Caterpillar’s restructuring to cut 880 jobs

CHICAGO: Caterpillar Inc will close two facilities in Texas and Panama and is also considering shutting its engine manufacturing plant in Illinois as part of a strategy to boost profitability and better handle business cycles, but the move could cut 880 jobs.
The plant closures, which were announced internally over the past two months, were confirmed to Reuters by a company spokeswoman on Friday.
She said the move will affect its work tools facility in Waco, Texas and its demonstration centre in Panama.
The world’s largest heavy-duty equipment maker emerged last year from the longest downturn in its history, when sales dropped more than 40 per cent between 2012 and 2016.
The struggle led not only to a leadership change, but also resulted in a credit rating downgrade by Moody’s.
Chastised by the sales slump, the Deerfield, Illinois-based company has embarked upon a restructuring strategy, looking to squeeze more production out of its existing factories, focusing on lean manufacturing, margin expansion and asset efficiency.
Separately, Caterpillar’s Progress Rail unit is contemplating the closure of its engine manufacturing facility in LaGrange, Illinois, shifting the work to Winston-Salem, North Carolina, and outside suppliers.
“If the LaGrange decision is finalized, the closure would impact approximately 600 full-time positions related directly to engine manufacturing,” Caterpillar’s spokeswoman said.
The plant closure news comes as some US manufacturers are grappling with President Donald Trump’s decision to impose import duties on steel and aluminium imports, which is expected to inflate input costs for equipment makers like Caterpillar.
The company’s shares were up 1.6 per cent at $156.99 on Friday afternoon. Since 2013, Caterpillar has reduced its construction and energy and transportation assets by more than $4 billion.
The full-time workforce is smaller too. Even as a recovery in key markets is driving up production at its factories, Caterpillar is relying more on workers with flexible contracts to cater to the improving demand.
Caterpillar had 116,700 workers globally — including both full-time and part-time — at the end of last
year. — Reuters