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Are Cat layoffs unethical?

New York Times columnist Randy Cohen thinks so.

Although the law limits the duties employers have to employees, ethics sets a different standard. Caterpillar’s workers have existed for years — sometimes generations — in profound dependence on the company. (No work, no food.) In accepting and profiting from this relationship, Caterpillar (i.e., its stockholders) incurs moral obligations to those workers. In hard times, it may not simply say: find another job. There are no other jobs, or surely not enough of them.

Mass layoffs relegate people to the status of disposable objects. A company can mothball its welding robots…. But people are not machines. Many ethical systems mandate that you do not treat a person like a thing. You must regard other people as full human beings with the same moral rights as you. And that must include the right to make a living…..

Before adopting the ethics of the overcrowded lifeboat, before tossing thousands of non-millionaires over the side, gentler — and more equitable — methods must be tried. Everyone’s hours might be reduced, diffusing the pain. Dividends to stockholders can be eliminated. Pay cuts can be instituted company-wide, with the deepest reserved for the highest paid (that is, those most able to endure them). To its credit, Caterpillar has done some of this, trimming some executive pay by up to 50 percent, less for other management and support staff, and offering buyouts to some employees.

41 comments to Are Cat layoffs unethical?

  • 11Bravo

    Interesting article, he makes some good points. But a question he failed to ask is at what point is enough, enough? By that I mean, you can only cut pay and implement some of the other more “ethical” (according to the author) cost saving measures for so long before they undermine the viability of the entire company. At what point do you draw the line between laying off 20% of your workforce or 100% because the business has failed?

    The other issue, and this is more of a problem for union employees although the white collars have this as well, if there is a limited amount, or none at all, for an individual to do based on their training and experience than what do you have them do to pass time at work?

    According to his bio, Cohen has no educational or practical background in philosophy or business. As a result he seems to be oblivious to the fact that a business is similar to a machine and as such you can’t just interchange all of the parts anywhere you want and expect a desirable outcome. Ironically enough, he works for a company that has been incredibly mismanaged and is on the brink of collapse so we might see how he feels about some of his own suggestions when the axe comes looking for him. And at no point does he really address any particular ethical theory, he just speaks in empty platitudes about a number of different ethical theories to make his point.

  • kcdad

    When a company hires an employee there is an understood contract… the two parties commit to each other. In “business” ethics, only the employee commits their self. The employer exploits the labor and makes a profit off it while restricting the labor’s ability to work elsewhere.
    (I love it when my boss tells me if I want to earn enough to pay for medical insurance or food, I should get a second job!)

  • 11Bravo

    For the most part I agree with you, except that you don’t commit your “self” you commit your time and depending on the arrangement the individual is willing to enter into that can be a fixed time, flexible time, or as needed depending on the situation. I also don’t agree with the use of “exploit” either…

  • s

    The ethics of everyone taking a paycut to eliminate layoffs deeply troubles me.

    In the Caterpillar organization there are (at least a few) truly irreplaceable people. Should they go get another job CAT is unquestionable harmed by some amount greater than the salary those people command.

    Converesly their are a LOT of factory floor workers then can be replaced within days at minimal cost to CAT. How long does it take to learn to operate a forklift or run a drill press? I believe the last strike in fact proved this point.

    So should those irreplaceable people take a pay cut to help save the jobs of the replaceable workers? No! In fact CAT is in jeopardy asking the taleted to take a paycut when in fact they should be offering them monthly raises to insure that they never leave.

    If you are not a vitrually irreplaceable worker at your company then you need to consider how to become one before you whine about layoffs. More Education and training perhaps?

  • New Voice

    “In “business” ethics, only the employee commits their self.”

    ETHICS – that branch of philosophy dealing with values relating to human conduct, with respect to the rightness and wrongness of certain actions and to the goodness and badness of the motives and ends of such actions.

    CAT = Ethics CAT Employees = Ethics

    ‘Ethics’ is an abstract term. Maybe another way to look at this is in terms of individual ‘loyalty’. While there is no real way to measure the ‘loyalty’ of each individual towards his/her workplace, many employees who work for any given company are ‘loyal’ to that company; company standards/products, work ‘ethos’, NASCAR team, etc. It is also a question of individual pride.

    What ‘motivates’ the worker? Company CEO/Board of Execs?

    ————————

    # s,

    You are walking a fine line here. If EVERY CAT worker were to walk out with the exception of white-collar management, where would the company be? I know very few white collar employees who can drive a forklift, work a drill press, etc. Who [or what] are you to determine who is expendable and who is not? You possess some magic formula to determine who is “irreplaceable” and who is not?!? You sound like someone with his head up his ass who couldn’t even change the oil in his own car.

