|Photo by Joseph Schulz|
Oshkosh Defense is in the midst of an 8-year, $6.7 billion contract with the U.S. military for 17,000 JLTVs.
Negotiations between Oshkosh Corp. and UAW Local 578 have started even though the current contract still has more than a year to run.
“Oshkosh Defense and the UAW 578 are having conversations well in advance of contract expiration to ensure we are in the best possible position to not only take care of our production team members but to provide strong business continuity for our customer,” said Don Bent, chief operating officer for Oshkosh Defense.
Both the union and the company have a lot riding on the negotiations and the shape of a new collective bargaining agreement (CBA).
The union is looking at a drop of as much as 30 percent in membership as it loses its current protection from the state’s right-to-work law. The company has just come off a sharp drop in defense-related profits, which it says is temporary, and faces possible new competition on the production of its prized Joint Light Tactical Vehicle (JLTV).
The new CBA will take effect September of next year, but it is being renegotiated early because the company needs to have a cost structure in place for its defense contract, according to a member of United Automobile Workers Local 578.
Once the CBA takes effect, Oshkosh Corp. employees will no longer be protected from Wisconsin's right-to-work law. The state’s right-to-work law prevents a company and a union from entering into an agreement that forces workers to join the union as a condition of employment.
Oshkosh workers are currently grandfathered into pre-right-to-work laws because the UAW's contract was extended in 2013—two years before Wisconsin became a right-to-work state.
In 2013, when the contract was extended, 317,000 Wisconsin workers were union members, but by 2019 only 219,000 workers were union members, a 31% decrease, according to the U.S. Bureau of Labor Statistics.
UAW leaders fear they could see a similar decrease in membership after the new CBA takes effect.
UW Oshkosh history professor Jeffrey Pickron, who researches American labor movements, said unions lose bargaining power when membership declines, making it harder to petition companies for better wages and benefits.
"If your union has enough people in it, you essentially have more leverage against your employer," Pickron said.
While the union faces uncertainty about maintaining members, the company faces uncertainty about maintaining its position as the sole-source provider of JLTVs.
Last month the Army said it plans to continue buying JLTVs from Oshkosh but will put the vehicles out for competitive bid with a new contract coming in fiscal 2022, which starts Oct. 1, 2021.
“A split procurement will occur between the existing Oshkosh contract and the new competitively awarded contract based on the approved acquisition strategy,” the Army said in a budget document released in February.
Company officials remain optimistic about the future of the JLTV program, in part because of the potential for overseas sales.
“Our JLTV defense team was just over in London at an armored vehicle conference, and they had 16 different ministries of defense, all doing trials and demonstrations on JLTV,” Oshkosh CEO Wilson R. Jones said in January, speaking to stock analysts.
“We're very excited about the opportunities in Europe and the Middle East for the JLTV,” he said. “We expect orders in '20 and in '21 from an international standpoint.”