Category Archives: Caterpillar

Caterpillar, City of Peoria

Who’s actually paying for the Caterpillar Sky Walk?

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Remember in my last post, how I said Caterpillar had purchased the naming rights for $1 million? Well…

Under the “Purchase” section of the Naming Rights Agreement, one of the conditions that must be met for the deal to go through is this: “Pere Marquette Hotel Associates, L.P., a Kansas limited partnership shall have paid to Caterpillar the amount of One Million and 00/100 Dollars ($1,000,000.00).” Pere Marquette Hotel Associates, L.P., is the company that sold the Hotel Pere Marquette to developer Gary Matthews.

So here’s how this works: Peoria gives $29 million to Matthews. Matthews gives $7,384,000 to the Pere owners to purchase the property. Pere owners give $1 million to Cat. Cat gives $1 million back to Matthews for naming rights. That $1 million then must be used (as specified in the naming rights agreement) “to pay for non-qualified rehabilitation expenditures … related to the construction of the project.”

This raises a couple questions. First, was the selling price of the Pere artificially inflated in order to kick back a million dollars to the developer? Did that million really come not from Cat’s pocket, but from the taxpayers? And second, where is that money going? Do “non-qualified rehabilitation expenditures … related to the construction of the project” include the developer’s fee, for instance? Or if it’s reinvested in the project, does it count toward Matthews’ personal equity in the project?

Caterpillar, City of Peoria, Peoria Civic Center

Caterpillar purchases naming rights to Civic Center-hotel connector

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One of the most prominent pieces of the hotel redevelopment will carry a corporate sponsor’s name: the Caterpillar Sky Walk.

Part of the downtown hotel project is the construction of a pedestrian bridge over Fulton connecting the renovated Pere Marquette and new Courtyard Marriott to the Peoria Civic Center. Caterpillar, Inc., purchased the naming rights to the bridge for one million dollars.

The naming rights agreement, which is only between the hotel developer and Caterpillar (not the City of Peoria or the Civic Center), allows Caterpillar to “name the Connector, including the right to display appropriate signage on the exterior and interior of the Connector,” but “not includ[ing] any other marketing, advertising, or other rights.” The agreement specifically says that Caterpillar does not have any rights to name the hotel or garage, but it also forbids the developer from granting naming rights to “any person or entity that competes with Caterpillar in any industry that is part [of] the core business of Caterpillar.”

Neither the redevelopment agreement between the City of Peoria and the hotel developer, nor the easement agreement between the Peoria Civic Center, City of Peoria, and the hotel developer, precludes the sale of naming rights. Council members contacted Monday said they were unaware that naming rights had been sold for the connector, or that there were any plans to do so.

Artist's rendering of the planned pedestrian walkway over Fulton, looking northwest

 

Caterpillar

Cat and UAW agree, averting strike

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This was some of the best news all year for Peoria:

Members of the United Auto Workers on Sunday ratified a new six-year contract with Caterpillar Inc…. By a margin of 72 percent to 28 percent, members at all seven UAW locals that represent Caterpillar workers voted to ratify the agreement, union officials said….

It was reported on the radio (1470 WMBD) that the union was ready to go on strike if a tentative agreement hadn’t been reached by the deadline — that is, they would not have approved another extension. The fact that a strike was averted in these hard financial times is a blessing not only to the families who work at Cat, but to the entire community.

Caterpillar

Cat: How can we not do business with countries that abuse human rights?

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Doug Oberhelman, Chairman and CEO of Caterpillar, met with Chinese President Hu Jintao on Thursday in Chicago:

In an interview with the Journal Star just before a luncheon in Washington, D.C., featuring Chinese President Hu Jintao, […] Oberhelman didn’t argue that the concerns about human rights issues in China are valid. […] Hu, Oberhelman said, has helped companies like Caterpillar because he has been welcoming to foreign investment in China.

“We’re big in China, of course, and it is really hard to imagine how we could continue to be a leader in world markets without investing in China,” he said. If you want a legal insight Read more

“I am often asked why we invest as much as we do in China. My question is, how can we not?”