    I doubt very much that there are any great number of ‘blue collar’ workers you can point the finger at and blame for the current condition of the national economy.

  • Sharon Crews

    New Voice: I should stay out of this discussion–yet I feel that if I’m always supporting teachers and their union, etc., that I would be wrong not to defend blue-collar workers who seem to be considered so expendable. In an era when we have daily been confronted with the news of the high salaries paid to CEOs of failing companies, I think we have to question whether or not the words “ethics” and “business” even belong in the same sentence. It seems to me we are getting dangerously close to a “new” era–just like those of old–when the salaries of the rich elite–salaries that seem obscenely exorbitant–are made possible by workers who do not earn a living wage. Can anyone name any job that commands an extremely high salary that would be possible were it not for the labor of many minimum wage workers?

  • 11Bravo

    NV, I don’t think that # was saying that CAT could run without union workers. I think he was making a point that they are more easily replaceable than most of the white collar workforce. I would agree with that, although I don’t think the entire union workforce is replaceable, I believe there are individuals in that group who possess the same irreplaceable qualities that some of the white collar staff has.

    Sharon, can you name any hourly job that wouldn’t exist but for the investment of blood, sweat, tears, and money of a business owner or entrepreneur? Who risks more, the individual who starts his own company or the hourly employee who goes to work for him or her?

  • Sharon Crews

    11Bravo–I guess they both need each other. As for Caterpillar, it was a long time ago that someone risked his blood, sweat, tears, and money to start this company–everyone, including the CEO, is riding on his (or their) back today. I guess I was thinking of the pyramids–which Pharoh risked his blood, sweat, tears, and money to build them? 🙂 Meant only to be funny.

  • New Voice

    11 Bravo,

    I hear you.

    #’s last comment makes me think he is a little more ‘out-of-touch’ than you give hime credit for…….

    “If you are not a vitrually irreplaceable worker at your company then you need to consider how to become one before you whine about layoffs. More Education and training perhaps?”

  • New Voice

    Damn the spelling errors!

  • 11Bravo

    “As for Caterpillar, it was a long time ago that someone risked his blood, sweat, tears, and money to start this company”

    Only if you are talking about the founders Sharon, there is a difference between founder and owner. There are thousands upon thousands of CAT owners via their decision to purchase CAT stock with their own hard earned money. So the risk doesn’t end just because a company’s founders are no longer in the picture. As you can see from CAT’s stock price someone(s) risked and lost quite a bit during this recession. And its those owners who elect the board of directors which selects the executive staff and sets their compensation. Just because the same risk is spread out over more people then it was in the beginning doesn’t mean it doesn’t exist.

    As for my original question, you answered “they both need each other” which I agree with. But my question was who risks more? Because in our system we compensate those who are willing to risk more to become successful.

    The other thing is, nobody forces anyone to work at a particular company or work for ANY company for that matter.

  • kcdad

    “The other thing is, nobody forces anyone to work at a particular company or work for ANY company for that matter.”

    That’s right…. there is always the alternative of going out into the world with your District 150 education and fending for yourself.

    11Bravo: we live in a society that FORCES one to have a job in order to survive. We must have money in order to get food, clothing and shelter. In order to get money we need to either work for someone or get someone to work in our place. That is reality.

    The days of being able to be independent (free, exercise liberty, etc) are over.

  • New Voice

    11Bravo,

    “As you can see from CAT’s stock price someone(s) risked and lost quite a bit during this recession.”

    I am willing to bet that anyone who risked ‘quite a bit’ did so because they could AFFORD to do so. Most people who invest heavily do so becasue they can afford to take great losses.

    Besides, would/could you really expect any CAT board member or exec staff to know how to build/repair CAT products?

    P.S. Owens was awarded 250, 000 shares of CAT stock in March. If the value goes up only $1.00, he earns a profit of 1/4 million dollars.

    WHERE EXACTLY IS THE RISK THERE?!?

  • 11Bravo

    NV, investment through 401(k)s IRAs and other retirement savings vehicles is quickly becoming, if it isn’t already, the primary method for saving for retirement in our country so from a numbers standpoint there are far MORE people who who you could argue “can’t afford” to take great losses than those who can. And even those who have pensions whether we’re talking about union or government employees still receive their pension payments from funds that are invested in these stocks.

    Secondly, I don’t see what your point is about whether board members or exec staff can build CAT products??

