Wall Street Journal excerpts, 9/24/15
Caterpillar Inc. said it would slash thousands of jobs and cut manufacturing space by 10%, as it expects weakening demand from resource and construction companies will continue to drive down sales of its heavy equipment through at least next year.
The Peoria, Ill.-based company said the job cuts could exceed 10,000 people through 2018, including 4,000 to 5,000 salaried and management positions to be eliminated by the end of next year. It aims to reduce annual costs by roughly $1.5 billion.
Caterpillar said it now expects 2015 revenue to be about $48 billion—$1 billion lower than its previous projection—which would mark a decline of about 27% from a peak of nearly $66 billion in 2012. And it said 2016 revenue likely would fall another 5% from 2015, which would be the first time in Caterpillar’s 90-year history that sales declined for four consecutive years.
The announcement, which sent Caterpillar shares tumbling, underscores the depth of the downturn in the mining and energy sectors after years of rocketing demand for its excavators, mining trucks, wheel loaders and industrial engines. Caterpillar already had cut its global workforce, before Thursday’s announcement, by more than 31,000 since mid-2012, and it had closed or announced plans to close or consolidate more than 20 facilities, affecting 8 million square feet of manufacturing space.
The company had 111,247 employees at the end of June.