Empirical evidence below. The story behind the 20,000 people laid off by Caterpillar.
I don't mean to harp on Caterpillar. However, the trends of increased overseas production, the huge layoffs, and its shift of plants from the north, where unions are strong, to the south where workers have the "right to work" for lower wages demonstrates, in my mind, the trend for most multi-national manufacturers in America.
More troubling, it tells the story of why we will suffer long-term, if not eternal, unemployment in America and a future of low wages for the 'unwashed masses'.
The jobs are gone over seas, moved from the northern to the southern states, and wages for whatever jobs continue are slashed for good. It's a sad, but true story.
But, hey, it's just what corporations do. No story here. Move on.
Stop. Take a look at the Caterpillar story. In the last two years, it has done all of the above which explains why it laid off 20,000 workers, not the recession.
In answer to those who are right: Corporations exist to make profits, not to bow to social responsibility for American workers, I would like to posit that impoverishing American and European manufacturing workers, in the long run, will have a negative impact on the world economy and the corporations bottom line. It's short-sighted.
Then, again, workers don't buy mining equipment, so maybe Caterpillar is special. Many other corporations aren't quite so fortunate.
Multi-nationals need to see a much bigger picture than returns for the next quarter.
And as long as CEOs/Officers and shareholders reap huge rewards for being socially irresponsible in the moment in order to pump dividends for the quarter (as demonstrated below), they have little or no incentive to do so. They simply grab their bootie, get rich, and if necessary, move on if they accidently tank the company.
And this is done under the demand for 'efficiency'. It's just what multi-nationals do. Ok, we all get this, so we don't need comments strings to reiterate, thank you very much.
But first, as Naomi Klein so perfectly enumerates in her excellant book, The Shock Doctrine, multi-nationals (including financial institutions) have to destroy a country's economy so they can fire people, decrease wages, decimate social safety nets, and roll their billions into trillions as they buy up assets at $.10 on the $1.00 (which they did in March, 2009).
Think Asian Crisis.
Think Russian Crisis.
Think Greece.
Now think North American/European Crisis or
Think NOW, here.
And, to add insult to injury, these crises always end up shredding a country's social safety nets, which is why we hear all the blabbering about Social Security these days.
Btw, learn about Peter G. Peterson, you might want to study up on this man who has wanted to end SS for quite a long time. He's financed a movie that will be playing in living rooms around the country before the 2010 elections. He's sort of like the Anti-Michael Moore.
And before launching into the empirical evidence, I would like to address what Fox news was ramping up this July 4th weekend. Yes, I have suffered to listen in. I damaged my foot so have been arm chair constrained for a couple of weeks. It's getting better.
"Most employers are small businesses". This is a straw man to take the focus away from the real culprits of mass layoffs or large, multi-national manufacturing companies. The closing of a small business doesn't remove all income from a town. The closing of the foundation employer, or large manufacturing plant, decimates the economy of a town. The small businesses then fail. Fox sure can spin a straw man story. It's what they do. It could be called Straw Man News.
Someone mentioned this week that we need stories to help people understand the firehose of bad news we have had since NAFTA passed.
I have chosen the Caterpillar story.
Here's a few snippets of Caterpillar's relatively recent job killing activities:
Note that these are recent stories, the last couple of years. I haven't the heart or the patience to track the history of the Mass Murder of American Jobs back to when NAFTA (SHAFTA) was inacted, which is when the plug was pulled on whatever remained of social conscience in Congress:
Strategy 1 - Move manufacturing overseas:
UPDATE 1-Caterpillar opens plant, building another plant in China
June 28, 2010
http://www.reuters.com/...
Caterpillar to invest $200 mn in India facilities
June 26th, 2008 - 9:34 pm ICT by IANS
http://www.thaindian.com/...
And, in Brazil?
Caterpillar to build new facility in Brazil
June, 2010
http://finance.yahoo.com/...
Strategy 2: Layoff (fire) employees.
Another Layoff Shock: Caterpillar (CAT) To Cut 20,000
Posted: January 26, 2009 at 7:42 am
CAT admitted that it could not even call the depth of the recession. The company said "Global economic conditions and key commodity prices have continued to decline significantly. Financial markets remain under stress, and our expectations for 2009 have deteriorated. Uncertainty around the depth and duration of this recession makes it very difficult to forecast sales and revenues."
http://247wallst.com/...
Me thinks Caterpillar speaks with fork-ed tongue (see * below for empirical evidence).