    Finally, I also don’t see your point about Owens? Owens still has a significant risk in the fact that a significant portion of his net worth is wrapped up in stock he received from options he exercised. If we could look at the numbers I would almost bet that Jim Owens, as a percentage of his overall net worth, suffered more than almost anyone else invested in CAT stock over the last year or two.

  • s

    I cleary need to define my terms better. I believe could be “irrreplaceable worker” can be a very skilled blue collar man who knows how to operate one or moe specialized machines. It may also be a white 9or blue) collar salesman with customer contacts and relationships that are more dependent on the salesman than then the company he chooses to work for.

  • Sharon Crews

    11Bravo: Your “Jim Owens, as a percentage of his overall net worth, suffered more than almost anyone else invested in CAT stock over the last year or two.”
    I think your definition of “suffer” and mine are quite different. Also, “a significant portion of his net worth is wrapped up in stock he received from options he exercised.” Also, that kind of “work” and “loss” doesn’t seem to qualify as “blood, sweat, and tears.”
    That said, I believe I am correct in stating that Owens’ salary is considerably less than CEOs of other companies, and I also believe Owens does seem to be responsible and charitable with his earnings–as are many of those “expandable” workers.
    Over the years, I have done my share of complaining about Cat workers who kept making more and more demands for benefits, etc.–and every time their salaries and benefits increased, those of us without such good benefits paid the same as they did for dental work, etc. However, things are changing now–maybe too much.

  • 11Bravo

    Sharon, it seems you are implying that the 40 some years he has been with CAT have been a cake walk? Well that’s fine, but what about the teacher who invested $1000 in an online brokerage in CAT stock and lost $700 of it or the police officer or the soldier? If you want to get hung up on Jim Owens vs the rest of the world then this point will be lost on you.

    And you still never addressed the original point which is whether or not you believe someone who starts a business enters into more risk than one of their employees and whether or not that additional risk should be rewarded.

  • Sharon Crews

    11Bravo, I thought I qualified my comments about Owens–that I really have not meant to attack him. Also, I know (from my very limited understanding) that it is globalization, in large part, that is changing the world of “work” so much in this country–and our economy, in general. And I even understand that globalization is probably inevitable–and, unlike others, I do not resent workers in other countries for taking a piece of the pie, so to speak. Also, I know that the middle class and even capitalism is an experiment that is not all that old. I just hate to see that experiment fail and for us to return once again to a two-class society, to a world of a few “haves” (where greed takes over) and many “havenots.” Caterpillar’s situation right now is just a symptom, not the cause.

  • New Voice

    Reference your last:

    Maybe we are getting criss-crossed here.
    11Bravo,

    Reference your last:

    Maybe we are getting criss-crossed here.

    Yes. There are far more people in this country who cannot afford to take a risk, but…….. are forced to! What is your definition of risk? What other options are there for someone like us who make a good, yet modest income? Having part of my paycheck go into my 401k, etc for retirement is great… until I find out all of my meager investments are now worthless. Now I can NEVER afford to retire. It’s simple math; Bill Gates can afford to lose a billion because he is worth several billion. I lose a couple thousand dollars and I am broke.

    “I would almost bet that Jim Owens, as a percentage of his overall net worth, suffered more than almost anyone else invested in CAT stock over the last year or two.”

    BRAVO! Come on!!!! I know Sharon already got on you for this statement, but dude…..!

    I WISH I COULD SUFFER LIKE JIM OWENS!!!

  • New Voice

    “Secondly, I don’t see what your point is about whether board members or exec staff can build CAT products??”

    I was addressing the notion that some employees are more ‘valuable’ than other…………………..

    More of a counter-point directed towards #.

  • 11Bravo

    I think somehow we all lost track of the original argument here. My original point was that the owners of a company, in CATs case we are talking about stockholders who come in all shapes, sizes, and levels of wealth, bear more risk in the business because they have put in their own money. As a result, they don’t have an ethical obligation to double their losses by taking huge losses to keep employees on board who aren’t being utilized on top of the drop in equity they have already taken from the drop in the stock price. Can we all agree on that? That was my original point whether I did a good job of describing it earlier or not… 🙂

  • Frustrated

    They cannot retain workers if there is no work to be done.

    Many work groups at Cat have taken pay cuts, pay has been frozen, partial shutdowns in order to retain the staff they need to operate the company when business picks up again. Portionally, it is not my impression that so many more union employees were laid off versus clerical and management. Some of the reported “layoffs” of union employees was part of an earlier decision to relocate a function to a facility in Texas.

