(Reuters) - Caterpillar Inc (CAT.N) expects a strike early Tuesday morning at its Joliet, Illinois plant after talks with the union broke down Monday just hours after union workers there overwhelmingly turned down a new six-year contract.
Caterpillar spokesman Rusty Dunn said the International Association of Machinists and Aerospace Workers, or the IAM, has informed the company that it will strike after the current contract expires after midnight on May 1.
But the world’s largest maker of construction machinery does not expect a strike to disrupt production at this point, Dunn said. The labor dispute comes as Caterpillar is scrambling to meet growing demand for its machinery in North America.
About 800 workers at the company’s Joliet manufacturing facility are covered under a contract.
Steve Jones, an official with the IAM Local 851 that represents affected workers, said Caterpillar’s offer was rejected because it calls for “wage stagnation” over the next six years and higher health care premiums.
“We’re going to be in a much worse economic position six years from now than we are now,” Jones said. He said the union has informed Caterpillar that it is willing to meet, but said there are no further negotiations currently scheduled.
Caterpillar spokesman Rusty Dunn said the outcome of the vote, which took place on Sunday, was “unfortunate” and that the company hoped to avoid a work stoppage. But production will continue, even if the current workforce decides to walk out.
“The Joliet facility will continue to work safely, meet production levels and conduct business as usual as we focus on meeting customer needs,” Dunn said. “Caterpillar has work plans, processes, policies and people ready to be deployed in the event of any business interruption, whether it is a tornado, fire or a strike.”
Jones said union officials expect striking workers to remain calm and orderly even if replacement workers are deployed to the plant.
Dunn said Caterpillar and the IAM had been negotiating for more than a month. Specific terms of the new labor pact were not disclosed by Caterpillar, but Dunn said the company had put forth a “competitive contract offer.”
IAM officials were not immediately available for comment.
IAM workers in the Joliet plant produce hydraulic components and systems for a variety of Caterpillar machines, including track-type tractors, wheel loaders and mining trucks.
The labor dispute in Joliet follows a high-profile conflict between Caterpillar and the Canadian Auto Workers late last year. Caterpillar had employed hundreds of CAW-represented workers at a London, Ontario locomotive plant.
The company closed the plant after failing to come to terms with the CAW.
Shares of Caterpillar closed down 1.8 percent at $102.77 on Monday.
Reporting by John D. Stoll in Detroit; Editing by Lisa Von Ahn, Bernard Orr