At least one union figured out .. better to go back to work than to have their plant closed.. Imagine that.. 3 months of striking and they finally got a clue that the economy sucks

By BOB TITA and JAMES R. HAGERTY

JOLIET, Ill.—Striking workers at a Caterpillar Inc. CAT +1.60% factory here ended a 3½ month strike Friday, bowing to demands they accept reduced health-care and pension benefits and wage freezes for veteran workers.

Workers ratified a contract that cuts health-care and pension benefits. Above, a striker shouted at autos entering the factory on Wednesday.

The vote to return to work is the latest sign that unionized employees have little power to buck employers' demands for concessions. High unemployment is making workers wary of risking their jobs, and Caterpillar and other companies that have historically offered generous union contracts have shown they are willing to shift production away from areas where unions are strong.

"We really got nothing," said Joe Johnson, 19-year veteran of a factory that makes hydraulic parts for Caterpillar's construction and mining machinery. He said he voted for Caterpillar's slightly sweetened terms partly because of worry about how he would keep paying his mortgage and partly because he feared the strike was crumbling and would end in disarray if a settlement wasn't soon reached.

The company, which has said it wants labor to be "competitive" with local costs, said it was "pleased" by the vote and "ready to get this behind us."

Large strikes have become rare in recent years. In 2011, there were 19 work stoppages involving 1,000 or more workers in the U.S., down from an annual average of about 35 in the 1990s, according to government data.

Caterpillar isn't alone in its willingness to take on unions. American Crystal Sugar Co., the nation's largest processor of sugar beets, has locked unionized workers out of plants in North Dakota, Minnesota and Iowa for more than a year, using temporary workers to maintain production. Its dispute involves seniority rights for workers and health-care benefits.

In late June, about 3,600 workers at Lockheed Martin Corp. LMT +0.38% in Fort Worth, Texas, ratified a contract that dropped defined benefit pensions for new hires to end an International Association of Machinists and Aerospace Workers union strike that had curtailed production of military fighter jets. The union vowed to press the issue when the four-year deal expires.

AT&T; Inc. T -0.19% and Verizon Communications Inc. VZ -0.14% have been wrestling over the past year with unions representing workers in their declining wireline businesses. The two have pushed to cut pension and health-care benefits, and disagreements have led to several short strikes. AT&T; in recent months has reached agreements with unions covering more than 48,000 workers, but another 20,000 workers remain without a contract. Verizon hasn't yet reached agreements with two labor unions covering about 45,000 workers.

"Clearly, it is a very difficult environment to wage strikes," said Robert Bruno, a professor of labor relations at the University of Illinois at Urbana-Champaign. Caterpillar was able "to impose its will on its labor force," he said.

In Joliet, several local IAM leaders recommended against acceptance of Caterpillar's latest six-year offer, saying the company still was demanding too many sacrifices from workers. The union didn't release a vote tally but workers said about 280 to 290 members voted in favor of the contract and 220 against. Some of the 780 workers represented by the IAM didn't vote.

Caterpillar signaled its desire to end the dispute with a last-minute increase in the bonus workers will receive for ratifying a contract to $3,100 apiece from $1,000.

Timothy O'Brien, local president of the IAM, said workers learned only on Friday morning that Caterpillar had agreed to raise that bonus and the last-minute concession may have tipped the balance. Mr. O'Brien recommended against the offer saying workers were being asked to give up regular cost-of-living raises, pay more for health care, cede seniority rights and switch from a defined-benefit pension plan to a 401(k), defined contribution program.

Workers hired before May 2005 would receive no hourly pay increase; those hired later would receive a one-time 3% pay increase and thereafter would be eligible for additional raises at the company's determination. Hourly pay for most workers in the plant ranges from about $13 to $28 an hour.

After the vote at a union hall on Friday, some workers cracked open cans of beer in the parking lot, but the mood was somber. "I hate to give up a fight, but I don't think there is anything more to get," said Bob Jessen, who has worked at the plant since 1974 and voted for the contract. Mr. Jessen said he expects to retire by year-end.

As part of the new contract, a $7.8-million fund that had been used to supplement the incomes of laid-off workers will be converted into retirement bonuses. About a quarter of union workers at the plant are eligible to retire. "It is pretty hard to turn down," said Mr. Jessen. "But I feel sorry for the younger people still trying to make a living."

Newer Caterpillar workers said the loss of cost-of-living adjustments meant pay for their jobs would be capped once they reach the job's maximum, leaving them with flat salaries as they age. "I no longer look at Caterpillar as a career," said machinist Jason Clayton.

Many strikers had said it was unfair to ask them for sacrifices when the company is forecasting record profit and has given sizable pay increases to top executives. A Caterpillar spokesman declined to comment on that but said the new contract provided the workers with "a competitive wage and benefits package."

During the strike, Caterpillar continued to make hydraulic gear at the plant by using managers and temporary workers. More than 100 workers out of about 780 represented by the IAM had crossed the picket line as of early this week, Caterpillar and the union said.

In the 1990s, Caterpillar faced down strikes by the United Auto Workers union, forcing concessions including sharply lower pay for newer workers. Earlier this year, Caterpillar closed a locomotive plant in London, Ontario, after workers refused to accept a pay cut of about 50%. Caterpillar has instead ramped up production at a new plant in Indiana, whose legislature recently enacted a right-to-work law that makes it harder for unions to organize factories.