Who ought to benefit from big profits?
Caterpillar, the heavy machinery giant, is cutting its labor costs by declaring a 6-year wage and pension freeze for employees in its Joliet, Illinois plant and demanding a larger employee contribution to health plans. Earlier this year, Caterpillar closed the doors on one of its assembly factories in Canada after the union wouldn't concede to a 55 percent slash in wages.
Drastic times may call for drastic measures, but “[t]he company had a profit of $39,000 per employee last year,” reports the New York Times. In May of this year, Fortune Magazine declared that “Caterpillar is absolutely crushing it.”
And last year, the company’s stock grew 56 percent and was the top performing stock on the Dow and is expected to continue its growth thanks to an increasing demand for metal mining equipment.
Who is benefiting from the financial growth, then? Do you even need to ask? Between a base salary increase to $1.4 million a year plus $8.3 million in stock options and $4.9 million in incentive pay, CEO Doug Oberhelman should have no trouble making house payments or paying for health care. (I've read in various places that the increase was by 60 percent, while others said it was just 42 percent.)
“Caterpillar's board said its CEO deserved the additional compensation because the company completed several acquisitions successfully and still delivered strong results.” Meanwhile, Rose Bain, who has worked for the company for two years at $15 an hour told the Times, “We’re the people who busted our butts to help them make record profits. We shouldn’t be treated like this.”
Beyond the injustice of this particular labor battle, Caterpillar’s hard-lined approach to employee compensation and union negotiations has broader implications, as all eyes are watching the company: “Michael LeRoy, another labor relations professor at the University of Illinois, said Caterpillar has served as a model in legitimizing tough labor strategies, like take-it-or-leave-it contract offers.”
The situation, the Times reports, is becoming a “test case in American labor relations.”
It’s just another chapter in the book on keeping money (and power) out of the hands of the American worker. With CNN Money labeling the giant one of the top 50 most admired companies, the outlook for a complete turnaround in Caterpillars’ (and other large companies’) labor practices look grim.