On January 21st, thousands of protesters and union workers gathered at a massive rally in London, Ontario, to speak out against the Electro-Motive plant lockout that took place three weeks prior.
The actions that led up to the massive rally included the company management informing workers that pay would be cut nearly 50 percent across the board.
With such massive cuts in labor costs, one would expect that the company is in dire financial straights. However, the reality is that Electro-Motive is owned by Caterpillar – and Caterpillar is anything but financially strapped.
In fact, in October of 2011, the company posted record profits – a 44% increase in profits that even surprised market observers on Wall Street (1).
Caterpillar Posts Record Profits and Executives Cash In
Douglas Oberhelman, the CEO of Caterpillar, reported to the media that sales were up nearly 20 percent higher than expected.
“We’re having a great year in 2011, and 2012 is shaping up to be better.”
Following the positive news from Caterpillar executives, the company stock rose 5 percent.
After the announcement and subsequent stock price increase, there was a flurry of executive trading activity.
Director David Goode sold over 4,600 shares, and then exercised options for 16,000 shares at a fraction of the market price. Just the stock option trade alone netted Mr. Goode an estimated $1.03 million in a single transaction.
Director Eugene Fife sold 8,625 shares, and then exercised his stock options for 12,833 at about 30 percent under market price, earning a sweet bonus of about $360,000.
The story from Wall Street didn’t quite jive with the offer that company management at Electro-Motive were feeding to employees.
Massive Cuts to Pay and Benefits
The offer to employees meant that skilled workers earning $35 an hour would have to continue doing the same job for about $16.50 per hour.
On top of the crushing income cuts, employees would also be faced with a significant reduction in benefits as well.
In light of the stellar market performance announced by Caterpillar only months earlier, as well as continued projected corporate profits into the new year, workers and union leaders rejected the offer. So the company locked the doors.
Now, Caterpillar employees from across Canada have converged on London, Ontario to stand in solidarity with the workers.
One worker named Marty McKenney vented to CBC reporters about his frustrations with the company lockout.
“I’ll stand until this is either resolved or they close the damn plant. Just let me know what the hell you’re going to do so I can pick up the damn pieces and get on with my damn life.”
While it may seem strange to observers that a company would be slashing employee salaries and benefits at a time when that same company is posting record profits – it has become the manner of doing business in the world today.
If the corporation can take money from workers to boost company profits, investors are happy, corporate executives get to cash in their stock options, and the gap between the rich and the poor continues to grow.