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Should workers share company profits?

Scott Tong Jul 24, 2012

Should workers share company profits?

Scott Tong Jul 24, 2012

Tess Vigeland: In Joliet, Ill., nearly 800 workers at a Caterpillar plant have been on strike almost three straight months. They say management is forcing them to take big cuts while the company posts record profits. Caterpillar is not alone in asking for sacrifice from employees even while the good times roll.

Marketplace’s Scott Tong reports.

Scott Tong: At the Caterpillar plant in Joliet, Ill., management wants to freeze pay at a range of $12- to $26-an-hour and shift more health care costs onto workers.

Historian Jason Kozlowski at the University of South Florida has studied the company’s labor history. He says in the last two decades, when it comes to confrontation, Caterpillar has shown itself very hungry.

Jason Kozlowski: Caterpillar’s proved itself to be more than willing to take drastic measures — including replacing its workers and at times the willingness to close factories.

The company argues worker pay exceeds market rates by a third. Workers note Caterpillar made nearly $5 billion in profits last year — that they deserve a bigger piece of a bigger pie. But for industrial workers generally, that’s not the trend.

Kozlowski: Workers wages generally have been increasingly detached from — for many companies — corporate profitability.

There may be many reasons: union weakness, globalization.

Michael Leroy at the University of Illinois adds technology:

Michael Leroy: With the increasing automation and mechanization of a modern industrial plant, you need fewer workers. You have more and more operators, and less and less craftspeople. That’s the trend line.

And in the equipment sector, new markets are abroad, so the impetus is to shift the plants there.

Leroy: Our road construction boom is in the past, it’s not in the future. If you ask the question about Southeast Asia, the answer is, they’re going to build lots of new roads.

As the strike enters month four, Caterpillar announces earnings tomorrow. If you’re a consensus analyst, what do you see? I see earnings growth of 29 percent, and wages, not so much.

I’m Scott Tong for Marketplace.

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