Caterpillar Tractor Company routinely out-performs the previous quarter’s profits. However, even Caterpillar is feeling the impact of the economic slowdown the United States has been experiencing.
Michael Muskal in the Los Angeles Times is one of several reporters writing about large companies struggling. In his article, “Home Depot, Sprint, GM, Caterpillar and Pfizer slash jobs,” Muskal writes that the combined effect of these five blue-chip companies is the loss of about 45,000 jobs.
Caterpillar who’s located its World Headquarters in my hometown of Peoria, Illinois, has announced a fourth-quarter loss of 32%. This is incredible given Caterpillar’s track record. But now once again I have to wonder about this financial news.
Caterpillar is comparing its poor financial situation to earnings at the same time last year. This year the company can only yield $1.08 per share when last year they declared a $1.50 per share profit for investors. That is fair enough. Wait a minute, in the same breath Caterpillar indicates they have had, as the article says, their “sixth record-breaking year of sales and earnings.”
So, because of that they are trimming their work force by 20,000 employees.
In addition to Cat’s actions, GM will cut shifts in Ohio and Michigan relieving 2,000 workers from having a job.
Pfizer and Sprint Nextel are both cutting 8,000 jobs and Pfizer could reach 19,000. Also Home Depot is looking to shave 7,000 jobs.
This is going on at the same time President Obama is trying to wrangle a stimulus package out of Congress.
Interestingly the Stock Market gained points in the face of all this bad new.
I wonder how much these layoffs represent a “pre-emptive strike.”
All the companies are making money-just not as much as they want to make.
A number of years ago Caterpillar had a strike occur with their union workers. They refused to bargain and made their managers perform the machine-shop operations along with other duties. Further they hired non-union labor and ultimately sent jobs overseas.
I worked for a company who wasn’t making the money they wished to make. They were making an excellent profit yet they didn’t feel they were making enough. Rather than accept a nice profit and keep their loyal workers employed they laid off about 20% of their workers.
It used to be that people were taught in business the responsibility the business had to society or “social responsibility.”
Today I’m afraid we not only don’t have people who are as savvy with respect to running a business, but they also don’t care about the very people who buy their products.
References:
http://www.latimes.com/business/la-fi-layoffs27-2009jan27,0,3113467.story
http://www.cat.com/cda/layout?m=8703&x=7
