The employee reduction is part of an effort to restructure the company and reduce costs.
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Caterpillar Inc. announced significant restructuring and cost reduction actions that are expected to lower operating costs by about $1.5 billion annually once fully implemented.
Caterpillar will also be offering voluntary retirement enhancement program to employees that are qualified, according to the press release.
In addition, Cat is planning extensive facility consolidations and closures in the next two years which could impact as many as 20 facilities.
This will bring the total number of job cuts to possibly 10,000 or more.
Caterpillar Chairman and CEO Doug Oberhelman says the company is up against balancing industries known for ebb and flow-while trying to protect Caterpillar investors. If those projections hold true, it would mark the first time in Caterpillar’s history that it has experienced a decrease in sales and revenue four years in a row. The company said revenue is anticipated to drop an additional 5 percent next year.
Caterpillar, the world’s largest construction and mining equipment maker, has already reduced its workforce by more than 31,000 since mid-2012.
Caterpillar announced the cuts Thursday, September 24, 2015, roughly seven months after a new headquarters building was slated to be placed downtown Peoria, Illinois.
Caterpillar’s announcement was no surprise to Bill Hickey, president of Chicago-based steel-mill operator Lapham-Hickey, which supplies the company’s road construction and road equipment operations. The company also said revenue is expected to be down about 5% from in 2015 levels next year.
Federal Reserve Chair Janet Yellen said last week that she expects the housing market to keep improving as more people find jobs.
Peoria Mayor Jim Ardis said Thursday that he expects the city and region to absorb a sizable hit from the latest round of job cuts, though he said the company has not shared specifics. The big loss in Caterpillar, which is looked as a proxy for economic health globally and a component of the Dow Jones Industrial average, dragged down the Dow.
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Caterpillar has an IBD Composite Rating of 13, which means that 87% of all other publicly traded companies have outperformed it in a mix of technical and fundamental factors. “While they are the right businesses to be in for the long term, we have to manage through what can be considerable and sometimes prolonged downturns”.
