Caterpillar handed investors $6.7 billion in 2022, while demanding more concessions from workers in next contract
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On Tuesday, global construction and mining equipment manufacturer Caterpillar announced its fourth-quarter and full-year 2022 results. The earnings report showed significant revenue increases and strong year-over-year profitability, which the company used to reward its investors with $6.7 billion in payouts via share buybacks and dividends. Since 2018, Caterpillar has returned more than $23 billion to its investors, or about $12.6 million a day.
The bonanza for Caterpillar shareholders — dominated by big investment firms like Vanguard Group, State Street Global Advisors and BlackRock — comes as the company prepares to accept a new round of concessions from nearly 7,000 US workers in the United States United Auto Workers to call union, whose six-year contract with CAT expires on March 1st. For their part, workers are seeking significant improvements in wages, benefits, paid time off and working conditions, reversing years of rollbacks overseen by the UAW bureaucracy. On Friday, workers voted by a nearly unanimous 98.6 percent to authorize a strike.
“Our global team delivered one of the best years in our nearly 100-year history, including record full-year adjusted earnings per share,” said CEO Jim Umpleby in a statement accompanying the earnings release. Although the figure wasn’t included in the latest earnings report, Ummpleby undoubtedly received a handsome payout himself last year; Between 2019 and 2021, he earned more than $72.5 million in salaries and other compensation, according to the company’s financial records.
In response to the pay report, a Caterpillar worker in East Peoria sarcastically told the WSWS, “Looks like they could do with some good help.”
Caterpillar’s fourth-quarter revenue increased to $16.6 billion, up 20 percent from the same period last year, supported by continued price increases. Revenue increased 17 percent overall in 2022, reaching $59.4 billion. According to a report by a Bank of America research analyst cited by Reuters, the company’s stock is up 14 percent recently, its sharpest rise in a decade.
The company also reported strong year-over-year growth in operating profit, which rose 15 percent to $7.9 billion.
Along with record full-year earnings per share, adjusted operating profit margins also rose to an all-time high, reaching a robust 17 percent in the fourth quarter.
The company forecast continued revenue and earnings growth in the coming year, saying it expects higher prices to “more than offset manufacturing costs.”
However, in an indication of headwinds caused by the broader economic and political crisis, fourth-quarter earnings per share fell significantly from a year earlier, missing financial analysts’ estimates and falling 29 percent to $2.79 per share. Executives attributed the decline in fourth-quarter earnings to increased material and freight costs due to ongoing supply chain issues and unfavorable exchange rates against the US dollar. Wall Street reacted negatively to the news, sending the company’s share price sharply lower before recovering somewhat to remain 5 percent below its recent all-time high.
Significantly, the company’s conference call with financial analysts on Tuesday made no mention of the impending expiration of the UAW contract or the possibility of a strike. Wall Street officials probably have little doubt that Caterpillar management is preparing an aggressive response to a strike, based on the company’s well-known reputation for its no-compromise approach to its workforce.
The company has enjoyed years of strong profitability based on the long-term reductions in labor costs it wrested from its global workforce through a combination of ruthless strike-breaking and reliance on pro-business union bureaucracies. In 2017, against widespread opposition, the UAW pushed through a six-year deal that sanctioned the closure of the company’s Aurora, Illinois, plant and provided just 2 percent annual wage increases.
Summarizing what workers want to win in the upcoming contract fight, a Caterpillar worker told the WSWS, “More [paid time off]. More vacation days. More wages. Better retirement provision.”
Another veteran worker in the Peoria area told the WSWS, “Just what they paid out to shareholders would cover all of our demands. Restore pensions, raise wages, COLA, profit sharing, health care, everything.
“Of course it was never about ‘CAN’. It is purely a matter of “WILL they”. With undisguised contempt, they snap their fingers in our faces and say, ‘You don’t deserve it.’
“At our start-of-shift meeting today, one of the topics discussed was a summary of the year-end security incidents for 2022. 433 for the Mapleton facility alone. Including x number of reportable injuries, x number of first aid visits, x number of burns, etc. No mention of the two fatalities.”
In 2022, Steven Dierkes, a 39-year-old worker at Caterpillar’s Mapleton, Illinois foundry, fell into a vat of molten metal after working for less than two weeks.
The Occupational Health and Safety Administration (OSHA) said in a report following its investigation that the deaths were a result of Caterpillar’s “willful” safety violation and “failure to comply with its legal obligations to ensure the safety and health of workers,” but only fined the man the company $145,027 — roughly the equivalent of just two days’ salary for the company’s CEO. The death was the second at the foundry in just six months.
In conclusion, the Caterpillar worker said, “We just don’t register as living beings, let alone human beings.”
The struggle at Caterpillar, unlike in previous years, comes amid a renewed outbreak of international class struggle, which is increasingly taking the form of a rebellion against corrupt union bureaucracies. Over the past two years, UAW workers have repeatedly voted to reject pro-business contracts negotiated and endorsed by union leaders, including those with staggering 90 percent margins at Volvo Trucks and John Deere in 2021.
The urgent task of the Caterpillar workers is to organize now, to take control of the struggle in their own hands and to enlist the support of the entire working class for a united struggle. Will Lehman, a Mack Trucks worker and Socialist nominee for President of UAW International, has garnered widespread support among workers based on his call to abolish UAW bureaucracy and shift power to workers at plants, by building a huge network of leaderboards. and filing committees. Contact the WSWS today to discuss forming a simple committee at Caterpillar.
