Latest Post | Last 10 Posts | Archives
Previous Post: *** LIVE *** Overtime session coverage
Next Post: Mendoza gets big union support
Posted in:
* Tribune…
Construction and mining equipment maker Caterpillar plans to lay off more than 10,000 workers in a bid to save $1.5 billion a year in operating costs, it announced Thursday.
Nearly half those job losses — 4,000 to 5,000 salaried and management employees — will come before the end of 2016, with most completed this year, the company says in an SEC filing.
Doug Oberhelman, CEO of the Peoria-based firm, blamed “challenging marketplace conditions” in the energy and mining sectors, as Caterpillar, one of Illinois’ biggest employers, revised downward its sales projections for 2015 by $1 billion, to $48 billion.
It noted in a news release that this 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.”
* From the announcement…
Key steps planned by the company include:
· 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.
* From the Peoria paper…
Caterpillar remains committed to Peoria, though with Thursday’s announcement central Illinoisans shouldn’t expect construction to begin soon on the new Downtown world headquarters complex.
That was the message from the Fortune 50 company after announcing a significant restructuring and the likely reduction of 4,000 to 5,000 employees worldwide by the end of 2016 and potentially as many as 10,000 — with likely facility closures or consolidations — by 2018.
“Above all, we remain committed to Peoria and Illinois,” spokeswoman Rachel Potts said. “Our vision and our hopes and plans for a headquarters in Downtown have not changed.”
That said, “given the current conditions, now is not the time to start, and we cannot say now when that will begin,” she said by phone Thursday morning.
posted by Rich Miller
Thursday, Sep 24, 15 @ 9:55 am
Sorry, comments are closed at this time.
Previous Post: *** LIVE *** Overtime session coverage
Next Post: Mendoza gets big union support
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
mmmm…hard times.
Comment by Honeybear Thursday, Sep 24, 15 @ 9:59 am
This is very bad news for Peoria.
Comment by Tournaround Agenda Thursday, Sep 24, 15 @ 10:00 am
Caterpillar has never had sales and revenue decrease for four straight years. The CEO who I believe makes over $20 million a year might be the one to blame. Or maybe he could be a team player and cut his salary to $5 million to help save jobs. Wonder if a change will be coming from the top soon. But then again it is Illinois’s fault not the direction the CEO decides the company should take.
Comment by Almost the Weekend Thursday, Sep 24, 15 @ 10:03 am
Yet nothing happens to the CEO and the other individuals responsible for buying Bucyrus?
Comment by ihpsdm Thursday, Sep 24, 15 @ 10:09 am
“challenging marketplace conditions” in the energy and mining sectors”
Possible translation: the fracking industry went bust due to low oil prices?
Comment by Secret Square Thursday, Sep 24, 15 @ 10:13 am
There’s a flip side to $45 a barrel crude.
Cheap gasoline is swell, but new wells aren’t being drilled domestically as OPEC producers keep pumping like crazy to try and strangle the U.S. fracking industry and maintain market share. Tens of billions in domestic production projects have been cancelled in the last year.
The infrastructure bubble in China has collapsed as well, as local governments are drowning in debt and are looking for a bailout from Beijing to cover the costs of their projects.
And, of course, because….. Madigan.
Comment by Wordslinger Thursday, Sep 24, 15 @ 10:18 am
Even as a card carrying Republican, stuff like this makes it VERY hard to defend businesses and unchecked/unlimited free trade. I understand Cat’s problems, but that is quite the sieve in manpower.
My criticism from yesterday of school district and non-profit leadership taking the lead on cuts and pain goes for corporate management.
For shame.
Comment by Team Sleep Thursday, Sep 24, 15 @ 10:22 am
Wordslinger:
I am sure the statement from ck blaming Madigan and the UAW is on its way.
Comment by Juvenal Thursday, Sep 24, 15 @ 10:25 am
Yep, time for the Fed to raise short term rates because inflation is just around the corner I tell you!
Comment by PublicServant Thursday, Sep 24, 15 @ 10:27 am
This is the “leadership” that constantly complains about Illinois?
Comment by Precinct Captain Thursday, Sep 24, 15 @ 10:27 am
China put a coal fire power plant online ever seven days. Coal ming is a massive earth moving enterprise.
That stopped.
Comment by VanillaMan Thursday, Sep 24, 15 @ 10:28 am
CEO Oberhelman was active in trying to cut benefits for public employees. He should have paid more attention to his company. Cat bought back bonds by borrowing cheap money from the feds and invested all that money in China resulting in multiple lawsuits with stockholders.
One can’t say the business community has everything right.
Comment by Liberty Thursday, Sep 24, 15 @ 10:29 am
It seems as though employment status in the private sector can be diminished and impaired.
Comment by nixit71 Thursday, Sep 24, 15 @ 10:32 am
Nixit, do you have a point you’re trying to make?
Comment by Wordslinger Thursday, Sep 24, 15 @ 10:34 am
Cat remains Committed to the bottom line.
Comment by tobor Thursday, Sep 24, 15 @ 10:39 am
@word:
Agreed, Madigans fault.
Comment by Jack Stephens Thursday, Sep 24, 15 @ 10:39 am
“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.”
“That’s baloney - the layoffs are because of the terrible business climate we have in Illinois that has been continued by Speaker Madigan and the legislators he controls.”
How did I do ck?
Comment by Dee Lay Thursday, Sep 24, 15 @ 10:44 am
Oberhelman remains utterly committing to running the absolute best earthmoving company of the 20th century. Which is Cat’s major problem. Oberhelman doesn’t want it to be the 21st century, so he’s just going to keep pretending it’s not, and keep solving 21st-century problems with 20th-century solutions.
