Mired Labor Talks Focus on Company Demand for Merit System

Contract negotiations between machinists and Solar Turbines Inc. have been stalled for 3 1/2 years.

Although the impasse is in part because of differences that are common in union-management relations, like wages and pension rights, a main stumbling block is an unusual proposal by Solar management.

Bernie Theule, Solar general manager of human resources, said company officials are insisting that pay raises for blue-collar employees be based on merit only. Merit pay is common for management employees, but rarely used to compensate unionized blue-collar workers.

Traditionally, union workers are given annual pay increases, along with cost-of-living adjustments, negotiated by their union representatives in contract talks with the employer.

Theule said Solar officials do not plan to back down from their proposal, and he called merit pay “a final offer that will be included every time.�

It is also an offer that is likely to be voted down every time by the 1,000-member Lodge 685 of the International Assn. of Machinists union at Solar. Since July, 1987, when members rejected the company’s first contract offer, machinists have voted down four company proposals. The lastest was rejected Oct. 7.

California Western School of Law professor Paul Gudel, an expert in labor law, called Solar’s merit pay proposal “quite rare for a unionized plant.� Both Gudel and Theule said they could not name another company where blue-collar workers represented by a union are paid according to merit.

“I would think that, if an employer was going to convince a union to adopt merit pay, it would be in a more troubled industry in a bleak area, like some areas on the East Coast, and not in California,� Gudel said.

The idea of merit pay for union employees originated about four years ago, when companies began promoting flexibility, competitiveness and productivity in order to compete with the Japanese, Gudel added.

“But the idea of merit pay never really got off the ground. . . . In the last couple of years, the idea has died out,� he said. “It seems that this is one of the firms that grabbed onto it and has hung on.�

Theule acknowledged that Solar’s proposal is “fairly unusual for a unionized operation.�

“But it’s a philosophy we believe in. We believe in pay for performance. We want to be competitive and survive in San Diego,� said Theule.

According to Theule, 62% of the company’s unionized machinists received merit pay increases in 1989 that averaged about 75 cents an hour. It is the only pay increase union workers have received since 1987.

In addition, union members received profit sharing in 1988 that totaled 3% of their gross incomes and 6% in 1989, Theule said.

Under the company’s plan, supervisors would decide who gets merit raises and who does not, Theule added.

Tony Stimus, Lodge 685 business agent, said both sides are still wide apart in their talks. Another big stumbling block is the company’s insistence on having an open shop, where employees may join the union or not.

“We’re not going to give in to the company. They’re saying no wage increases and no union shop. In my opinion, it’s just vindictiveness on their part. . . . There’s nothing in their contract offers to make members want to buy them,� Stimus said.

The union is also strongly opposed to a Solar proposal to freeze wages in some classifications. The union wants the traditional pay raises for every classification, but company officials want pay scales tied to prevailing market wages.

“You wouldn’t want to pay $13 an hour for custodial work, when the going rate is $8,� said Stimus. “In our plan, jobs that do not warrant a pay adjustment because of the current market conditions do not get one.�

Stimus called Solar’s contract stance “sad and disappointing.�

“We’re still producing a product that has given the company a profit for three straight years,� Stimus said. “The company basically doesn’t care about the employees’ future.�

In an effort to get the talks moving, Stimus said, the union agreed to some concessions.

“We’re allowing salaried people to do occasional work of ours. That’s a hell of a concession, because you’re talking about job security,� he said.

Machinists at Solar struck briefly but returned to work in August, 1987, when the company began hiring replacement workers. Theule said most of the strikers returned to work, but both sides are still in a dispute over the permanent hiring of 56 replacement workers.