Scenario Background:

Although small in size relative to its competitors, Harper Container Company (HCC) is recognized as a technology leader in the specialty plastics container market. HCC's only manufacturing plant is located in a medium-sized city that has experienced long-term declines in both its heavy-industrial base and its population as many area firms moved production operations to lower-cost locations both nationally and overseas. HCC survived the downturn only to face increased competition as foreign firms began to expand into its product market segment. Local economic conditions have improved recently with the relocation of two large service-industry firms to the city that significantly reduced area unemployment and forced local firms to compete for available workers. HCC is regarded as a progressive employer concerned with the welfare of its employees. Many employees have spent their entire working lives at HCC and expect to continue there until retirement.

United Chemical and Plastics Workers (UCPW) Local 14 represents all of the 200 labor employees at HCC. There are 15 unorganized office staff employees. The amicable relationship between HCC and the UCPW has now become strained due to union pressure for wage and benefit increases as economic conditions have changed since the last contract was signed three years ago.

The previous collective bargaining agreement expired two months ago; the parties have agreed to continue operating under the old contract on a day-by-day basis. The company and the union are both concerned that a new contract be agreed to as quickly as possible.

General Industry and Economic Information Available to Both Bargaining Parties:

For the specialty plastics industry, average industry-wide wages have increased 4% each year for the past three years while HCC wages increased by only 2% (across-the-board) each year for the same period under the now-expired contract. Future industry-wide wage increases are forecast to average 5% per year for the next three years. Increases in the Consumer Price Index for the next three years are forecast to range from 2.5 to 4% (the expected three-year average is 3.0%).

Per-hour shift differentials are fifteen cents for the evening shift and twenty-five cents for the night shift. There are fifty non-monetary grievances pending for settlement. Turnover of labor employees at HCC averages 5% per year.

Question

Develop strategiesfor both the Company and the Union that will lead to a successful bargaining agreement.