In the face of declining or stalled demand, companies have been trimming costs and rethinking their distribution networks. But more quietly, an undercurrent of corporate plant relocations may be aiming to escape union contracts and higher-priced labor.
It may not be surprising that the new non-union Victoria, Texas plant will handle excavator production that'll be halted over time in Aurora, Illinois, where the United Auto Workers (UAW) still holds sway. Nevertheless, the Aurora plant will remain open, although it'll be shifted to other products. Ditto the Japan plant, which will now be free to focus on turning out high-demand products in its booming geographic region.
Texas is sweetening Caterpillar's pot by donating 320 acres, $3 billion in cash, and favorable tax treatment. While U.S. manufacturing is slowly creeping back, you may notice a trend in Caterpillar's moves: Other than the South Dakota facility, it's moving toward the South, where union representation is far less prevalent.
Caterpillar is hardly alone, Boeing
Clearly, overly demanding labor can hinder a variety of companies. The UAW's excessive strongarming notoriously plagued Detroit's former Big 3, before the government intervention and bankruptcy of Chrysler and General Motors, or near-bankruptcy in Ford's
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