Illinois-based Caterpillar Inc. (NYSE: CAT) has announced plans to reduce its global work force by as many 10,000 employees through 2018. The company has not yet identified specific locations that will be affected, but says nearly half of the potential cuts are expected to take place by the end of next year. Caterpillar has a significant presence throughout Indiana, including logistics, manufacturing or distribution locations in seven communities.
The state is also home to multiple suppliers connected to the heavy equipment manufacturer. Caterpillar’s website lists locations in Charlestown, Franklin, East Chicago, Greenfield, Indianapolis, Lafayette and Plainfield.
Work force is just one part of the equation, as the company says it is considering consolidations and closures of manufacturing facilities that will also take place over the next three years. More than 20 facilities could be affected, which is around one-tenth of its total manufacturing square-footage. Caterpillar says, once fully-implemented, the measures will lower annual operating costs by about $1.5 billion.
Chairman and Chief Executive Officer Doug Oberhelman says "we are facing a convergence of challenging marketplace conditions in key regions and industry sectors – namely in mining and energy. 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. Our strategy is to deliver superior total shareholder returns through the business cycle, and growth is a key element of that strategy. However, several of the key industries we serve – including mining, oil and gas, construction and rail – have a long history of substantial cyclicality. 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 company’s annual sales and revenues have declined in each of the last four years and the company says a fourth consecutive dip would be a first for the 90 year-old business.