Caterpillar to cut another 2,110 production jobs
Heavy equipment maker Caterpillar Inc. announced 2,110 new job cuts as it scales back production to match lower demand in a slowing global economy.business Updated: Jan 30, 2009 23:02 IST
Heavy equipment maker Caterpillar Inc. announced 2,110 new job cuts on Friday as it scales back production to match lower demand in a slowing global economy. The world's largest maker of mining and construction machinery said the layoffs at three Illinois plants _ in Aurora, Decatur and East Peoria _ and other cost-cutting measures were needed to maintain competitiveness. Like other large manufacturers, Caterpillar has seen its key markets undercut by weakening sales of large equipment as companies reduce spending.
The layoffs add to job cuts announced on Monday that totaled 20,000. That day, the Peoria, Illinois, company reported a 32 percent drop in fourth-quarter profit as slumping commodity prices, tight credit markets and a decline in construction hurt orders for its backhoes, tractors and other machines.
Bob Williams, Caterpillar's vice president for the Americas Operations Division, said in statement that "over the last few months, recessionary conditions have had a very negative impact on our customers."
Caterpillar, he said, "must drastically reduce our production levels and cost structure to remain competitive for the long run." Caterpillar, with about 113,000 employees worldwide, has expanded dramatically in recent years, helped by surging demand from infrastructure projects in developing countries. At the end of 2008, the company employed 11,500 more people than it did a year earlier. The latest reductions include 500 production workers in Aurora, where Caterpillar makes wheel loaders and hydraulic excavators; 1,026 production workers in Decatur, where the company makes off-highway trucks, motor graders and wheel tractor scrapers, and 584 production workers in East Peoria, where Caterpillar makes track-type tractors and pipelayers.
Caterpillar said it notified the employees on Friday of the permanent layoffs scheduled to begin in April.
The company said it also notified 416 support and management employees at those locations of layoffs under a plan announced on Monday, including 96 support and management employees in Aurora, 146 in Decatur and 174 in East Peoria. That overall plan calls for shedding about 5,000 white-collar workers globally by the end of March.
Caterpillar said its other business units were still determining how many layoffs would be needed to meet the company's staff reduction plan.
Shares of Caterpillar fell $1.41, or 4.4 percent, to $30.44 in midday trading.
Other cost-cutting measures announced by Caterpillar recently include hiring and salary freezes, slashing executive compensation and capital spending, and shortened workweeks at several plants. Caterpillar on Monday also lowered its 2009 profit forecast and warned of a possible first quarter loss, which would be its first such loss since 1992.
"These are very uncertain times, and it's imperative that we focus ... on dramatically reducing production schedules and costs," Caterpillar Chief Executive Jim Owens said in a statement that accompanied the earnings.