While Caterpillar may be Deutsche Bank’s latest darling, with the German bankrecently initiating coverage on the heavy machinery equipment maker with a Buy and a $98 price target, the company – which has not seen a positive retail sales month in nearly 4 years and which has been on a substantial firing spree, got into hot water when Belgium’s government announced it was considering legal action against Caterpillar over the U.S. heavy equipment maker’s decision to close a manufacturing site and lay off more than 2,000 workers.
Prime Minister Charles Michel told lawmakers Thursday that “we will take action against Caterpillar if necessary.” According to AP, Michel described the expected closure of the Gosselies plant in the Wallonia region as “brutal, cruel and heartbreaking.”
In a surprise announcement last week, Caterpillar said it would shift production to Grenoble, France, and other facilities outside Europe. About 2,200 workers are likely to be laid off as well as thousands more from subcontractors working on Caterpillar contracts. Some learned they would lose their jobs via social media.
Wallonia officials slammed the move, saying Peoria, Illinois-based Caterpillar Inc. received substantial government financial support and big tax breaks.
While we are touched by the politician’s seeming solidarity with his workers (and voters), we are surprised that despite years of mass layoffs in the US, so far not a single American politician has voiced any concerns about the company’s strategy which over the past three years has been to maintain cash flow, by which we mean buybacks, by way of laying off thousands of high paying jobs.
On the other hand, CAT’s latest “business model” goes a long way to explaining a chart we pointed out recently: namely that the only jobs that have seen any wage growth in the past year, are those belonging to minimum-wage workers.