Milwaukee Biz Blog: UAW lacks leverage in negotiations with Kohler

There have been a lot of ugly headlines for Wisconsin manufacturers lately. The Oscar Mayer plant in Madison will close, eliminating 1,000 jobs. A Tyson Foods plant in Jefferson will close, putting 400 people out of work. GE will shut down manufacturing operations in Waukesha, eliminating 350 jobs. Joy Global will close one of its Milwaukee plants, cutting 51 jobs.

The ISM manufacturing index for the Milwaukee area has been in negative territory for eight months in a row.

The last thing we need is another big plant shutdown. That’s why it’s so important for the Kohler Co. and its 2,000 workers from UAW Local 833 to reach an agreement that ends their current labor dispute.

Kohler workers at plants in the Village of Kohler and north of Sheboygan went on strike in mid-November, the first strike at the company since 1983.

One of the biggest issues for the workers is a two-tier wage structure implemented five years ago. Under that structure, newer employees are paid at lower rates than employees that have been with the company for decades. The newer “tier B” employees would receive an average pay increase of $3.18 an hour under the company’s proposed contract.

Understandably, the union would prefer to have all of its members paid at the higher rates that the most senior employees enjoy.

However, the company says it could not sustain operations in Sheboygan County if it had to pay all of its manufacturing employees at the higher rates. The company has a global workforce of 33,000, with 13 manufacturing facilities in the United States and 48 globally. In a column he wrote for the Sheboygan Press, Kohler Co. president David Kohler said that Sheboygan County is the company’s highest-cost manufacturing location in the world.

Considering the company has numerous operations all over the world, it certainly doesn’t need to keep manufacturing in Wisconsin. Kohler could easily join the list of legacy manufacturers that have closed their Wisconsin plants and moved operations elsewhere.

“If profit was Kohler Co.’s sole motivation, there would be no strike,” David Kohler said in his column in the Sheboygan Press. “In fact, there would be no manufacturing here at all. The savings of moving production out of Sheboygan would be that significant.”

If Kohler were a publicly held company, its investors, with no loyalty whatsoever to Wisconsin, would probably demand that the company close down its most expensive manufacturing operations.

But Kohler is a privately held firm with a 142-year history in Sheboygan County that wants to maintain operations there. David Kohler is the fourth generation of family leadership for the company.

Striking Kohler workers may believe that the company has so much invested in Kohler that the company would not close the plant in its longtime home.

The Kohler headquarters, the American Club resort, and the Whisting Straits and Blackwolf Run golf courses aren’t going anywhere. But Kohler’s manufacturing operations in Sheboygan County shouldn’t be taken for granted. If they don’t make financial sense for the company at some point, they will be shut down.

Hopefully the company and the union reach an agreement that keeps the Sheboygan County manufacturing operations viable for years to come.

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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