I’ve juxtaposed these quotes in the hopes that it will be jarring to my readers. If it’s not jarring to you, read them again and realize that “human rights issues” in China include things like torture, illegal detention (imagine being arrested simply for expressing unpopular views or for no stated reason whatsoever and denied contact with anyone for an indefinite period of time), and being put before a judicial system that is explicitly instructed by the very same Hu Jintao “to rank ‘the constitution and laws’ of China behind the ‘Party’s cause [and] the people’s interest.'” (See the Human Rights Watch report.)

Think of that and read it again. Torture, illegal detention, unfair courts — concern over that is “valid,” Mr. Oberhelman says. And then he asks “how can we not” invest in China? It’s helped Cat continue to be “a leader in world markets.”

The key here is that Caterpillar wants to put human rights issues and U.S.-China trade in separate compartments, and convince policy-makers that one should not have anything to do with the other. That’s the gist of the memorandum of understanding (MOU) that Cat signed:

The MOU outlines the importance of maintaining a positive trade environment between the Unites States and China, emphasizes how Caterpillar’s exports to China support jobs in the United States and stresses that mutually beneficial trade policies will support greater U.S. exports from Caterpillar in the years to come.

“We realize there are important and substantive issues that exist between the United States and China, from currency valuations to the protection of intellectual property, and that these need to be resolved with a sense of urgency,” said Rich Lavin, Caterpillar group president with responsibility for growth markets, including China. “But we also know the way we resolve disagreements is important. Caterpillar will continue to urge policymakers in both the United States and China to resolve differences in an atmosphere of mutual respect— not by threatening a trade war. We continue to believe that quiet diplomacy and multilateral forums offer a preferred path for resolving differences,” Lavin added.

In other words, address torture and illegal detentions if you must, but don’t let it get in the way of our company making lots of money by doing business with this oppressive regime. Nothing is more important than making money. We should be able to resolve disagreements over torture and illegal detention without threatening the profits we’re getting from the people who torture and illegally detain Chinese citizens. Do we have an understanding?

Is there no one who questions the morality of this? How does Caterpillar defend this kind of compartmentalization ethically? Why does no one hold Caterpillar to a higher standard than this?

Caterpillar, Nation/World

Cat’s growing presence in China — Is it a good thing? Part 2

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In a previous post, we looked at potential pitfalls in efforts to access China’s markets. Specifically, it appears that access comes with a high cost: supplying Chinese competitors with proprietary technology. Another example of this was recently exposed in the Wall Street Journal:

When the Japanese and European companies that pioneered high-speed rail agreed to build trains for China, they thought they’d be getting access to a booming new market, billions of dollars worth of contracts and the cachet of creating the most ambitious rapid rail system in history.

What they didn’t count on was having to compete with Chinese firms who adapted their technology and turned it against them just a few years later.

Today, Chinese rail companies that were once junior partners with the likes of Kawasaki Heavy Industries Ltd., Siemens AG, Alstom SA and Bombardier Inc. are vying against them in the burgeoning global market for super-fast train systems. From the U.S. to Saudi Arabia to Brazil and in China itself, Chinese companies are selling trains that in most cases are faster than those offered by their foreign rivals.

Caterpillar recently announced it’s building another large engine factory in China, expanding its presence there. How long will it be before we start seeing Chinese companies competing head-to-head with Caterpillar — using Cat’s own technology against them?

Caterpillar

CAT’s growing presence in China — is it a good thing?

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Caterpillar announced Sunday that Cat China and AVIC Liyuan Hydraulics Co. “have signed a joint-venture agreement to establish a company to design and manufacture medium- and heavy-duty hydraulic pumps and motors for the construction equipment industry.” The press release was picked up and reprinted in the Journal Star Monday on the web — it will probably appear in Tuesday’s paper.

This joint venture comes on the heels of Cat’s September 29 announcement that they were building their twelfth factory in China, this one to make mini hydraulic excavators. That announcement was met with some criticism, not so much at Caterpillar per se, but against U.S. trade relations with China. From the American Thinker blog:

Why can’t Caterpillar make a profit exporting mini-excavators to China? The answer is simple: China has a 30% tariff on all excavators. In fact it has a similar high tariff on just about every vehicle…. When President Obama’s economic adviser Larry Summers was Secretary of the Treasury under President Clinton, he oversaw China’s entry to the WTO (World Trade Organization), and he let China declare all these vehicles as a “strategic sector” entitled to high protective tariffs….

