Monday, July 30, 2012

The Collapsing Influence of Unions

The Guardian (h/t nc links):
Few places better illustrate the uneven recovery than Joliet, Illinois, where nearly 800 factory workers are locked in a bitter, three-months-and-counting strike against their employer. Caterpillar, famous maker of yellow bulldozers, has demanded its employees accept a six-year freeze on wages and pensions; the machinists' union says its members had no choice but to walk out.
Labour-management fights are nothing new, especially not for Caterpillar, which wears its union-busting credentials as a badge of honour. When car-workers resisted company plans to impose a two-tier wage system in 1992, Caterpillar crushed two strikes before they surrendered unconditionally. When workers at a London, Ontario locomotive factory refused a 50% wage cut last year, the company locked them out and then shut down the plant. "Few companies are as willing to take on unions, and uproot entire communities, as Caterpillar," says author Stephen Franklin, who covered the strikes for the Chicago Tribune.
What's surprising is how, in a still sluggish post-recession economy, Caterpillar is actually doing well. Incredibly well, in fact: last year's total sales, $60.1bn, broke all company records. Little of this comes from the US market, which counts for less than a third of Caterpillar's global sales. The company has been aggressively building its presence in Asia, and riding China's construction boom. Caterpillar's per-share profits soared 78% in 2011, from $4.2 to $7.4bn. Analysts predict profits will top $9bn by year end.
Labour costs, on the other hand, have declined. Caterpillar's most recent annual filing with the SEC shows the share of total operating costs represented by employee salaries and benefits shrank, from 24% to 21%, in the same period.
Record profits and six year wage and pension freezes?  Companies are pushing closer and closer to making unions more relevant.  The pendulum has swung about as far as it can to the right.  It may start swinging back soon.  If unions could clean out the crooks in the upper echelons of the ranks, and actually become a little more relevant for today's workers, businesses will find their hands full.  But I wouldn't hold my breath on the existing unions changing much.

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