Caterpillar making major job cuts over the next three years

Chronicle Media
The Caterpillar visitor's center in downtown Peoria. (Peoria County Chronicle photo)

The Caterpillar visitor’s center in downtown Peoria. (Peoria County Chronicle photo)

More than 10,000 Caterpillar employees will be facing the loss of their jobs  over the next three years as part of a $1.5 billion cost-cutting measure the Peoria-based manufacturer announced Thursday (Sept. 24).  

Most of the cuts will happen sometime before the year is out and will include  4,000 to 5,000 salaried and management employees. Another 5,000 workers will be affected over the next three years at up to 20 facilities  — and some of those facilities could be closed.

There is no specifics from Capterpillare on where those cuts will happen this year.

State Senator Dave Koehler (D-Peoria) reacted to Caterpillar’s announcement with a released statement.

“This is a sad situation and I know devastating to the affected employees.  Everyone in the Peoria area wants Caterpillar to succeed, and depends on that success,” Koehler said.  “It’s disappointing that the global economy had led to circumstances where layoffs are necessary.  We can only hope this situation turns around soon.  I do appreciate Caterpillar’s continued commitment to Peoria and to Illinois.”

Caterpillar officially called the cuts a “Restructuring and Cost Reduction Plan”  saying it will make the company stronger.

“We are facing a convergence of challenging marketplace conditions in key regions and industry sectors – namely in mining and energy,” Doug Oberhelman, caterpillar chairman and CEO, said in a statement.

“While we’ve already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now. 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,” Oberhelman stated.

This year is the company’s third consecutive down year for sales and revenues, and 2016 would mark the first time in Caterpillar’s 90-year history that sales and revenues have decreased four years in a row.

The company now expects sales this year to total about $48 billion, or $1 billion less than previously expected. Sales are expected to drop another 5 percent next year.

This is the third round of layoffs announced by Caterpillar this year. Other cuts hit the East Peoria, Morton and Joliet plants.

Specifics of the plan as posted on the company’s web site:

  • An expected permanent reduction in Caterpillar’s salaried and management workforce, including agency, of 4,000 – 5,000 people between now and the end of 2016, with most occurring in 2015, and with a total possible workforce reduction of more than 10,000 people, including the contemplated consolidation and closures of manufacturing facilities occurring through 2018.  
  • The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015.
  • Slightly less than half of the $1.5 billion of cost reduction is expected to be from lower Selling, General and Administrative (SG&A) costs. The reduction in SG&A will largely be in place and effective in 2016 and occur across the company.
  • The remaining cost reductions are expected to come from lower period manufacturing costs, including savings from additional contemplated facility consolidations and closures, which could impact more than 20 facilities and slightly more than 10 percent of our manufacturing square footage. A portion of these cost reductions are expected to be effective in 2016, with more savings anticipated in 2017 and 2018.

 

 

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