International Truck and Engine Corp. has announced that members of the United Auto Workers Union (UAW) have approved a new five-year labor agreement that will enable the company to become more competitive.

The contract was ratified by 54% of voting UAW members. It takes effect immediately and runs through Sept. 30, 2007. The UAW represents approximately 7,100 employees in manufacturing plants in Indianapolis, Ind., Melrose Park, Ill. and Springfield, Ohio; parts distribution centers in Atlanta, Baltimore and Dallas; and the truck technical center in Fort Wayne, Ind.
International Truck and Engine Corp. is the operating company of Navistar International Corp. and is the nation's largest truck and mid-range diesel engine producer. Highlights of the contract include overtime flexibility, shared health care costs, competitive new-hire package and reduced costs associated with layoffs.
Dan C. Ustian, Navistar president and chief operating officer, said the company and the UAW worked very hard to bridge gaps prevalent in the difficult negotiations.
"The resultant agreement addresses the needs of our employees and provides our business with a competitive labor package that will help the company be profitable over the business cycle which in turn creates greater job security for employees," Ustian said.
"Our goal was to achieve a long-term contract that provided an affordable cost structure with production flexibility and manageable health care costs so we could finish what we started when we began our next generation truck and engine programs," Ustian said. "The agreement rewards our many long-term employees who have made significant contributions to our new truck and diesel engine programs and it enables the company to compete in today's extraordinarily competitive marketplace."
Ustian said production flexibility to meet market conditions is assured under the new agreement because the company now has the ability to schedule an additional hour of daily overtime as well as overtime on two out of three Saturdays per month.
"The ability to schedule overtime is something that all of our competitors have," Ustian said. "This flexibility gives us the ability to meet short-term spikes in the market without having to add employees only to be forced to lay them off when market demand ebbs."
In the area of health care, the new agreement moves from first dollar of care coverage with self-referral to a more cost-effective point of service program with an increased level of employee participation. The point of service plan is in step with the growing national trend that place greater emphasis on utilization of the primary care physician as the overall coordinator of health care for each individual.
According to Ustian, the new contract will provide a work force that is properly sized to meet industry demand and support the investments that have been made in the company's production facilities. It is anticipated that employee job protection will decline to approximately 3,500 by 2004, to ensure that the company is well positioned for the next downturn.