CATERPILLAR'S UNION FALLOUT
By Andrew Kupfer

(FORTUNE Magazine) – Sometimes unions have the last laugh. Although the United Auto Workers seem to have caved in to Caterpillar CEO Don Fites's threat to replace its members with nonunion workers, hiring permanent replacements for strikers at Ravenswood Aluminum had a different result. The directors fired CEO R. Emmett * Boyle. Among the reasons: Boyle's resistance to renewing negotiations with the United Steelworkers. They went out in November 1990 and were soon replaced.

Union membership is down (see chart), and only two other major strikes are in progress. The International Longshoremen who operate tugboats in New York have been out since 1988. Replacements are at the helm. In Michigan, 7,800 Food and Commercial Union members are striking Kroger supermarkets. The longshoremen simply want a better contract than the one offered. But the Kroger strike resembles Caterpillar's -- workers want a deal like the one the union reached with A&P, a competitor. These so-called pattern contracts are common industry by industry. But many companies argue that their businesses really have little in common. Caterpillar, for example, says it depends far more on exports than Deere, which signed a contract with the UAW. Detroit has grudgingly accepted pattern bargaining for years. How will this play out when the UAW opens negotiations with the automakers next year? Most industry observers believe that once one company agrees to a contract, the others will argue unique circumstances and try to chip away pieces of the pattern contract. But don't look for threats of replacement workers. Similarly, the Communications Workers of America are expected to reach agreement with AT&T on a contract that expires May 30. These days most employers and workers recognize that jobs are scarce and foreign competition real. Says AT&T Chief Executive Robert Allen: ''We have more areas of common interests than differences.''

CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: BUREAU OF LABOR STATISTICS CAPTION: UNIONS LOSE MUSCLE Striking Kroger workers at a store in Ann Arbor, Michigan