The Chinese government has long used these tariffs as a lever in order to loot American companies of their technology. First it forces vehicle-making companies to locate their factories in China if they want to sell to the growing Chinese market. Then it forces them to “share” their proprietary technologies with Chinese competitors. Caterpillar already has 11 factories in China. It also has two Chinese competitors – Liugong and Sany – that are producing what one expert describes as “knockoffs” of Caterpillar models, and they are exporting them to the world.

From a similar post (same author) on a different blog, they add, “What we see is American trade pacifism at work. We keep our markets open to Chinese products. They close their markets to American products and then, in return for access, force our companies to build factories in China and give Chinese competitors their proprietary technology.” The upshot is, “If trade were free and balanced, Caterpillar might profitably produce excavators in the United States and sell them in China, but with the Chinese government setting the terms of trade in a way that keeps out made-in-America products, Caterpillar has little choice but to locate its factory in China.”

Well, they have “little choice” if they want to do business in China, that is. It’s easy to see why they would want to do business in China — so obvious I need not recite the reasons here. But is it worth the cost in the long run if they ultimately have to share their research and development with their competition? What happens when they start having to compete with cheaper knock-offs of their products — not just in China, but worldwide? I can’t help but wonder if they’re sacrificing long-term viability for short-term gain.

Caterpillar, Museum Block, Peoria County

CAT bullying County on museum

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Peoria County Board Member Merle Widmer is reporting that Caterpillar sent a threatening letter regarding the proposed Peoria Riverfront Museum (PRM) to all County Board members demanding “a positive response from the Peoria County Board by February 12, 2010.” The letter, signed by CEO Jim Owens and CEO-elect Douglas R. Oberhelman, went on to say, “Failure to move forward in a responsive manner will result in Caterpillar withdrawing its funding for a PRM and termination of our plans to move forward with the Caterpillar Visitor Center.”

The bullies are back, and they want action.

You may recall that this isn’t the first time that Caterpillar has strong-armed community members to support the museum. In December 2008, they sent letters to the all the county school districts asking them not to put a tax referendum on the ballot that would have provided desperately-needed funds to the cash-strapped rural districts who don’t have access to the Public Building Commission. Why? Because it would have jeopardized passage of the museum tax referendum which was slated to be on the same ballot.

So the school districts lost out on education funding, and the museum referendum passed, raising the sales tax a quarter of a percent. Even after all that, the museum group was still unable to raise the remaining private funds they needed, despite promises from museum supporters that the shortfall would be easy to make up once the referendum passed. The County Board had the audacity to insist the museum group keep their word and raise the remaining money before starting construction, which has delayed the project considerably. Also contributing to the delay has been an apparent inability to agree on the makeup of the new museum’s board and operational bylaws.

Now Big Yellow has turned its muscle on the County Board, giving them an ultimatum. The county needs to move forward — presumably with a contract between the County, City, and Lakeview — by February or else Cat withdraws all its funding and its plans to build a visitors center. If the deal falls through, who will get the blame according to Cat? The county! Yes, it’s all their fault the museum can’t get its act together, I guess. Cat even included this little gem in their letter: “Delays (by the county) have cost our community $5 million dollars in New Market Tax Credits.” Et tu, Feles? After all the county has done for you? After successfully shepherding through a tax increase in the middle of a recession that will contribute $37.5 million to the cause, you’re going to throw them under the bus for your failed attempt to secure more taxpayer money? There’s gratitude for you.

Well, the bullying is already paying off. Just a couple hours after Widmer published his post on the matter, he received an e-mail informing him that “all misunderstandings have been cleared up and the collaboration contract will soon be ready for the County Board vote.” It looks like Peoria taxpayers’ milk money will be dutifully handed over by the deadline.

Check Merle’s blog for the latest news.

Caterpillar, City of Peoria, Streets

Caterpillar opposes changes to Washington Street

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Caterpillar, Inc., sent the following letter to all City Council members on August 20, 2009:

To the City of Peoria,

While Caterpillar has long supported downtown revitalization efforts, the latest feasibility study for reworking the Washington Street (U. S. Route 24) corridor causes significant concern for pedestrian safety.

