Monday, January 02, 2012

Yeah, this outfit really needs a tax cut

From CBC: (emphasis mine)
Electro-Motive Diesel, which makes diesel-electric locomotives and engines in London, Ont., has locked out almost 500 unionized workers after they failed to take a 50 per cent cut in wages and benefits.
The collective agreement between EMD and the Canadian Auto Workers Local 27 ran out at the end of 2011, and picket lines were set up at 6 p.m. Sunday.

EMD is owned by construction equipment maker Caterpillar through its Progress Rail subsidiary. Caterpillar has a reputation for being tough on unions and waiting out long strikes.
So, lets look at Caterpillar's condition. Is this a suffering corporation? From Caterpillar's 3rd quarter report of 2011: (emphasis mine)
"This was the best quarter for sales in our history, and our order backlog is at an all-time high. Excluding Bucyrus impacts, this was also our best profit quarter in history, and year-to-date operating profit as a percent of sales was higher than any full year in more than three decades. Machinery and Power Systems operating cash flow has also been very positive, with the first nine months of the year better than any full year in our history," said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.
The Bucyrus impacts refer to the Caterpillar acquisition of Bucyrus International, (a heavy mining equipment company), in 2010.

Even with the negative number from Bucyrus added to Caterpillar's year-end figures, the company is forecasting a $6.79 profit per share, a 63 percent increase over the previous year.

Again from CBC:
Union leaders fear Caterpillar will move production to a Progress Rail plant in Muncie, Ind., which was opened on Oct. 28 and also produces diesel-electric locomotives, media reports say. It could benefit from any Buy American policies that might affect purchasing in the U.S.

Union officials told the London Free Press that the final offer would cut wages to $16.50 from $35 an hour, though the CAW has made it clear it rejects wage cuts as long as Caterpillar enjoys record profits.
Unfortunately, here's a piece of reality no one is going to like.
The economic development arm of the state gave Progress Rail $3.5 million US in tax credits and $1 million in training credits, another $1 million for the region to build public works, and help to pursue a $1-million grant and $22.5 million in tax abatement over time, Roysdon said.
In return, Progress Rail was to invest in the shell of a manufacturing plant and employ as many as 650 workers by 2012.
But the hoped-for flood of new jobs has been less than overwhelming, and the company is keeping secret how many it's hired, Roysdon said.
In October, when the plant rolled out its first two locomotives for mass transit, three different public officials cited the number of employees and all three numbers were different, varying between 150 and 180.
"The workforce hasn't been as easy to find as they thought," Roysdon said.
Why that's the case is tough to determine, with Progress Rail reticent to speak. But two factors come to mind: low wages and training requirements.
In September, an employee told Roysdon that wages ranged between $12.50 and $14.50 an hour, a tough sell in a region where vanished manufacturing jobs once paid $25 and up an hour.
The other challenge has been finding employees with the requisite skills, a problem that drew the attention of the Economist.
Progress Rail even paid retirees from London to help - something that raised the ire of the Canadian Auto Workers, the union for the London factory's workers.
So, Progress Diesel went to where the corporate welfare was and made big promises into their lapels. Not that such behaviour will bother the Governor of Indiana. He's cut from the same rotting cloth as Stephen Harper.

The Republican governor of Indiana, Mitch Daniels, has made it a priority to pass legislation that would make his state less hospitable to unions, so-called right-to-work laws ...
Yes, well right-to-work legislation has done wonders for the U.S. It attracted German auto manufacturers to position themselves in the right-to-work states because they consider the U.S. a low wage country. Even the German car makers admit that the only reason they pay such low wages is because they can get away with it.

Welcome to Stephen Harper's Canada. Tax cuts for corporations which are exploiting employees and reaping more profits. Higher unemployment insurance premiums for employees on an already reduced wage.

Right. When you only have one tool in the box it becomes a race to the bottom.


meadowlark said...

Canadian people should read. Harper gives a speech in New York at, The Council of Foreign Relations. In Sept. 25/2007. Harper made his evil agenda, abundantly clear. Watch out for Harper and Obama's border deals, they really stink. Everything Harper does, stinks.

Edstock said...

The Caterpillar organization is a nasty piece of work: hard core neo-fascists. I wish the workers all the luck — they are going to need it.

That being said, it is currently fashionable to pillory the import car manufacturers like Honda, Toyota, BMW and Mercedes for locating in "right to work" states.

Fact is, UAW President Bob King has been unsuccessful in organizing all those "victimized" workers — the UAW sucks, as far as they are concerned. You might not like it, but that's their mind-set. The UAW sucks. No Peter Sellers "I'm All Right, Jack" for them.

And the CAW are also aware. Lean on Ford or GM or Chrysler so they can't compete, and they'll be building them in Hermosillo instead of Oakville or Oshawa. Ford has spent BILLIONS on Chicago, Oakville, Windsor, Detroit, to build the next generations of product — but they will walk away from it if they have to, to get to deal with reasonable labor. Fortunately, the CAW appears to have a clue, so that's not likely to happen.

For now, though, all the politically-correct with their shiny, happy Asian cars are helping this process. Oh what a feeling Toyota. Prius inter pares?