In a sign the global economic slowdown is hurting sales of its machines, such as backhoes, asphalt pavers, excavators, dozers and hydraulic mining shovels, the company said it would cut 4,000 to 5,000 jobs.
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The reductions are part of a corporate restructuring that the company said will lower operating costs by about $1.5 billion annually once implemented.
Caterpillar said it’s dropping its 2015 revenue forecast by $1 billion to about $48 billion, and it projects that sales for 2016 will be about 5 percent lower.
The firm’s shares dropped as much as over 6 percent in early trading on the announcement. It expects to incur about $2 billion in pretax costs.
Analysts expect, on average, revenue of 48.93 billion dollars (£32 billion) this year, according to FactSet.
Through 2018, total possible workforce reduction could exceed 10,000 people. It now plans a “restructuring” at 20 more of its 103 plants worldwide, that will involve some closings, a move that will cut its total manufacturing space by about 10 percent, it said. The guidance cut is the result of weaker business conditions in Caterpillar’s three large segments – construction industries, energy & transportation and resource industries. “We have a talented and dedicated workforce, and we know this will be hard for them”. “We don’t make these decisions lightly, but I’m confident these additional steps will better position Caterpillar to deliver solid results when demand improves”. That’s led mining and oil exploration companies to cut back on spending on the heavy equipment that Caterpillar produces.
Caterpillar said it isn’t abandoning plans for a new headquarters building in downtown Peoria, but that there now is no schedule to begin construction.
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Before the end of 2016, up to 5,000 jobs will be cut, with the bulk occurring before the end of this year. Numerous employees at this division are contractors, all of whom were immediately concerned about their jobs.
