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Caterpillar tractor

Here's another entry in the "company going to America for cheap labor" category for you: Iconic heavy machinery manufacturer Caterpillar bought a plant in Canada just two years ago—and now it's planning to move those jobs to Indiana unless Canadian workers will agree to massive concessions. Massive like a 50 percent pay cut, giving up their pension, and more, and Caterpillar has locked the workers out to drive home how serious it is about this, as Huffington Post's Lila Shapiro reports.

Caterpillar isn't suffering financially; in fact, it's been profitable consistently over the past five years and profits spiked over and above that in late 2011. And it's not that the Canadian workers of whom Caterpillar is demanding a 50 percent pay cut make outrageously much money. It's that the Muncie, Indiana workers earn so little: $24,000, below the median income in the U.S. and just above the 2010 poverty threshold for a family of four. Shapiro points out that:

The situation at Caterpillar illustrates an emerging problem with the nascent economic recovery: While corporations are rebounding from the depths of the recession, working Americans aren't. Corporate profits are at their highest level in decades while worker compensation is at a relative 50-year low. Much hope has been placed in the rebound of North American manufacturing, but while the industry has added some 334,000 positions in the past two years, many of the new jobs don't pay the old middle class wages. [...]

"It's a fundamental problem: Now we have a situation where there's not enough purchasing power in the American economy to feed this recovery," said Thomas Kochan, a management expert at the Massachusetts Institute of Technology.

"It's not all bad," he continued, pointing to companies like General Electric, which have slashed wages while profits were strong in return for continued investment in the United States and the promise of more jobs. Other companies must cut wages to stay alive, such as the auto makers, which pay new workers nearly half what starting employees made before the crash.

"But if it's just companies slashing wages because they've got the power to do so, then it's dysfunctional," Kochan said.

Standards may vary on what constitutes "companies slashing wages because they've got the power to do so" rather than because they need to; I suspect that MIT management expert Kochan and I locate that at rather different starting points. But there seems to be no question that Caterpillar falls into this "dysfunctional" category. Other words that might be applied include "abusive" and "evil."

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Comment Preferences

  •  The race to the bottom. (23+ / 0-)

    It's why we fight not for just jobs, but for good jobs that can support families.  And it's why labor must beceeom international, since capital already is.

    I'm from the Elizabeth Warren and Darcy Burner Wing of the Democratic Party!

    by TomP on Fri Jan 20, 2012 at 07:34:19 AM PST

  •  They're rocking on go... (7+ / 0-) wonder Daniels wants to ram through Right-To (Screw)-Work(ers) legislation min Indiana!

    Float like a manhole cover, sting like a sash weight! Clean Coal Is A Clinker!

    by JeffW on Fri Jan 20, 2012 at 07:36:15 AM PST

    •  It's not just Right-to-Work states (4+ / 0-)
      Recommended by:
      JeffW, polecat, phonegery, DruidQueen

      About one month ago the New York Times carried a story in which union leaders implicitly bragged about lower wages making US manufacturing more competitive.

      Did that union leader know what he was saying?  Or is he too ignorant to appreciate the implications of his statement.

      Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

      by PatriciaVa on Fri Jan 20, 2012 at 07:43:18 AM PST

      [ Parent ]

      •  Link? I missed that one. n/t (2+ / 0-)
        Recommended by:
        phonegery, Dirtandiron
        •  The Link.... (2+ / 0-)
          Recommended by:
          Youffraita, Losty

          Reprehensible what private sector union leaders have done.  Either its collusion or incompetence.  I don't know what's worse.

          December 29, 2011

          Factory Jobs Gain, but Wages Retreat

          according to Gordon Pavy, president of the Labor and Employment Relations Association and, until recently, the A.F.L.-C.I.O.’s director of collective bargaining.

          “Some companies want to keep work here, or bring it back from Asia,” Mr. Pavy said, “but in order to do that they have to be competitive in the final prices of their products, and one way to be competitive is to lower the compensation of their American workers.”


          “We are getting from the company an $800 million investment in Appliance Park over the next two years, and what we had to do for that investment was accept the ‘competitive wage,’ ” said Jerry Carney, president of Local 761


          Mr. Carney’s competitive wage — a euphemism that G.E. officials also use — is really, as both sides acknowledge, the price of halting or at least slowing this migration. It is, in effect, the lower tier of a two-tier system first introduced in the 1980s. That system limited those consigned to the lower tier to 20 percent of a company’s work force. In addition, new hires eventually advanced to the higher tier. Bonuses and profit sharing eased the pain, and they still do, but for a new generation of workers, graduation to the upper tier is disappearing, and the lower tier is becoming a new hire’s lifetime wage scale.

          Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

          by PatriciaVa on Fri Jan 20, 2012 at 08:23:37 AM PST

          [ Parent ]

          •  I am very skeptical (1+ / 0-)
            Recommended by:

            about accepting at face value comments trashing union leaders coming from someone who pushes Robert Rubin's economic ideas.

            Robert Rubin, whose pro-investment-banking, anti-financial-regulation positions played a large part in setting up the disastrous financial meltdown of the late aughts.

