales of $8.4 billion and record profits of $370 million (up from $203 million). Despite McCardell's actions, IH's profit margins were still only half those of competitors like Caterpillar Inc. and Deere & Company."International Harvester: The Strike Hurts," The Economist, March 8, 1980.
Among the many changes McCardell made was to fire 11,000 of the company's 15,000 mid- and upper-level managers, whom McCardell felt were too close to UAW shop stewards.Friedman, "The Culture of Mediation: Private Understandings in the Context of Public Conflict," in Hidden Conflict in Organizations: Uncovering Behind-the-Scenes Disputes, 1991. McCardell took personal control of IH's labor relations, and appointed a new vice president of human resources, W. Grant Chandler (who was to assist McCardell in all union negotiations). McCardell's actions stripped the company of nearly all its experienced labor negotiators, and those who remained were mostly ignored during the upcoming round of negotiations. McCardell and Chandler had little labor relations experience, however, and none in heavy manufacturing or in negotiating with the UAW.
Early negotiations Negotiations opened on August 9, 1979, in Chicago, Illinois."Farm Machinery Firms And UAW Open Talks On Master Contracts," Wall Street Journal, August 10, 1979. UAW International Vice President Pat Greathouse and two veteran IH negotiators—Art Shy, and Cletus Williams—led a union bargaining team composed of 20 representatives from 51 IH local unions.Slater, "Tentative Agreement Believed Near In International Harvester Strike," Associated Press, March 19, 1980. Among the proposed changes to the contract that the union proposed was that the union contract be automatically extended to any new plants opened by International Harvester—essentially allowing the union to organize new workers without holding an election.
Instead of a similar long list of demands (which the company had traditionally countered with in the past), Chandler gave the union only seven demands and advised it that these proposals must be dealt with, strike or no strike. The proposals were aimed at largely ending job transfers and seniority, adding five shifts a week, and instituting a mandatory overtime scheme; the company claimed it had lost $1.3 billion over the previous three years over these issues. Many companies in turnaround seek to improve product design and production processes, and managerial expertise before seeking labor concessions. But McCardell concluded that the fastest way to achieve cost savings was to persuade workers to accept work rules changes which would have cost employees $100 million. Surprisingly, however, IH agreed to match the pay increase pattern set earlier in the year by automobile manufacturers in Detroit.Slater, "Council Orders More Talks in 140-Day Strike," Associated Press, March 20, 1980."In Midst of Joblessness, A Strike Over Too Much Work," U.S. News & World Report, April 21, 1980.
Despite the concession, these early negotiations did not go well. McCardell and Chandler were inexperienced negotiatiors, not picking up on the private signals the union sent and did not understand the importance of the signals when they did become aware of them. Even company-side negotiators complained about the inexperience of McCardell and Chandler, arguing that this inexperience lessened the company's ability to divine the union's real bargaining positions. When McCardell and Chandler were not at the bargaining table, negotiators who were present had no real authority to bargain on behalf of the company. Combined, these two factors significantly hindered IH's bargaining abilities. As one scholar pointed out: "There was no sense that the company negotiators had the capacity to understand the industry, the union's positions, or the politics that these leaders faced; neither were these negotiators truly free to develop that understanding."Friedman, "The Culture of Mediation: Private Understandings in the Context of Public Conflict," in Hidden Conflict in Organizations: Uncovering Behind-the-Scenes Disputes, 1991, p. 156.
Other company actions unintentionally hardened negotiating positions and decreased trust between the two parties. The company moved the negotiations out of a neutral local hotel and into management conference rooms, limited informal side conversations (which had been used in the past to explore compromises), refused to build social ties with the union bargainers, refused to informally signal their true intentions, and ignored symbolic issues (one IH negotiator wore a silk suit to negotiations, which offended the blue-collar negotiators).
International Harvester also unintentionally disempowered the union negotiators, making it harder for them to agree to company demands. For example, the company repeatedly went public with its bargaining proposals, which made it harder for company negotiators to back down later and reach compromises. The company's "match the pay pattern" announcement also had the effect of depriving union leaders of the ability to claim a "win" in negotiations by claiming they had achieved a pay raise—making it harder for union negotiators to "sell" more hard-to-swallow compromises later, and forcing the union to entrench itself to achieve gains in other areas.
The talks recessed after just one day."Strikes, Settlements, Employees: Int'l. Harvester," Toronto Globe and Mail, August 22, 1979.
Less than a week later, International Harvester reported on August 15, 1979, record sales and earnings for the first nine months of fiscal 1979."International Harvester," Associated Press, August 16, 1979. Year-to-year net earnings for the third quarter rose $1.12 per share to $2.19, and the year-to-year third quarter dividend raised 5 cents to 62.5 cents. Net income for the quarter rose to $67.91 million, an 89 percent increase over the same period last year, and net income for the first three quarters of the year was $221.9 million, a 95 percent increase over the previous year. The company said prospects for the final quarter also looked strong."Stock Prices Post Declines in Hectic New York Trading," "Toronto Globe and Mail," August 17, 1979.
Bargaining resumed on August 21, 1979.
International Harvester's behavior at and away from the bargaining table, coupled with the company's exceedingly positive economic news, hardened the UAW's bargaining position. On September 14, 1979, the UAW said it would strike all heavy-equipment manufacturers it was negotiating with if new collective bargaining agreements were not reached."Domestic News," Associated Press, September 15, 1979; "U.A.W. Strike Threat Affects Big 3 Makers of Farm Implements," United Press International, September 16, 1979. The UAW's contract at International Harvester expired on October 1, 1979. But despite the union's more rigid stands, a council of all 51 IH local unions agreed to extend the contract on a day-to-day basis as negotiations continued."Domestic News," Associated Press, September 28, 1979.—a decision opposed by the international union.
In late October, IH received mixed signals about the Auto Workers' intentions and capabilities. On October 18, the union reached a new three-year agreement with Deere & Co. after an 18-day strike by 31,000 employees, while at the same time 23,000 of Caterpillar's 40,000 workers engaged in a wildcat strike to protest the slow pace of negotiations at that company."Domestic News," Associated Press, October 19, 1979. Six days later, the union made it clear it would strike IH if no agreement was reached, but IH officials merely reiterated that their seven demands must be met."Domestic News," Associated Press, October 25, 1979. Another 17,000 Caterpillar workers struck on October 28, and IH officials suggested that the UAW would be too financially exhausted and organizationally stretched too thin to engage in a third strike."Domestic News," Associated Press, October 29, 1979. International Harvester refused to budge on its demand for mandatory overtime."Domestic News," Associated Press, October 31, 1979.
Strike