Plant Shuts Down in Ohio

"We're furious."

That's how one official of the United Auto Workers responded to the news that Caterpillar Tractor Company may shift production away from its Mentor, Ohio factory to South Korea.

Workers at the Mentor lift truck plant, who have been on strike over concession demands since October 1, were told by management that their factory would be closed as part of a Caterpillar plan to restructure its world-wide tractor operations. Further use of the Ohio plant, Caterpillar said, was "under study."

But according to a report in the Wall Street Journal, Caterpillar is close to signing an accord with Daewoo Corporation, one of South Korea's largest conglomerates, for production of the lift trucks. Caterpillar officials have met with Daewoo representatives several times in the last two months, the Journal reported.

A Caterpillar spokesperson contacted by Multinational Monitor denied any deal had been made.

"No Korean company has been identified," says Steve Newhouse, Caterpillar's in-house expert on tractor production. "We have talked with a number of companies," he added, "but right now there's no commitment. It's pure speculation."

Newhouse confirms that Caterpillar's Mentor plant will be "discontinued" and that the company has been negotiating with "foreign sources." In addition to the possible move to Korea, Caterpillar has announced it will produce lift trucks at a modern plant at Leicester, England, built in 1976.

The closure of the Mentor plant will mean the loss of 1,700 jobs, the UAW official says. Caterpillar had record profits in 1981 of $579 million. In 1982, the company faces its first full-year loss in 50 years, as the entire earth-moving equipment industry is in decline during the recession.

The UAW spokesperson claims Caterpillar is moving to take advantage of poor working conditions abroad. "They feel they can get it done cheaper in Korea, where labor costs are more competitive," he says. "That's because there's no union in the industry over there. It's a totalitarian country."

Caterpillar's overture to Korea is also significant because the move involves the transferring of heavy industry. "Companies have moved to Hong Kong and Korea a lot in the past, but mostly in light industry," says the union official. "But it's fairly recent in heavy industry."

In the last several years, South Korea has been trying to shift from its dependence on light industry such as textiles to heavier, more advanced sectors, such as automobiles.

Last spring, the Korean commerce minister travelled to the U.S. and proposed that Korean companies produce auto parts for U.S. companies. The Korean minister said such an arrangement would help the U.S. "reindustrialize" and "thereby help improve overall American industrial competitiveness," according to a report in the Korea Herald. Daewoo already produces automobiles in Korea under an agreement with General Motors.

"We're not only in a death struggle with the company," says the UAW official. "This is part of a pattern of dismantling America's industrial structure.

This report was written by Tim Shorrock, who next month will become the editor of Multinational Monitor.