    Mr. Owens has already reported in communications to employees several months ago that CAT, even after the economy heals, will continue to be a much leaner organization.

    11Bravo is right on the money.

  • Anon

    It’s a for-profit business, not a charity or employment agency. They can do whatever the f*** they want

  • kcdad

    “My original point was that the owners of a company, in CATs case we are talking about stockholders who come in all shapes, sizes, and levels of wealth, bear more risk in the business because they have put in their own money.”

    http://www.tolerance.org/image.....tables.pdf

    Please note who these sufferers are… and whose money are they using to invest?

    Donald Trump is a great example of a guy that has never risked a dollar of his own money but built an empire for himself out of other people’s money.

  • New Voice

    Anon,
    CAT is not a charity? Wow! The government is NOT a charity either. Does that mean THEY can do what ever they want?

    Frustrated,

    You must not be FRUSTRATED because you lost your job to a company that is spending millions on a new museum and visitor’s center – and still laying off thousands of workers?!?

    I might not agree with 11Bravo, but at least he is developing a sound argument [sort of…].

  • Karrie E. Alms

    kcdad:

    Trump …
    and the curious Buffet deals… l

    like Wachovia and Citigroup … one day after Wachovia was to be purchased by Citigroup, Treasury Assistant Secretary Eric Solomon published notice that Wachovia’s $74 billion in losses had now suddenly been transformed into $25 billion in potential tax savings for Wells Fargo. Did I remember to ask you what is Berkshire Hathaway’s second largest holding? You got it … Wells Fargo. Voila, Buffet then renewed Wells Fargo’s bid for Wachovia, after just days prior withdrawing the bid. Buffet appears to have used the Treasury as his personal bank.

    Interesting how in the 90’s Berkshire had acquired Wells Fargo stock during the nationwide savings and loan fraud.

    So, taxpayers pay and pay and pay and Buffet et al get richer and richer and richer….

    So many examples ……….. the tentacles are numberous and strangling.

  • 11bravo

    The problem isn’t capitalism, its that fact that elected officials can’t resist the opportunity to come in and “save the day” only to screw things up even worse. If the federal government would have just let things ride both now and previously we wouldn’t be in the mess we are now.

  • Frustrated

    New Voice – I certainly have been affected by the CAT decisions and the economy. I have never advocated the financing of the museum, be it CAT or otherwise. MY only point was that CAT has taken steps to retain as much of it workforce as it believes it will need for the future, which is less than in the past.

  • Sharon Crews

    Is the need for fewer Caterpillar workers in Peoria because there is less work or because Caterpillar jobs have moved elsewhere–especially to places where unions are not strong, etc? Quite honestly, I can’t really fault Caterpillar or any company today that is looking for cheaper labor–I am sure they have little choice considering the effects of globalization–the need to compete with other companies whose labor costs are lower, etc. Also, I know that during better times Caterpillar workers were used to making demands for salary increases and benefits that were met–and were even exorbitant compared to the salaries of other Peoria employees. What I don’t understand about the effects of globalization is how prices for just about everything can remain so high if workers will be asked to work for lower salaries. Who is going to buy the products? What I am trying to say (and to understand) is how is all of this going to end? The world economy has changed so much; I don’t think anyone really knows what to expect of the future. The discussion on this blog seems to me to point to the fact that we are all fearful of what the future holds.

  • kcdad

    11Bravo… your history is lacking some information. Perhaps you could reread some history from the 1870s and 80s.

    If Capitalism were allowed to go on unfettered we would be in a purely feudal system right now controlled by the few elite industrialists the government has kept from gaining total monopolistic control over their industries.
    The banks would still eventually take over everything as they are now.

  • 11Bravo

    kcdad, believe it or not I have actually been to school and sat through a few classes and even done some of that fancy book readin’ in my free time. And I made no mention of a problem with the government stepping in when companies violate anti-trust laws or any other laws for that matter. I specifically mentioned my issue was with the propping up of failing companies by the government.

    And besides, be honest you wish that the government would not have gotten involved back in the 1870-80s so we could have had a workers rebellion to bring on that great communist society that you dream about.

  • Karrie E. Alms

    kcdad:

    …. we would be in a purely feudal system right now controlled by the few elite industrialists ….