            Robert Rubin, who convinced Clinton to spend all his time worrying about the deficit and not funding progressive priorities. As we all know, that worked out fabulously - Clinton built up a big ol' surplus that enabled the GOP to enact massive tax cuts.  

            Robert Rubin, whose proteges we can thank for large banks not having been broken up and for the Obama administration not taking advantage of the fiscal crisis to force the financial industry to serve the real economy's needs rather than its own executive's greed.

            If this is who you think should be telling DKos members about economics, then I see why people might think you are a troll.

            "You try to vote or participate in the government/ and the muh'fuckin' Democrats is actin' like Republicans" ~ Kweli -8.00, -6.56

            by joey c on Fri Jan 20, 2012 at 10:07:19 AM PST

            [ Parent ]

          •  Huh. I guess I don't read that (0+ / 0-)

            as bragging.

      •  Republican Troll. Read her "Kudos to BP" (0+ / 0-)

        comment here.

        Where are all the jobs, Boehner?

        by Dirtandiron on Fri Jan 20, 2012 at 08:23:22 AM PST

        [ Parent ]

        •  The stalker who "Hides" my comments... (1+ / 0-)
          Recommended by:

          ...makes an appearance.

          Why does the person "hide" my comments?

          Simply because I'm a Dem who believes in cheap energy - cheap energy which benefits the working and middle-class.  

          You accuse me of being a GOP troll, yet I"m one of the few people in this community that has argued for a national wealth tax!!!!

          How do you reconcile "GOP Troll" and "National Wealth Tax".  You can't.

          I considered reciprocating your "hide", but, me dio flojera.

          In any case, I do advise you to think more critically before you pass judgement on comments.

          Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

          by PatriciaVa on Fri Jan 20, 2012 at 08:34:37 AM PST

          [ Parent ]

          •  With Democratic people like you, we don't (0+ / 0-)

            need Republicans. "Kudos to BP"  Really? Kudos to BP? For capping the well in "only three months"?

            Where are all the jobs, Boehner?

            by Dirtandiron on Fri Jan 20, 2012 at 08:38:01 AM PST

            [ Parent ]

            •  Do you know ho long it took Pemex.... (0+ / 0-)

     cap a similar blowout?


              Ten Months!!!

              Do you know how many Pemex execs lost their job?


              Because they were all there, for the most part receiving salaries/benefits 30% higher than they would have earned in the private sector, at the pleasure of the president.

              Many BP execs, including the CEO, lost their jobs.  And more would have done so had they not capped it in 3 months.

              That's why I applauded BP.  Because they did work expeditiously.

              Imagine how much longer BP would have taken to cap it had they been certain that no jobs were on the line.

              Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

              by PatriciaVa on Fri Jan 20, 2012 at 08:46:06 AM PST

              [ Parent ]

          •  Define "Cheap" (1+ / 0-)
            Recommended by:

            Simply because I'm a Dem who believes in cheap energy - cheap energy which benefits the working and middle-class.

            Is this the same kind of 'cheap' we are talking about when we talk about 'cheap' products, wherein all the externalities are ignored, where all of the massive dislocation is ignored, where the common man and woman are the first on the chopping block?

            You can see where 'cheap' labor has not gotten us. It won't be very much longer and we will all begin to experience up close and personal (Washington State is experiencing it right now) what 'cheap' energy has wrought.

            I won't be coming home tonight, my generation will put it right - Genesis 9:3

            by superscalar on Fri Jan 20, 2012 at 09:21:28 AM PST

            [ Parent ]

  •  Hell Yes, With National Health That's a Big Cost (5+ / 0-)

    of labor they don't have to spring for directly.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Jan 20, 2012 at 07:38:30 AM PST

  •  UAW contributing to this mess (5+ / 0-)
    Recommended by:
    mikeconwell, ffour, phonegery, dougymi, Losty

    The UAW recently had the rank-and-file at GM and Chrysler agree to one of the worst contracts ever.

    New union hires at GM North make as much as new hires at Toyota South.  Where's the incentive to join a union?  If I were a new hire at GM in Michigan, I would refuse to pay my monthly dues.

    And how is the UAW leadership treated?  Many of you regard them as heroes, securing the best contract they could.

    Yet, that''s precisely what the union bosses in Mexico do, year after year.  They claim that they got the best possible deal in the context of globalization.

    If the UAW leadership had any pride in their work, they would have resigned months ago.

    And it's not just the UAW.  About 18 months ago, the union representing Harley Davidson rank-and-file agreed to a contract freezing wages for the next seven years.  In effect, the union agreed to a wage cut (in real terms).  Meanwhile, Harley reported record profit.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

    by PatriciaVa on Fri Jan 20, 2012 at 07:39:46 AM PST

  •  The proportion of union members in Canada's (6+ / 0-)

    workforce has not declined as rapidly as it has in the USA. I do not know the exact numbers, but it is likely 50+% higher here. Canada's edge has been public health care -- companies save by not having to provide that large benefit, but in a deunionized America they may not have to. The race to the bottom rolls on.