It’s astonishing how little adaptation there’s been in that company — either in what they’re manufacturing, or in HR practices — to the challenges of the 21st century. It’s 1960 in those headquarters. And if you go visit their new “visitor’s center,” the whole thing is pitched as a celebration of limitless oil and grown and expansion. There’s no acknowledgement that they face a changing market or are doing anything to adapt to it. Pure 20th century industrial triumphalism. It was one of the strangest marketing/PR messages I’ve ever gotten from a company trying to sell itself in 2015.
Comment by Educated in the Suburbs Thursday, Sep 24, 15 @ 10:48 am
This is bad news for the folks in the Peoria area. Several of you knowledgeable posters have mentioned a few world wide events which have had a negative effect on Cat’s business.
To be clear, this situation doesn’t have anything to do with how business friendly Illinois is but I’m expecting a few of our politicians to try to spin it that way in hopes that it will further their agenda, which is basically to stick it to middle income workers.
Comment by The Dude Abides Thursday, Sep 24, 15 @ 10:49 am
Apologies for typos, my fingers are very fumbly this morning.
Comment by Educated in the Suburbs Thursday, Sep 24, 15 @ 10:49 am
This is terrible news. More middle class jobs eliminated. Cat use to do temp layoffs during slowdowns, now they do permanent layoffs and restructuring.
Comment by pool boy Thursday, Sep 24, 15 @ 11:01 am
I am losing confidence in this CEO. They are still paying a hefty dividend, which I am happy to get, but they should consider lowering that before laying off employees.
Comment by A Jack Thursday, Sep 24, 15 @ 11:03 am
@Wordslinger - When benefits that cannot be diminished or impaired are dependent on revenue sources that can be diminished or impaired, one might ask if certain protections are scalable.
Comment by nixit71 Thursday, Sep 24, 15 @ 11:27 am
Nixit71, Absolutely, just get a constitutional amendment to that effect…
But one might ask, why did the governor want to reduce the tax rate when the programs supported by those revenues were not reduced by the governor when he presented his budget?
Comment by PublicServant Thursday, Sep 24, 15 @ 12:02 pm
=scalable. =
Hence the reason some people back in 1970 had the foresight to protect pensions from being “scalable” at the whim of political machinations and welching.
Comment by JS Mill Thursday, Sep 24, 15 @ 12:08 pm
There you go. Lose $1B in SALES & cut $1.5B in costs. Gotta key the old eye on earnings an profit above all else.
Comment by sal-says Thursday, Sep 24, 15 @ 12:10 pm
Nixit71, are you making the case for why the CEO’s compensation isn’t changing despite the company’s revenue problems?
Comment by Michelle Flaherty Thursday, Sep 24, 15 @ 12:15 pm
Educated in the suburbs I could not agree more. Caterpillar threatens to leave Peoria, but they never will. They are a shark in a little pond. Being in Peoria and one of the largest private sector employers in the area they receive not only state, but also large tax breaks at the local level. One downside to this is they are isolated from their competition. They don’t see how other companies are adapting and investing in other areas of the economy. Oberhelman decided to invest in mining in Asia and Australia and lost big. He’s doubled down the past several years. I doubt he does it again, but who knows the way this company has been rin the past five years.
Comment by Almost the Weekend Thursday, Sep 24, 15 @ 12:20 pm
Cat cries poor, but it should blame itself:
http://www.reuters.com/article/2014/01/23/caterpillar-china-special-rep-idUSL3N0IT1SV20140123
Comment by Newsclown Thursday, Sep 24, 15 @ 12:28 pm
Mining down
Energy down
Construction down
China slowing
It’s pretty simple why they’re struggling.
Comment by 4 percent Thursday, Sep 24, 15 @ 12:45 pm
@JSMill - I hear ya. And if our political welchers would have lived within their means and properly funded those pensions, that would mean less money for employees over those years, which would mean less employees over the years and/or less/lower pension payouts today.
But here we are, and the folks being diminished and impaired across all income levels are being asked to pick up an ever increasing share of the tax burden.
Comment by nixit71 Thursday, Sep 24, 15 @ 1:17 pm
Rough news for an area of the State that has sustained man issues over the past decade.
I agree with the posters who mentioned the CEO needing to take some financial heat for poor decisions. The top people should be the ones who take a hit. They have been making all of the decisions particularly when it comes to expensive purchases of other companies that are not necessarily profitable.
Comment by Belle Thursday, Sep 24, 15 @ 1:53 pm
I have lived in Peoria a long time and it’s painful news for sure. I would agree if you make $20 million you can afford to take a few cuts and save a few jobs. But long run it is a drop in the bucket. I just hope most of those jobs aren’t in peoria.
Comment by Strangerthings Thursday, Sep 24, 15 @ 1:56 pm
@Norseman.
The new contract doesn’t look too different from the old contract.
Comment by Pete Thursday, Sep 24, 15 @ 3:20 pm
So it really appears none of you understand that the folks that you think are at the top have been taking cuts. Might not be visible to you by middle management and up at CAT have been taking up to 3 weeks of unpaid furlough days for 2 years in a row now. Unlike our elected officials they actually cut spending when they don’t have the cash. And to the folks that post they just ensure they make a profit - That is the sole purpose of company to the shareholders. If you don’t understand that then you were not educated well.
Comment by fly on the wall Thursday, Sep 24, 15 @ 8:17 pm