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Company 1’s Negotiation Ceiling is $17.60. If the top of the Negotiation Ceiling is below labor’s demand, labor strikes. At the end of the strike the two sides will settle halfway between the company’s Negotiation Ceiling and labor’s demand, or at $20.80 (figure below). Strike lengths depend on the spread between positions.

Company 1 Strike Settlement: Company 1’s Negotiation Ceiling of $17.60 is less than Labor’s demand of $24.00. The workers strike (see Table 7.1). Eventually, a settlement is reached for at a wage of $20.80.

The maximum length of a strike is 84 days, at which point both sides accept arbitration. Workers will strike approximately seven days for every:

  • $1.00 difference in wages
  • $300.00 difference in benefit package
  • Percentage point difference in Profit Sharing
  • Percentage point difference in Annual Raise

Table 7.1 illustrates a strike example. Strikes always occur at the end of the year. If a strike is 46 days long, workers would picket from the middle of November to the end of December.

If you have inventory on hand during the strike, sales continue. R&D projects also continue.

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