1. How did the negotiations begin? Which side talked the most in the beginning? Does each side have a clear understanding of the purpose of the negotiations?

2. What behaviors of the negotiators seem either to bring the parties closer together or to drive them further apart?

3. How does the climate of the negotiations change over time? Which side talks the most as the negotiations wear on? Do the parties agree more or less as time passes?

4. How do the negotiations end? Are the parties friendly with each other? Do they both seem committed to the final solution? Are future union–management relations likely to get better or worse as a result of this agreement?

Collective bargaining is the cornerstone of American labor relations. Face-to-face negotiations involving give-and-take on the part of both management and labor representatives are an inherent part of our present system. It is through these negotiations that both sides attempt to understand the positions of the other and attempt to persuade the other side of the fairness of their own demands. 

The purpose of this exercise is for you to experience the collective-bargaining process and to gain an awareness of the nature and complexity of labor negotiations.

Background Information

Moulton Machine Shop is a 60-year-old shop located near Lake Erie in Pennsylvania. The company manufactures a wide variety of made-to-order products, but its primary business is the repair of mechanical airplane parts and components, a business that it conducts on an international basis. The firm has developed a reputation for quality and timely work on difficult machining projects. The mostly blue-collar workforce at Moulton consists of about 200 workers who were organized 40 years ago by the International Machinists Union (IMU). The labor relations climate at Moulton has been fairly good over the past 20 years (after a rather stormy beginning), with no strikes in the last 9 years. In the past 2 years, however, the number of grievances has increased substantially.

Recent economic conditions have been difficult for Moulton. Over the past 5 years, increased competition from lower-priced, foreign-based machine shops has pruned Moulton’s profit margins. Overall, sales are down about 10 percent compared with projections made earlier in the year. Moulton’s management believes that competition will intensify in the near future, creating even more problems for the firm. The union is aware of the financial situation at Moulton and is sympathetic, but it has been very clear in its overtures to management that it intends to fight for an improved contract for its members because they have fallen behind equivalent workers in recent years.

Current Contract Provisions
Clause	Current contract
Wages	Average hourly wage is $24.73.
Benefits	Company-paid life insurance and a $200-deductible medical insurance plan.
Overtime	Time and a half.
Layoffs	A 2-week notice is required to lay off any union member who has been at Moulton more than 2 months.
Vacations	2 weeks for all employees except those with more than 20 years’ service, who receive 3 weeks.
Holidays	9 paid per year.
Sick leave	4 paid days per year unless verified by doctor, in which case can be up to 10 days.
Length of contract	2 years.

Additional Information

• Hourly wage rates for union members doing similar work elsewhere in the local vicinity average $26.80.
• A $200-deductible dental insurance plan would cost about $75 per employee.
• Overtime averaged 185 hours per employee last year.
• Among competitors, the most frequent vacation, holiday, and sick-leave schedules are as follows: (1) 2 weeks’ vacation for starters, 3 weeks after 10 years of service, and 4 weeks after 25 years; (b) 10 paid holidays per year; and (c) 6 paid sick-leave days per year (although there is a wide variation here, with a few firms having no paid sick leave at all).
• Contract length at similar firms varies from 1 to 3 years.

Procedure

Divide the class into groups of three. Each group consists of a union negotiator, a management negotiator, and an observer. The instructor will provide a role statement for each negotiator. These role statements should not be shared with the other negotiator or with the observer. Each group’s task is to negotiate a contract between Moulton Machine Shop and the IMU. Your instructor will tell you how much time you have available for this task. It is important that you settle this contract in the limited time available, so that you can avert a costly strike.

As the negotiations proceed, observers should record significant events. (Use the sample observation form shown on page 541.) When the negotiations end, observers will be asked to report the final agreed-upon contract provisions to the rest of the class and to describe the process by which the negotiations took place in each group.

Contract Negotiations Observation Form
Clause	Final Settlement
Wages
Benefits
Overtime
Layoffs
Vacations
Holidays
Sick Leave
Length of Contract
Other Provisions