(Reuters) -Caterpillar Inc said on Wednesday it had reached a tentative agreement with a union that represents workers at four of its facilities, dodging a possible walkout at a time when companies across the United States are dealing with widespread labor shortages.
The construction equipment maker's new six-year agreement, which needs to be put to a vote by employees, comes after some union workers had threatened a strike as they negotiated wage increases, improved safety measures and better healthcare benefits.
Caterpillar (NYSE:CAT), which has been struggling with margin pressures as input costs keep rising, has more than 100,000 employees around the world.
Labor unions in the United States have, in the meanwhile, stepped up efforts to ensure cost-of-living adjustments keep pace with inflation.
"Members at four locals in Illinois and Pennsylvania will review the tentative agreement and vote at upcoming ratification meetings," United Auto Workers (UAW) said in a statement on Wednesday.
The UAW will schedule a ratification vote soon, Caterpillar said in a statement, adding that the current agreement would be extended until the voting was complete.
The contract covers roughly 7,000 union employees represented by the UAW at three manufacturing plants in central Illinois and a parts and distribution center in York, Pennsylvania.
In January, union workers at the four Caterpillar facilities voted almost unanimously to authorize a strike, according to one local union's Facebook (NASDAQ:META) page.
Contract negotiations between the UAW and the Irving, Texas-based manufacturer began on Jan. 5, the company said.