Caterpillar strike continues as company posts record profits
Caterpillar Inc. announced record-smashing quarterly earnings Wednesday, trouncing 2011 figures and previous projections by market analysts, even as a strike at its Joliet plant is nearing the three-month mark.
The industrial manufacturing giant posted sales and revenues of $17.37 billion – a 22 percent increase over the previous year – including a quarterly profit of nearly $1.7 billion. The company also raised its profit outlook to $9.60 per share.
In a statement, Caterpillar Chairman and Chief Executive Officer Doug Oberhelman said he expects global business to continue the strong earnings.
"I am cautiously optimistic about the world economy in 2013, very positive on the long-term prospects for global growth and excited about the role Caterpillar will play in making that growth happen," Oberhelman said.
However, back at the company's Joliet plant, hundreds of workers represented by the International Association of Machinists (IAM) continue to press corporate management for higher wages and low-cost benefits. Earlier this year, the workers rejected a Caterpillar offer that would have frozen most workers' pay while cutting their pension benefits and raising health care costs. The impasse has led to an ongoing work stoppage that began on May 1.
“There’s no question that Caterpillar is flush, they can afford these benefits and wages. They’re fair benefits and wages, especially for people (who) are as highly-skilled as the folks that work in the Joliet plant,” said Steve Jones, an IAM spokesperson representing the striking workers.
New York-based industrial machinery research analyst Eli Lustgarten follows Caterpillar and says the company worries an increase in wages could lead to weakened global competitiveness. Lustgarten added that he believes Caterpillar's leaders are viewing the stoppage with a more long-term focus.
"Profitability is going to be under somewhat more pressure, particularly outside the United States," Lustgarten said. He attributed Caterpillar's worldwide business prospects as a reason for the company's "harder line" in labor negotiations.
"Hopefully the minds can meet somewhere in the middle," he said, adding the strike could affect Caterpillar's end-of-the-year earnings, but it has not greatly affected the daily business operations of the company.
Caterpillar did not return any calls for comment on Wednesday.