    We have only just begun and none too soon.

    by global citizen on Fri Jan 20, 2012 at 07:42:35 AM PST

  •  I recall when Cat begged Peoria for help (4+ / 0-)
    Recommended by:
    Egalitare, PatriciaVa, Dirtandiron, Losty

    touting its love of the US and A, as well as its corporate citizenship in the middle of Illinois.

    Peoria responded. This is how CAT pays them back. Bastards.

    What we call god is merely a living creature with superior technology & understanding. If their fragile egos demand prayer, they lose that superiority.

    by agnostic on Fri Jan 20, 2012 at 07:44:56 AM PST

  •  Looks like Caterpillar mgmt was listening.... (4+ / 0-)
    Recommended by:
    PatriciaVa, Dirtandiron, phonegery, Losty
    February 12, 2009



    Caterpillar Plant

    East Peoria, Illinois

    "So what's happening at this company tells us a larger story about what's happening with our nation's economy -- because, in many ways, you can measure America's bottom line by looking at Caterpillar's bottom line.


    "Right now, we have a once in a generation chance to act boldly, to turn adversity into opportunity, and use this crisis as a chance to transform our economy for the 21st century."  

    Too bad management's idea of transformation comes at the expense of its employees.

  •  "The race to the bottom" as a counter to the (1+ / 0-)
    Recommended by:

    "Bottom-up" comments I kept hearing last night during the debate.

    Another way to look at it is worker-pay arbitrage, and the people that make money in such a situation are the Viet Cong Vulture Capitalists like Romney.

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    —Spike Milligan

    by polecat on Fri Jan 20, 2012 at 07:47:04 AM PST

  •  What Kills Me about Towns Like Muncie IN (1+ / 0-)
    Recommended by:

    ... is, like Marianne Gingrich,  they steal someones husband (Catepillar) and then 10 years down the road, they are all surprised and hurt that they got left for a younger (cheaper) model.

    Poor man wants to be rich. Rich man wants to king. And the king ain't satisifed until he rules everything. B.Springsteen

    by howd on Fri Jan 20, 2012 at 07:47:43 AM PST

  •  Don't think they wanted EMD London (2+ / 0-)
    Recommended by:
    Losty, jessical

    The rest of EMD's factories are in much lower-wage areas (like the United States and Mexico) and it looks like Caterpillar essentially decided to get  rid of the expensive one once they acquired it in 2010.

    The workers at the factory are mystified as to why Caterpillar would buy a company with a high-wage plant in Canada, only to lock out the workers less than two years later and suggest that the factory will eventually be shut down.

    They didn't want the high-wage plant in Canada, it was a package deal.

  •  Maybe they will court another one of the "Right to (1+ / 0-)
    Recommended by:

    Work" Southern states for the location, and have them play against each other, as has been the strategy of many companies that have graced this region with their location.   Why look for, or to another country in this world to relocate to when you have "50" separate competing ones nearby.  All that's needed are a giving away the store of a ton of tax breaks and incentives as they have done down here with South Carolina, and Alabama, North Carolina, Georgia, and Mississippi along with a guarantee of $10.00 - $14.00 an hour employees, and there you have it.

    Oh, and let's not forget the anti Union sentiment and laws that prevent such organization and representation of workers down here in the South....  Very important to corporate growth, and serious dividend payments to investors these days.

    "Those who make peaceful revolution impossible, will make violent revolution, inevitable." - President John F. Kennedy (1917 - 1963)

    by LamontCranston on Fri Jan 20, 2012 at 09:00:31 AM PST

  •  Caterpillar and the GD (1+ / 0-)
    Recommended by:

    Back during the Great Depression, John Deere basically did backflips to help farmers keep their equipment. (Deere came out with their GP Wide Tread in '29. Could there have been worse timing?). People at my level who are in the know are fiercely loyal to Deere, because Granddaddy was.

    Caterpillar has no such history. It's Deere for me every time, whenever possible.

    I write the series Confessions of a Retail Worker here on DK. It documents my life in a non-unionized workplace.

    by Lightbulb on Fri Jan 20, 2012 at 10:32:05 AM PST

  •  UAW in a tough spot (1+ / 0-)
    Recommended by:

    The Canadian plant and the Muncie plant are both owned by Progress Rail Services, a wholly owned Cat subsidiary.  The Muncie plant was opened only a year ago, and seemed like good news at the time- a new American manufacturing plant, and a unionized plant at that.  Because all of the workers are "new hires", they're paid under the 'second tier" of the UAW's contract with Cat.  

    Still, it's a good job compared to what else is out there in Indiana these days, right? I mean, the beefits are pretty damn good compared to woking at Wal-Mart.  Not so fast.  The workers in Canada make almost double under a CAW contract, because that's not a "new" plant.  And now Cat is pitting union members against one another.  

    It's a bad situation, but what is the UAW supposed to do- stop organizing in the US because our weak labor laws and lack of union density mean less bargaining power?  It's oh-so-easy to condemn concessionary deals from an idealistic leftist perch.  But we're out here in the trenches rowing with half an oar upstream.

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