Caterpillar, the world’s largest manufacturer of construction and manufacturing equipment, announced plans Wednesday to expand its Brazilian operations, creating thousands of jobs in South America.

The company plans to invest $180 million to build a factory in the city of Campo Largo and expand an existing facility in Piracicaba. Those facilities will specialize in manufacturing backhoe loaders and small wheel loaders.

“This new facility is an important investment for the long-term growth and success of BCP, particularly as we meet the growing demand for Caterpillar’s smaller, versatile machines that help our customers accomplish their work more productively and profitably,” Mary Bell, Caterpillar vice president of the Building Construction Products Division, said in a statement.

Over 1,000 jobs will be created at the newly erected facility. The company did not announce whether the 5,000 plus workforce at the Piracicaba would be expanded.

The company, which is based in Peoria, Illinois, and has a worldwide workforce of 94,000, already has more factories located outside of the U.S. than inside. Caterpillar has 51 domestic factories and 59 international facilities.

The move to expand to Brazil is part of the company’s globalization strategy, aimed at reducing its U.S. workforce in favor of cheaper labor, less regulation and environmental responsibility.

The company has eliminated roughly 20,000 high-wage union jobs since the 1990s in an effort to cut down on costs. A 2001 report by the Nashville Business Journal found that 60 percent of the company’s workforce was outside the United States. In all likelihood that number has increased drastically in the nine years since.

To achieve its goals, the company has been a major proponent of America’s failed free trade policies. As The New York Times wrote of Caterpillar in 1993, “it has a reputation as a company that has never seen a free trade proposal it didn’t like.”

“Just because many products today are manufactured in China and other parts of the world doesn’t mean we’ve stopped producing much-needed goods in the United States,” the company claims on its website. “Free trade policies keep U.S.-made goods in demand around the world and U.S. workers employed. That includes billions of dollars of Caterpillar machines, engines and parts and tens of thousands of Caterpillar and supplier employees.”

The fact is, while free trade may be fantastic for multinational corporations that make millions through globalization, the same cannot be said for the average American employed in the manufacturing sector. In 1980, around the time that globalization exploded and free trade agreements became more prevalent, the U.S. had 19.2 million manufacturing jobs. Since then, the sector’s total employment has fallen to just 11.6 million as jobs are outsourced to low-wage nations, like Mexico and China.

Because free trade agreements knock down trade barriers, Americans are now forced to compete with China’s 113 million strong manufacturing workforce, each of whom averaged a wage of 81 cents-per-hour, just three percent of their U.S. counterparts pay, according to the U.S. Bureau of Labor Statistics. Mexico, whose 10.7 million industrial workers average just $2.92 per hour, is only slightly better.

Caterpillar was one of the main corporate proponents of the North American Free Trade Agreement. More recently, the company opposed the American Jobs and Closing Loopholes Act of 2010, which would raise $14.5 billion over the next decade by cracking down on six tax schemes multinational corporations use to skirt their U.S. tax obligations, including claiming foreign tax credits for income they have not actually paid taxes on. That bill has yet to pass.

Caterpillar’s enormous amount of political influence is derived from the money it throws at the system. Since 2000, the company has donated $2.2 million to national congressional and senate candidates. To ensure that it receives the most bang for its buck, 82 percent of that went to Republican candidates. And, to top it off, sitting on the company’s board is Susan Schwab, former U.S. Trade Representative for the Bush administration.

Now the company is turning its gaze toward a trio of stalled free trade pacts negotiated under the Bush administration.

“My hope is that we can find a way to bundle the three pending free-trade agreements – South Korea, Panama and Colombia – and achieve legislative approval. Together these three agreements will provide a foundation for President Obama’s goal of doubling exports over a five-year period,” outgoing CEO Jim Owens told the Peoria Star Journal.

Print PDF