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Union OKs Deere pact Pay and benefits for new hires halved under six-year contract, but jobs saved

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WATERLOOContract Highlights

Here is a summary of provisions of the new six-year labor agreementbetween Deere and the United Auto Workers.

Current employees

Maintain current base pay, even after companywide jobreclassification as long as workers do not transfer out of theirclassification.

Lump sum payments equal to 3 percent of qualified earningseach year for six years.

Quarterly cost of living adjustment (COLA) pay increases aremaintained.

Lump sum payout of $2,500 from an "excess overtimeaccount" for all employees with seniority as of Oct. 1,1997.

Roughly an additional $226.50 in monthy pension benefitsover the life of the agreement.

A $300 increase in supplemental allowances for earlyretirees over the life of the agreement. Early retirees receive $2,100per month until they reach age 62 and that will increase to $2,400 overthe life of the contract.

Five lump sum payments to workers who retired before Sept.30, 1997 of at least $170 and up to $510.

Continuation of "earned bonus hours" of pay forperfect weekly attendance, with a lump sum payout as a Christmas bonus.The payout previously occurred in October.

Continuation of comprehensive health care benefits,including a $200 increase in both maximum annual dental benfits, to$1,400, and orthodontic benefits, to $1,500.

New hires on or after Oct. 1, 1997

New base wage scale for all new hires, with a 1 percentannual base wage increase, plus additional incentive earningsopportunities under the company's "continuous improvement payplan," or CIPP, plus quarterly cost of living adjustments.

Comprehensive health coverage under the John Deere FamilyHealth Plan clinic plan the so-called "companyclinic" option.

Job security provisions after 10 years' senority;supplemental unemployment benefits of $100 per month for workers withone to up to 5 years service, up to 26 weeks; and $125 per month forfive or more years service, up to a maximum of 39 weeks.

Pension benefits and eligibility for a tax-deferred savingsplan with a matching company contribution.

Also Deere and the UAW agreed on a comprehensive new workertraining, retraining and personal development program.

A labor agreement designed to preserve John Deere's Waterloo operations and provide significant future hiring was approved by United Auto Workers Local 838 and other UAW-Deere locals Sunday.

The contract reportedly protects pay and benefits of current Deere workers, enhances pension benefits and allows continued annual lump sum payments and quarterly cost-of-living increases.

It also allows the company to hire a new generation of workers over the next six years -- at roughly half the pay and benefits.

Faced with the pending retirement and potential elimination of more than half the 3,500-member Deere-UAW work force here by the year 2003, Local 838 members joined other UAW members in several states in ratifying a six-year contract affecting some 9,500 workers companywide, by an approval margin of about 74 percent both locally and chainwide.

Deere & Co. declined comment this morning pending official notification by the union of ratification.

The price of preserving those jobs is the establishment of a new wage and benefit structure for new hires -- which one source said establishes the "two-tier" wage structure the UAW resisted in earlier negotiations.

Union officials said it was a necessity to blunt outsourcing, the elimination of jobs through attrition, and to prevent plant closings.

Base hourly wages for new hires will range from about $10.46 for general types of labor such as material handlers or storage system operators, up to $17 for skilled trade positions, with a 1 percent annual pay raise for the life of the contract. It also includes quarterly cost-of-living adjustments and the chance for additional incentive earnings under the company's "continuous improvement pay plan." Pay and benefits for those new workers will average about $25 an hour.

"We did a statewide study, and those (pay) rates are superior to anything in the state," said Dennis Kinard, a Local 838 shop chairman and member of the UAW negotiating team.

Workers hired before Oct. 1 will maintain their pay and receive lump sum payments equal to 3 percent of their earnings each year of the contract, plus enhanced pension benefits and continued quarterly cost of living adjustments. Job security provisions for those workers will be maintained, and kick in for the new workers after 10 years' seniority.

Some 300-plus job classifications in the Deere organization were reduced to 27 under the contract. Some workers will receive raises as a result of that reclassification, but no current worker is supposed to see a reduction. Workers currently earning more than they would under reclassification would have their current pay "red-circled," or protected, under the contract as long as they don't transfer.

Deere officials said the contract will allow the company to "repopulate" its plants.

Company officials told union negotiators that massive downsizing, continued outsourcing and some plant closings were a real possibility without the new wage and benefit structure for new hires.

In Waterloo, 55 percent of the current Deere-UAW work force will be eligible for retirement sometime during the next six years, Kinard said. Without the agreement, Deere could have eliminated that work force through attrition and intensified outsourcing of work to lower-paying plants outside the company or to facilities in Mexico.

"What we did as a union was, we went down and saved the (Deere-UAW) chain" of workers, Kinard said.

Immediately, Kinard said, the agreement saved about 70 axle assembly jobs at Deere's downtown Westfield Avenue site. That work was scheduled to go to Mexico.

The agreement will provide for additional hiring in Waterloo once 400 new foundry jobs, created under a separate labor contract in May, are filled, possibly in early 1998.

The company has already hired 125 of 400 new foundry positions and continues to hire about 25 per week, Kinard said.

Hiring has already begun at Deere plants in Dubuque and Davenport in anticipation of the contract's ratification, union negotiators said.

Without the contract, Deere plants like the one in Ottumwa would either have closed or workers there would have been forced to negotiate separately for significantly lower pay and benefits, much as the foundry did earlier this year, Kinard said.

"To be honest with you, there isn't a union guy that thinks it (the new hire package) is right. We think it's necessary. I don't know how in the hell you say it any different," Kinard said.

"The outsourcing to us is just plain wrong. From this point on, there is no reason the company should be outsourcing anything direct, with what this wage and benefit package gives them for new hires.

"Will they? Sure," Kinard said.

But in one key provision of the agreement, Deere agreed that in evaluating insourcing and outsourcing decisions the company will "use the average labor costs for employees hired after (Oct. 1) in making such decisions."

"That should get a lot of work back in house," Kinard said.

It was the first time since 1973 that Deere and the UAW concluded negotiations on time, without a contract extension, work stoppage or extending talks beyond the existing contract's expiration. Three years ago, UAW members worked five months without a contract until the 1994­97 agreement was reached.

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