Manitowoc is Back at Work
Manitowoc Company (MTW) has resolved the labor dispute with the Machinist's Union that had resulted in a two-month long strike and partial work stoppage for the manufacturer of cranes and industrial foodservice equipment (temporary workers were eventually brought in to keep vital operations up). This is good, as it allows production levels to restore to normal...and people retain their jobs. I'm bullish on MTW and the strike had been a point of worry as the company is still emerging from a re-organization.
The truly interesting part about the resolution of the work stoppage, though, is the terms of the contract with the Union. Pay wasn't reduced. Benefits remained "about the same". Number of employees remained level. The change to the contract? Union members now have the option to receive the same pay and benefits as offered in the contract but drop their Union membership. The company has contractual language that moves their facilities from closed to open shop.
The Union membership decision will happen at the individual level, and will work a little bit like a benefits open-enrollment period. Each year there will be a seven-day period in which every production worker will choose whether to be a Union member or not.
In the short-term, I really don't see many Union members giving up their membership. But, I also don't think MTW was thinking about the short-term. They are clearly looking ahead to the next generation of workers to whom Union memberships don't hold as much appeal. Younger workers have much less affinity and respect for Unions and what they have historically provided. Younger workers are more inclined to believe that they should be rewarded for their efforts on an individual basis rather than be forced to accept the collective reward. Right, wrong or indifferent...MTW seems to be banking on a natural decline in Union membership due to lack of interest. And that positions the company well for greater manufacturing flexibility in the future.
It may hurt organized labor (which I do support), but it shows that organized labor is not thinking as far ahead as companies are right now. Expect much more of this type of action from companies who have agreements with Unions.
I remain bullish on MTW over the next 3 to 5 years.