Note: Shortly after this story was written, the Caterpillar workers ratified a six-year contract that contained almost all of the concessions demanded by Caterpillar.  The contract doubled workers’ healthcare premiums, eliminated pensions, froze wages for some workers and diminished seniority rights. The strikers acted against the recommendation of the leaders of their union local – PGB

Many people say unions are passé these days but one does not have to look far to be reminded about why unions arose in the first place – to provide a voice for workers in the face of corporate greed.

Caterpillar is making record profits and has raised executive compensation while insisting upon a six-year wage freeze and a pension freeze for most of the 780 production workers at its Jolliet, IL, factory.

In April, the International Association of Machinists voted 504-116 to reject a six-year pact that Caterpillar offered. The union charged that the deal lacked raises, increased health care costs for employees and undercut union seniority rules.  Workers went out on strike on May 1, 2012.

The company, which earned a record $4.9 billion profit last year, recently announced second-quarter profits had climbed 67 percent. Meanwhile, the total compensation of Douglas Oberhelman, Caterpillar’s chief executive officer, last year rose 60% to $16.9 million. Five other top executives got raises averaging about 7%.

According to the New York Times, Caterpillar has been a leader in devising new ways to cut labor costs, such as two-tier wage scales and higher worker contributions for health insurance.

This time around, Caterpillar appears to be using a version  of generational warfare.

Caterpillar is insisting upon a wage freeze for its top-tier workers, those employed seven years or more; they average $26 an hour, or $55,000 a year before overtime. For the junior third of the workers who typically earn $12 to $19 an hour, Caterpillar has hinted it might raise their wages based on local market conditions.

Timothy O’Brien, president of International Association of Machinists Local Lodge 851, which represents the strikers, told the New York Times that  Caterpillar wants to push longtime workers into retirement and replace them with $13-an-hour workers. The union says Caterpillar also is demanding higher health care contributions from its workers, up to $1,900 a year more.

Caterpillar contends the workers are paid more than equivalent workers elsewhere,and the cuts are needed to keep the company competitive.

The workers receive about $150 a week in strike pay from IAM and free groceries.

The Wall Street Journal reported last week that more union members are crossing the picket line as they deplete their savings. Caterpillar said 95 of the IAM workers members had returned; the union says 79 have returned, which is up considerably from the dozen or so that had returned about two months ago.

The Caterpillar plant continues to churn out hydraulic components and other systems for Caterpillar loaders and mining trucks. The company is busing in replacement workers and using managers and union members who have crossed the picket line to run the company during the strike.

Observers say the showdown is being closely watched by corporations and unions across the country because it involves two often uncompromising antagonists — Caterpillar and the International Association of Machinists.

Caterpillar has already shown that it is deaf when profits are at stake.

Caterpillar locked out about 450 workers at its locomotive plant in London, Ontario last winter and then closed the factory after the Canadian Auto Workers rejected its demand to cut wages by 55 percent.  Caterpillar pulled the plug just three days after Canadian Premier Dalton McGuinty went to London and called on the company to “come to the table and demonstrate some flexibility.” The Canadian government gave Caterpillar a tax break to induce the company  to locate in Ontario in 2008.