    And we do not have a feudal system right now? Large portions of our society has become enslaved by the need to consume and have ‘stuff’. A dear friend of mine shares that we are ‘slaves’. We get an education so we can get a job to have a family and pay for things. Highly likely that we do not practice wise personal financial management and live paycheck to paycheck. A person gets a job to make money and miss out on the joys of live by working and living in an illusionary world of ‘stuff’. A person misses out by being unhappy because of not working at what he/she loves and does not have joy in life.

    about that ‘now controlled by the few elite industrialists’ statement

    Hum …. Buffet story …. Berkshire Hathaway is reported to own a 20% interest in Moody’s as well as controlling a bond insurer to which Moody’s gave a triple-A rating. Solomon’s ruling transformed Wachovia losses into Wells Fargo assets like Rumpelstiltskin’s dream of turning straw into gold. It appears that Moody’s ratings may well have turned financial straw into gold. Remember Citigroup’s Jack Grubman and his advice — the fool’s gold of the dotcom scandal period? It appears investors have not learned much when genuine risk analysis is replaced with what the public is being told — another shell game or con. And so, Moody’s pockets record fees for Buffet and he is richer and …. well I think you know the rest of the story…..

    …. Is plausible that the Oracle of Omaha has a lot of inside connections to aid in his success?

    Any conflicts of interest?

    Sharon: As for me, I am not fearful of what is going to happen. In keeping with my beliefs, it is all part of the ‘last days’ scenario before our Savior returns. Fear will not get any of us anywhere except to be afraid. In order to not have fear, imo, it is important to ‘know the territory’ and have a plan and continue to work your plan with faith.

  • Jon

    Sharon, here is the future of a globalized economy (from my 2nd favorite news source, after The Daily Show):

    http://www.theonion.com/conten.....utsourcing

  • kcdad

    “violate anti-trust laws” … who wrote the anti-trust laws and what are they supposed to prevent?

  • 11bravo

    the federal government and monopolies, what is your point?

  • Sharon Crews

    Karrie: I agree as to my own personal reasons for not being fearful. And to be honest, being 71 helps, too. Also, I do not feel that globalization is an evil or something to fear. It is, as with much in life, the unknown that brings about fear. I was speaking more hypothetically–I can’t envision where globalization will take the world. Probably there were people who feared the Industrial Revolution in much the same way and for the same reasons. There is some kind of economic revolution taking place–and I am not able to comprehend it.

  • Sharon Crews

    Jon: That is funny! And doesn’t everyone believe that eventually all those willing to do outsourced work for 68 cents an hour will eventually want more–and then what will happen?

  • kcdad — Must you always use the Socratic method? Can you just jump to the thesis? 😉

  • kcdad

    “when companies violate anti-trust laws or any other laws for that matter”

    That is why the Sherman anti-trust legislation was passed… there were no laws to stop these industrial tycoons from taking over the entire economy. It was fought tooth and nail by those wealthy elite and when it finally passed, they started on new strategies to monopolize the wealth in this country and the world. The government can not keep up with these guys because they have half of the government in their pocket.

    So these elites came up with another plan…
    “I can hire one-half the working class to kill the other half.”
    Jay Gould (1836-1892), financier, railroad businessman, on not worrying about an impending strike at Southwestern rail system, 1886

    Not kill literally (except in the case of strikes and war), but create a false class system and conflict between “management” and “wage laborers”… when in fact they are ALL wage laborers.

    Is that better, CJ?
    By the way… how was the jury experience?

  • kcdad — The jury experience was good. I met a very nice lady named kcmom. 🙂 What are the odds?

    I’ll tell you, I have greater faith in our justice system whenever I serve on a jury. I have yet to be on a jury where everyone agreed right off the bat. Both of my experiences have been with jurors that were split, almost to the point of impasse. But somehow, by the end, everyone comes to agreement. It’s good to know we have citizens who take this stuff seriously, and really work to get the right verdict, based on the evidence.

    I’ll bet you would be a real hoot on a jury! 😛

  • kcdad

    “Well that’s fine, but what about the teacher who invested $1000 in an online brokerage in CAT stock and lost $700 of it or the police officer or the soldier?”

    11Bravo: did you know that investment is a risk? It is no less a risk than playing roulette or a slot machine.

    The only reason we have forgotten that is because the economy has been so propped up in the past by artificial means (mainly The Fed) that there hasn’t been a lot of risk for 1/2 of the investors. In fact, you probably realize that 1/2 of the people in the stock market always lose real value. That is the way the system works, you know. It is a giant ponzi scheme with the elite at the top of the pyramid and the masses at the bottom trying to sneak in to a higher position… and most the losses occur at the bottom.

    You don’t hear about them because you aren’t supposed to… “dead men tell no tales”.
    It is the same as with unanswered prayers… you only hear about the “answered” ones.

    Stock holders are parasites.