FreightCar America Inc. reported quarterly earnings of $36.6 million in the second quarter. Apparently, the union that represents its employees sees this as a reason why the company shouldn’t be seeking concessions from workers.

The company had earlier suggested that if conditions for doing business at its Johnstown plant didn’t improve, it might shift production to one of its other plants. It reportedly asked its work force for some concessions in order to remain in Johnstown.

The union, noting the reported profits, suggested seeking such concessions under the circumstances was an act of bad faith.

This is an understandable response. If the company is making all that money, it should at the very least leave its workers alone, some would argue.

Well, it’s not as simple as that. And the wonderful free-enterprise system that made this country so great is very complex and can play tricks on observers who just look at profit statements without an understanding of the laws of economics.

Some companies, for instance, make huge profits in some years but incur huge losses in other years.

If you just look at one profitable quarter or year, you might miss the big picture. It could be a very troubled company catching a lucky break.

Some companies might report huge profits but might be loaded with debt, such that the sale of the company wouldn’t clear enough to pay the debt. In this case, the company is what consumers refer to as being “upside down,” meaning it owes more than it’s worth. And yet, it can still report great profits.

Some companies have to remain competitive with others in the same industry. So if Company A reports profits of say $100 million, it may sound great, but if investors see that Company B reported profits of $200 million, then that investment capital may be lured away from Company A.

Still other companies, dare we say most companies, compete with all other companies, even those not traditionally viewed as their competitors, for investment capital. These companies must run an efficient organization that reports not only profits but growing profits.

And being “efficient” isn’t enough. They need to be more efficient than the competition.

John Carroll, FreightCar’s CEO, put it as follows: “What killed Bethlehem Steel was exactly that kind of thinking: That you give more to the workers because you’re making money.”

This kind of thinking also crippled GM, and some think that once-great company will soon disappear.

We hope FreightCar America stays in Johnstown, and we hope union leaders representing its work force don’t scare them away.

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