Strategy 3: Close plants in the north. Move to weak/nonunion states, or states with "Right to Work" (right to pay as little as possible, hire/fire at will and/or no rights for the workers)
Caterpillar and the UAW have not had a contract in more than five years. They have had two long strikes, dozens of brief walkouts and hundreds of complaints of labor law violations.
Most Southern states have 'right to work' laws barring contracts that require people to join unions after getting a job. And the South has a long history of resisting unionization. The result is that Caterpillar can run its new plants with lower pay and less union interference.
http://www.thefreelibrary.com/....(BUSINESS)-a083857342
Well, at least some American will have a job, albeit a 'right to work' job.
And is this an example of a plant in the north being closed so the work can be done in the south. Pennsylvania's loss becomes Texas' gain?
Caterpillar, a manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines, closed the manufacturing plant in early 1998. There are approximately 200 workers at the parts distribution plant in Springettsbury Township.
http://www.allbusiness.com/...
Here's a new plant that will make diesel engines to open in Sequin Texas. Making diesel engines?
Seguin Caterpillar Plant Nears Completion
Facility To Employ 1,400 People
Katrina Webber, KSAT 12 News Reporter
POSTED: Monday, June 7, 2010
UPDATED: 5:39 pm CDT June 7, 2010
The plant, which will manufacture diesel engines, officially goes online next Monday, officials said.
http://www.ksat.com/...
June 1, 2010 | In: News
Caterpillar to move excavators out of Aurora plant
Caterpillar has announced that they will no longer be making excavators at its Aurora plant after 2013.
http://foxvalleylabornews.com/...
Since March, a number of states have approached Caterpillar in hopes of attracting the new facility, which is scheduled to open in 2012. Caterpillar has not identified the location of the new plant.
...Caterpillar also manufactures excavators in Belgium, Brazil, China, France, Indonesia, Japan and Russia.
http://www.dieselprogress.com/...
You may remember the French Caterpillar workers, 733 of them, were very upset they were being laid off. They took the managers hostage. Jim Dugan, a Peoria, Illinois spokensperson for Caterpillar had this to say about the French layoff:
“As it relates to the status of the social plan, we have been following the prescribed process and we are moving toward our plan of reducing the workforce by 733 in order to bring production levels in line with demand.”
http://www.globalpost.com/...
Well, yes Jim, it makes sense that you don't need the American and French workers anymore now that you have NEW PLANTS in China, India, and Brazil!!!!!!!
It doesn't take an economist or a logistics expert to figure out that, if you open several plants overseas, you can close the old ones in America and Europe. It's not a demand issue, it's a cheaper wage/cost of doing business issue. In short, it's an issue for the demand of larger CEO/Officer income and shareholders' dividends.
Or so it seems, as the Caterpillar story continues:
*You be the judge. Here's just how awful the recession has been for Caterpillar (not).
Empirical Evidence, recession not hurting Caterpillar, it's CEO, and it's shareholders.
It's CEO, J. W. Owens earnings increased sharply from 2006-2009:
2006 Caterpillar CEO Earnings - Pay: $4.28 million dollars, no shares listed in 2006
2009 Caterpillar CEO Earnings
If you do the math, Mr. Owens average pay for years 2007 and 2008 was about $16.44 million each year plus shares. Well, good for him. This is how capitalism works and what corporations naturally do even in the middle of a RECESSION, while laying off tens of thousands of American and European workers. Efficiency!
Sources:
2006 CEO Compensation, Fortune 500
http://www.forbes.com/...
2009 CEO Compensation, Fortune 500
http://www.forbes.com/...
Hey, have some fun. Check out the charts. Maybe you can find the company that laid you or your friends and family off. Compare it's CEOs income for both 2006 and 2009. Did the CEOs income increase or decrease?
*And, how have the shareholders weathered the recession storm? Quite well, actually. It's what corporations do. Reward shareholders.
WARNING: This might make your blood boil. Caterpillar seems to speak two languages. One language is "Sad, Bad Prospects, You're Fired" and the other is "Proud to Announce Higher Dividends for our Shareholders Because, in the words of Mr. Owens
Caterpillar Inc. (CAT, Free Analysis) of Peoria, Illinois is to raise their quarterly cash dividends to $0.44 per share of common stock, a total increase of $0.02, or 5%. The Board of Directors for Caterpillar voted on June 9th, 2010, and the dividends will be payable August 20th, 2010, to stockholders of record at the close of business, July 20th, 2010.
“During the global economic turmoil of 2009, Caterpillar maintained its dividend rate, while also strengthening the company’s balance sheet and improving cash flow.
Now we are pleased to reward stockholders with dividend growth, which underscores Caterpillar’s global reach and the strength of our business model,” said Caterpillar Chairman and Chief Executive Officer Jim Owens. “With this increase, Caterpillar has paid higher dividends to its stockholders for 17 years in a row.”
.....The company saw sales and revenues of $32.396 billion in 2009.
http://sumfolio.com/...
Sadly, all of Mr. Owens shareholder happy talk came on the heels of creating joblessness for over 20,000 American and European workers.
And the share value? Not so bad:
I wonder how many shares Mr. Owens and others were able to buy when the market tanked in March, 2009. I remember President Obama saying "There's a lot of great bargains out there."
Can you see how one might surmise Caterpillar speaks with a fork-ed tongue. Of course. It's what corporations do. No story here. Move on. Or many have suggested this week.
Isn't it stories like Caterpillar's that need to be chronicled and/or reported?
How long will it be before minimum wage is the norm for at least half of all Americans? or 75% or 90% Maybe it already is.
What can Congress do to reverse the huge income gap between the worker and the corporations/CEOs/shareholders as demonstrated in this chart?
And this chart which one could interpret as meaning we are in the same boat as workers in the Great Depression:
The economic inequalities have reached the same state of affairs that preceded the Great Depression, and the GOP wants to balance the budget and cut off unemployment for millions of innocent Americans. Thousands of Caterpillar workers?
ARE THEY COMPLETELY AND TOTALLY NUTS! OR JUST CRUEL? BOTH? WORSE?
IMHO, the Caterpillar story helps explain why we may have ETERNAL UNEMPLOYMENT for thousands of manufacturing workers in the northern states and millions nationwide.
Before the 20,000 worker layoff, Caterpillar had built new plants overseas. New ones are about to go on line. Plants in the north are still being closed, while plants in the south are about to open. The mining business is expanding, not contracting. Caterpillar owns a huge share of the mining equipment business. What incentives does Caterpillar have to re-open plants in Aurora, Ill or Pennsylvania and rehire 20,000 workers?
None! It's NOT what corporations do.
What I find shameful is the bold faced fact that the American and European workers spent decades sweating and working for Caterpillar to make it the company it became. For a few decades, Caterpillar profited and expanded AND paid decent wages and benefits, even retirement. And the reward for doing their thankless jobs all those years in the end: You're Fired, the plant is closing, Bye Bye Do you speak Mandarin? Hindi? or Brazilian?
So, as my friend once said:
That's what, so what, now what?
We hear quite often that the Chinese emerging market will save the day. However, if you read the entire analysis in this link, this might not be as robust as we would like it to be. For instance:
Chinese middle classes are not going to spend as much per capita as their North American counterparts, due to their higher savings rates, lack of social safety net and surplus of males relative to females. The ratio between the sexes means that men have to pile up savings to make themselves more attractive marriage candidates.
and
Foreign does not always mean better. According to a couple of studies Chinese consumers are reluctant to buy goods from Japan or the United States, believing that Chinese-made goods are better. Even foreign brands are perceived by many Chinese consumers as being Chinese brands, simply because they are known to be good. Ethnocentrism runs deep.
http://blogs.forbes.com/...
In short, the 300,000,000 Chinese middle class population (more than the whole population of the USA) is less consumer driven and is loyal to "Made in China" products.
One can assume the multi-nationals who already manufacturer their goods in China will figure out how to penetrate the Chinese market and mark their products "Made in China".
But how will this help the unemployed American and European workers? Maybe they can move to China? And the Chinese Oligarchs can move here and buy the laid off workers' foreclosed homes? Why would they want to remain in the pollution there?
Here are some solutions offered this week:
1. March and demand Congressional action
2. Increase tax on the wealthy, especially CEO/Officer salaries.
3. Impose tariffs on imports
4. Launch regional businesses while boycotting the chains
5. Get over it, it's what corporations do.
6. Impose higher taxes on companies that send jobs overseas
7. Hang down our head and cry, Tom Dooley
8. Get mad and get to work, working together
Have an idea or a solution?
Have a lay off story?
And, btw, General Motors opened plants overseas WHILE our Bailout Money helped them survive.
Read this June, 2009 Article for proof
Let's Face It, We Just Paid GM to Blow Dodge, Go to China
Public Private Partnerships. Yeah, right.