Hoping to slow down the process of health care reform, the world's largest construction machinery manufacturer sent a letter to House leadership on Thursday, warning that it would be hit hard financially by the legislation.
Not that Caterpillar is in precarious shape -- the machinery giant recorded substantial profits over the past few years and its executives receive generous compensation packages.
In a letter to House Speaker Nancy Pelosi (D-Calif.) and House Republican Leader John Boehner (R-Ohio), the company's vice president Gregory Folley said that Caterpillar would be forced to pay $100 million more in health care costs in the first year alone under the bill being considered. Folley pointed to an expansion of Medicare taxes and mandated insurance coverage as two provisions that would do the most damage.
"We can ill-afford cost increases that place us at a disadvantage versus our global competitors," said the letter signed by Gregory Folley, vice president and chief human resources officer of Caterpillar. "We are disappointed that efforts at reform have not addressed the cost concerns we've raised throughout the year."
Others, too, have raised concerns about the lack of effective cost-cutting measures in the health care legislation. But spending $100 million to provide more health care for workers -- while not chump change -- doesn't seem likely to cripple Caterpillar either.
In 2009, during the height of the economic downturn, the company still managed to turn a profit of $895 million, according to SEC statements. The preceding year, Caterpillar recorded a profit of $3.557 billion. The year before that it was $3.541 billion.
In short: if Caterpillar had to pay $100 million for extra health care costs in 2007 (a lucrative year but more representative than what the company earned during the height of the recession), that would have represented just 2.8 percent of its profits.
The company already spends a decent chunk of that money on executive pay. According to a 2009 proxy statement to its SEC filings, Caterpillar set aside more than $37 million in total compensation for just seven of its top officials in 2008. If you add in the compensation paid to chairman and CEO J.W. Owens, that number jumps more than $17 million (up to $55,129,209).
The company, of course, is facing a much more difficult economic climate now. And in that respect, concerns over "the substantial cost burdens" that health care reform "would place on our shareholders, employees and retirees" (as Folley writes) do seem worthy of discussion.
But for a company whose workers have already been hit quite hard by the health care crisis, and whose executives still seem to be doing quite well, it's difficult to view the letter to Pelosi and Boehner as a game-changer that could trip up health care reform's passage.
That said, the story currently rests atop the Drudge Report.
HERE IS THE CATERPILLAR LETTER: