The purpose of this problem is to familiarize students with the negotiation of a labor contract. The
problem is strictly a hypothetical one and does not pertain to any actually management or union. It is
designed to test in a practical way the student’s understanding of the issues of collective bargaining
studied during the semester and the strategy of the bargaining process.
The following constitutes the case on which demands will be based and which provides the
framework for the negotiations. Read it very carefully to size up the situation. Base your demands only
on the facts given here.
Representatives of the Auto Products Corporation of Indianapolis, Indiana, and Local 5000,
United Metal Workers of America, are in the process of negotiating their collective bargaining contract.
The negotiation covers the Indianapolis plant.* Auto Products also owns a plant in Little Rock, Arkansas,
but the southern plant is not organized and is not a part of the current negotiations. The current
contract, which covers only the Indianapolis plant, was negotiated for a 3-year period. The time of the
negotiation is the present, and, accordingly, the parties are conditioned by current economic trends,
patterns of collective bargaining, and labor relations law.
The Indianapolis plant has been in business for 60 years and has steadily expanded. At present,
1,409 production and maintenance employees are in the bargaining unit of the plan.
The financial structure of the firm has been relatively good. Here are some financial data from
the Indianapolis plant for the fiscal year preceding these negotiations:
Net Sales $200,825,900
Material Costs 79,250,000
Direct Labor Costs (includes fringe benefits, payroll taxes,
and reflects layoffs in previous fiscal year) 72,635,000
Other Variable Costs 13,265,000
Fixed Costs 5,500,000
Total Expenses 170,650,000
Income Before Taxes 30,175,000
Net Income After Taxes (Federal, State, County, Municipal)... [continues]
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