advisory

    COLLECTIVE  BARGAINING   ROLE  PLAY  –  BUSH  CORPORATION     1.  Objectives:     1)  To  allow  you  to  experience  the  collective  bargaining  process.  

2)  To  help  you  understand  the  skills  necessary  to  successfully  negotiate  a   union  contract.    

  Situation     Bush  Corporation  is  a  general  aviation  and  business  aircraft  firm  located  in   a  large  western  city,  the  company  manufactures  aircraft,  aircraft  parts,  avionics   and  other  aircraft  accessories  in  addition  to  providing  aircraft  maintenance  and   overhaul  services.  The  company’s  major  aircraft  models  –  fanjets  and  propjets  –   are  generally  used  for  business  and  recreational  flying.  The  company’s  products   have  fared  well  in  a  highly  competitive  market.  However,  in  the  first  half  of  the   last  decade  there  has  been  a  slump  in  the  market  for  new  general  aviation   aircraft.  Industry  experts  attribute  this  slump  to  high  aircraft  costs  and   overcapacity  in  corporate  flight  departments.  Many  large  corporations  are   increasingly  turning  to  on-­‐demand  charter  flights  to  meet  their  business  flying   needs.  A  combination  of  weak  market  demand  and  high  product  liability   insurance  rates  have  plagued  the  industry  and  have  forced  many  to  cut  back   production  and  lay  off  workers.  Economic  forecasts  indicate  that  demand  may   pick  up  in  the  latter  half  of  the  decade  as  international  sales  increase.  Top   management  at  Bush  is  very  concerned  about  keeping  down  labor  costs  in  order   to  remain  competitive.  Last  year  the  company  had  to  close  down  on  production   line  and  lay  off  450  workers  for  six  weeks.  The  aerospace  industry  is  becoming   increasingly  automated,  and  Bush  is  planning  to  increase  its  use  of  robots  in  the   production  process.       A  majority  of  Bush’s  2,500  production  employees,  2000,  are  members  of   the  International  Association  of  Machinists.  A  relatively  good  labor-­‐management   relationship  has  become  somewhat  strained  because  of  the  large-­‐scale  layoffs   last  year.  While  the  union  is  aware  of  the  company’s  economic  situation,  it  is   most  concerned  with  employment  security  and  a  better  position  in  terms  of   benefits.  The  present  three-­‐year  contract  (see  Exhibit  7.2)  is  set  to  expire,  and   contract  negotiations  are  set  to  begin.  Union  and  company  bargaining  proposals   are  shown  in  Exhibit  7.3.    

Exhibit  7.2-­‐  Provisions  of  Present  Contract  Between  Bush   Corporation  and  the  International  Association  of  Machinists       1.  Wages         Average  union  hourly  wage  -­‐  $14.48     2.  COLA  adjustment   Prepaid  increase  of  2%  and  1  cent  for  each  0.3  point  

rise  in  CPI;  adjustments  made  annually     3.  Shift  differential     15  cents/hour  for  third  shift     4.  Overtime   All  overtime  paid  at  time  and  one-­‐half     5.  Layoff  notice   Minimum  of  two  weeks  notice     6.  Paid  sick  leave   2  but  less  than  4  years  of  service     =  1  day             4  but  less  than  6  years  of  service     =  2  days             6  but  less  than  8  years  of  service     =  3  days             8  but  less  than  10  years  of  service   =  4  days             10  but  less  than  25  years  of  service     =  5  days     7.  Vacations           1  but  less  than  3  years  of  service     =  1  week             3  but  less  than  10  years  of  service   =  2  weeks             10  but  less  than  17  years  of  service     =  3  weeks             17  but  less  than  25  years  of  service   =  4  weeks             25  or  more           =  5  weeks     8.  Holidays   7  total  (Christmas  Day,  New  Year’s  Day,  Good  Friday,  

4th  of  July,  Memorial  Day,  Thanksgiving  Day  and  Labor   Day)  

  9.  Life  Insurance   $10,000  group  life  plan’  accidental  death  and  

dismemberment  (AD  &  D)  $7,500     10.  Health  Insurance   Major  medical:  $250,000  lifetime;  company  pays  75%  

of  individual  medical  insurance     11.  Pensions   $20  per  month  per  year  of  credited  service     12.  Union  security     All  employed  by  the  company  who  fall  under  the  

jurisdiction  of  the  union  shall,  as  a  condition  of   employment,  become  members  of  the  union  at  the   expiration  of  the  60  day  probationary  period.    

Emerging  Issues    

 Management  would  like  to:     A.     Include  a  contract  clause  to  establish  a  lower-­‐wage  structure  for  new  

employees  beginning  in  the  new  contract  year.  These  new  employees   would  have  an  average  hourly  rate  of  $10.50.    

  B.     Establish  a  joint  committee  to  work  toward  containment  of  health  care  

costs.     Union  members  would  like  to:     A.   Include  a  contract  provision  to  protect  workers  affected  by  new  

technology.  This  provision  would  require  Bush  to:         1.)  Notify  the  union  six  months  in  advance  of  the  purchase  or  projected  

introduction  of  any  technological  change  that  would  affect  employees’  jobs   or  job  content  

  2.)  Provide  the  union  with  full  information  about  this  new  technology.     3.)  Handle  any  reduction  in  work  force  through  normal  attrition  and  

turnover.     4.)  Not  reduce  the  pay  of  any  employee  who  transferred  or  displaced  

because  of  the  new  technology     5.)  Provide  workers  with  cross  training  and  retraining  for  jobs  created  by  

the  new  technology     6.)  Provide  employees  who  cannot  be  retained  with  training  for  jobs  

outside  of  the  company  and  displacement  assistance     B.   Include  a  contract  provision  for  an  employee  savings  plan  with  a  Section  

401K  feature   Note  to  bargaining  teams.   Your  bargaining  books  will  need  to  list  actual  or  estimated  costs  for  proposals   and  for  the  collective  strikelines  for  the  package.  If  costs  are  not  stated  or     apparent,  costs  should  be  estimated  and  your  assumptions  or  calculations    given.   The  parties  are  encouraged  to  stipulate  and  /or  share  the  costs  of  items.    For  example,  the  parties  could  agree  on  the  month  costs  of  health  care.