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Who can we blame?

Feb. 13, 2012
If were going to thrive in a global market well have to accept the sacrifices and responsibilities that come with success.

If you want to know what a successful company looks like, study Caterpillar Inc. It reported an annual profit of $4.9 billion in January, following a year in which it initiated and proceeded with numerous plant construction projects for its various product lines, and completed a major business acquisition that secured for it an even larger share of the mining equipment market. Its products elicit strong, and sustained, consumer demand around the world, and its business plan succeeds because its agricultural, construction, and mining equipment is critical to the most basic needs of humanity: food, fuel, shelter. It’s not riding a trend; it’s matching its resources and initiatives to the way people live.

Caterpillar succeeds by giving people what they need, but it cannot give everyone everything they may want. The company is enduring severe criticism for closing a diesel locomotive assembly plant in London, Ont. “This is just plain greed, and immoral and unethical behavior,” a local labor leader said. “We find the decision unconscionable.”

Can a company have a conscience? Can we attribute human traits like greed to a corporation, or assess its behavior in moral or ethical terms? Surely, those standards must be applied to the people working there – but is the corporation liable for the disappointments of those whose contract has expired and who do not like the new terms offered to them?

Caterpillar’s own statement was so blandly factual it defied any subtle analysis of motives: “The cost structure of the operation was not sustainable and efforts to negotiate a new, competitive collective agreement were not successful.”

Some less inflamed analysis of Caterpillar’s action concludes that this Ontario closing is another example of globalization driving business to lower cost locales, which Caterpillar confirmed. In a twist, however, the site most likely to benefit is a plant it invested $50 million to establish last year in Muncie, IN. So how are we to feel about “globalization” if it works to our advantage? And, will the anticipated benefits to Indiana absolve Caterpillar of its supposed ethical lapse in Ontario?

It’s not a small detail of this story that Indiana has made itself attractive to manufacturers for several years, with speedier regulatory processes and less punitive tax codes. Recently it eased its labor laws to shield workers from the obligation to pay union dues—meaning Caterpillar can anticipate better labor relations and lower labor costs than it faced in Ontario. If you want to assign human traits to a choice like that, you might call it greed, or thrift, or cautiousness, or prescience. You might also call it confidence — the quality that not so long ago was found lacking in corporations that were not hiring, not investing, or not expanding, because they were greedily hording their profits. Here is an example of one company doing those things, and its confidence is derided as something shameful, too.

Let’s clear this up: Corporations are governed by the same economic forces as workers, investors, suppliers, and customers. That, and not greed or spite, is the force driving “globalization.” They have to find ways to succeed. We can judge companies by the benefits (or injuries) they bring to their stakeholders — including the individuals they employ and the communities where they operate. Caterpillar has earned its success, and the rewards that follow it, and Indiana deserves its opportunity. It doesn’t show any lack of character – except perhaps in those who feel they deserve something at the expense of Caterpillar and its stakeholders. If anyone feels wronged in this case, they can blame their own lack of awareness.

It’s tempting in this era of threatening protestors and moralizing politicians to assign our disappointments to the ill motives and failures of others. But there is a lot more to “globalization” than greed and cruelty, and if we’re going to thrive and preserve our humanity in a globalized society we’ll have to be ready to acknowledge the good in each other and accept the sacrifices and responsibilities that come with being successful.

Robert E. Brooks | Editor