SOUTH MILWAUKEE (WITI) -- On the eve of the beginning of labor negotiations, employees at Caterpillar's South Milwaukee factory are uneasy, with the company saying there will be layoffs and workers rumbling about a strike.
The company has already announced layoffs, and now, South Milwaukee's mayor says he hopes the negotiations result in a fair contract, and don't damage the city's economy.
The company is calling these "short-term" layoffs, saying it is reacting to worldwide economic conditions. Still, the company made nearly $6 billion in profits last year, so the question is: how hard of a bargain can it drive with its workforce, when business is thriving? Labor and management so far are keeping negotiations out of the press.
Caterpillar, the world's largest manufacturer of mining and construction equipment informed employees at its South Milwaukee plant late last week that there would be layoffs coming, without specifying a number. Union officials speculate it could be as many as 250 people.
In a statement, a Caterpillar spokesman told FOX6 News: "Various Caterpillar facilities and business units are taking action to bring our production in line with demand, including our operations in South Milwaukee. This includes some short-term temporary layoffs."
The United Steel Workers Local Union 1343 would not comment on negotiations set to begin on Tuesday. The contract would cover 800 workers.
"I'm optimistic that things will be handled in a judicious way and that labor and management can get back together and get back to work," South Milwaukee Mayor Tom Zepecki said.
These are the first labor contract negotiations since Caterpillar bought the mining equipment company Bucyrus in 2011.
There are rumblings among the workforce that layoffs are meant to intimidate the union into accepting concessions on wages and benefits, but in a statement, Caterpillar denies that accusation:
"The company is prepared to begin the bargaining process and we intend to engage in good-faith negotiations in hopes of achieving an agreement that is fair to our employees and allows Caterpillar to compete on a global scale in a highly competitive business."
Meanwhile, businesses surrounding the plant -- especially bars and lunch spots like PJ's Deli worry that layoffs will take a bite out of sales.
"It probably would be a slight decrease in business. Not just mine, but other businesses," PJ's Deli Owner Tony Bloom said.
Mayor Zepecki says he is watching closely to see what happens with the negotiations.
"We're always concerned about the impact on the city. I would caution everybody to be a little bit -- not to jump off the cliff. Let's let things proceed and see where it goes," Mayor Zepecki said.
The current labor contract expires at the end of the month, and negotiations on a new one start Tuesday.