Caterpillar To Cut Another 2,110 Production Jobs
PITTSBURGH (AP) - Heavy equipment maker Caterpillar Inc. announced 2,110 new job cuts as it scales back production amid a world economic slowdown.
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 big manufacturers, Caterpillar has seen demand for its large equipment fall as customers cut back spending.
Friday's new layoffs came on top of 20,000 job cuts announced earlier this week, when the Peoria, Illinois-based company reported a 32 percent drop in fourth-quarter profit. Results fell as slumping commodity prices, tight credit markets and a decline in construction hurt orders for Caterpillar's backhoes, tractors and other machines.
"Over the last few months, recessionary conditions have had a very negative impact on our customers,'' Bob Williams, vice president for the Americas Operations Division at Caterpillar, said in statement. The company "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-building in developing countries. Its total employment grew by 11,500 people in 2008.
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 employees 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 Monday, including 96 in Aurora, 146 in Decatur and 174 in East Peoria. That plan calls for shedding about 5,000 white-collar workers globally by the end of March.
Caterpillar said other business units were still determining how many layoffs would be needed to meet the staff reduction plan.
Shares of Caterpillar fell $1, or nearly 3.1 percent, to close at $30.85 Friday.
Also Friday, Fitch Ratings slashed its rating outlook for Caterpillar, Caterpillar Financial Services Corp. and Caterpillar Financial Services Australia Ltd. to 'Negative' from 'Stable.' The outlook aims to "reflect the weakening global economy, which will pressure (Caterpillar's) business in 2009 and possibly into 2010.''
In recent weeks, analysts have forecast continued weak earnings for Caterpillar and other U.S.-based machinery firms, pointing to the stumbling construction and mining industries and an infrastructure spending plan proposed by President Barack Obama that may not boost equipment demand anytime soon.
Farm-equipment maker Deere & Co. recently told employees it plans to lay off almost 700 workers at factories in Brazil and Iowa following forecasts of lower sales.
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.