Caterpillar believes the U. S. Route 24 Adams Street / Washington Street Feasibility Study, released in draft form on May 15, 2009, fails to adequately address:

  • The safety of pedestrians (including Caterpillar employees in multiple buildings) in the entire downtown area,
  • The enhancement of safe and efficient traffic flow–especially truck traffic–on Washington, Adams, and Jefferson Streets, and on other routes connected to Washington Street,
  • The impact of this proposed plan on the downtown environment.

Caterpillar has publicly submitted its concerns and questions regarding the feasibility study to David Barber, Director of Public Works, according to procedures given by the City and the Illinois Department of Transportation.

Caterpillar believes these questions and concerns must be part of an Illinois Department of Transportation Phase I Study.

If the project is not expected to proceed to a Phase I Study, Caterpillar will seek a discussion of the matter with the City of Peoria and the Illinois Department of Transportation.

Thank you.

Tim Elder, Director, Corporate Public Affairs
William Ball, Social Responsibility Manager, Corporate Public Affairs
Raymond Perisin, PE, Sr. Engineering Project Team Leader, Global Facilities Planning

Several thoughts on this. First of all, I’m at a loss as to how Caterpillar can possibly be concerned about pedestrian safety in the proposed plan. The plan would narrow Washington street by widening and improving sidewalks and adding street trees, slowing traffic and reducing the crossing distance for pedestrians. There’s no way that could be considered less safe than the current situation.

Secondly, Caterpillar employees are not affected by Washington or Hamilton street traffic because they have skywalks over these roads already. They can completely avoid crossing at the street level.

Thirdly, slower speeds would make traffic flow safer. Whether it will make it more “efficient” depends on one’s definition of the term. If “efficient” means “fast,” then technically, it will be no less efficient than it is currently. I asked the IDOT representative if they were planning to lower the speed limit on Washington, and they said they were not. The improvements to Washington will only slow traffic that is currently exceeding the speed limit — especially trucks.

Finally, I’m not sure what to make of the last two paragraphs, except that the language sounds a bit bullying to me. It sounds to me like they are demanding their concerns be addressed to the exclusion of other businesses and property owners along the corridor. Caterpillar appears to be throwing their weight around to get their own way on a project that should be benefiting the whole city, not just one company.

Caterpillar, Museum Block

Museum still $5 million short

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You may recall that the sales tax increase for the proposed Peoria Riverfront Museum only closed the public funding goal, and that the museum group was still $11 million short on the private funding side. Whenever they were asked about this at town hall meetings before the vote, the answer was always that the CEO Roundtable had committed to raising $8 million of the remaining money from private sources, and that the museum group is “confident” that they can raise the remaining $3 million not covered by that.

The vote took place in early April. It’s now late July, and the Journal Star reports today, “Officials are trying to bridge a $5 million gap in public and private dollars still needed.” So it sounds like the CEO Roundtable has been unsuccessful in raising their promised $8 million (shocker!), leaving not a $3 million gap, but a whopping $5 million gap. Huh. Who’d have thought that a group so unsuccessful in raising private funds for this thing over the past ten years would have so much trouble closing an $11 million gap now?

In other news, Caterpillar, the company that lost $112 million the first quarter of 2009 and has been laying off lots of its workers, donated $100,000 to the “Friends of Build the Block” campaign, according to campaign finance reports. That $100,000 went toward marketing materials that proclaimed, “Over a 25-month construction period beginning in late 2009, The Block project will employ 250 to 300 local workers per month and contribute $1.8 million in monthly labor payroll to our area’s economy.”

Only it won’t actually do that. Almost immediately after the referendum passed, Caterpillar announced that it wouldn’t be building anything this year because of the economic downturn. And they haven’t given a date when they will start building it, either. Presumably, it will be after the economy recovers. So much for our “home-grown economic stimulus package.”

But the good news is that Peoria will still get the higher taxes it wanted. Those are still scheduled to begin in January, whether anything gets built or not. Probably the museum group won’t wait for that final $5 million to be raised before they start building. They’ll just start building anyway, and then when they start running short of money toward the end of the project, they’ll have another capital campaign, or another referendum, or some other gimmick to pry more money out of taxpayers’ pockets. By then it will be “too big to fail,” you know.

Caterpillar

Are Cat layoffs unethical?

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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.