Caterpillar to Cut 10,000 Jobs Over Four Years as Mining, Energy Slumps Continue
Caterpillar Inc., the world’s biggest mining and construction machinery manufacturer, reduced its sales forecast and said it will cut as many as 10,000 jobs over four years in response to a slowdown in the mining and energy industries.
The company lowered its 2015 revenue projection to about $48 billion from about $49 billion previously and said sales are expected to drop 5% next year. The job cuts are part of a plan that will save about $1.5 billion of operating costs annually, Peoria, Illinois-based Caterpillar said in a statement Sept. 24. Consolidation and closings of factories may affect more than 20 plants.
Caterpillar is heading for its first four-year decline in sales in its 90-year history. The retrenchments announced Sept. 24 come four years after the company spent $7.5 billion on its biggest ever deal to buy Bucyrus International Inc. and expand further into mining equipment.
Since then, the slowdown of the Chinese economy, the biggest commodity consumer, has sent coal and metals prices into a slump, hurting the company’s mining customers. Caterpillar also sells equipment to the energy industry, which is suffering from lower oil prices.
"We are facing a convergence of challenging marketplace conditions in key regions and industry sectors — namely in mining and energy," Caterpillar CEO Doug Oberhelman said in the statement. “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.”
The job cuts announced Sept. 24 follow a 5.5% reduction in head count in 2013, according to data compiled by Bloomberg News.
