Caterpillar cuts workforce by 14,000 in one year

Peoria, Illinois-based Caterpillar Inc. has reduced its global workforce by 14,000 employees in the past year, well ahead of the pace the company announced in September 2015.


At that time, Caterpillar announced plans to cut its workforce by 10,000 employees by 2018. The plan also called for consolidating or closing more than 20 facilities and decreasing manufacturing square footage by more than 10 percent.

The company said Tuesday it has announced all of the actions included in the September 2015 plan. The announced plans call for the closure of 30 facilities around the world, eliminating 11 percent of the manufacturing square footage.

Caterpillar also said the reduced workforce was the result of restructuring actions and lower volumes. The majority of the cuts were from the full-time workforce and 8,600 of them took place in the United States.

“The ongoing weakness in many key end markets Caterpillar serves has resulted in more aggressive cost reduction and restructuring actions than we anticipated in our announcement last September,” the company said. “Additional actions could still be taken as Caterpillar continues to align its cost structure with the economic conditions in its industries.”

The company has realized nearly $1.8 billion in cost reductions during the first nine months of the year, including combined and reduced job functions, less manufacturing space, material cost savings, and less short-term incentive pay.

Full-time employment at the South Milwaukee facility was down from 700 to approximately 650 positions as of Sept. 30, the company said.

Caterpillar manufacturers electric rope shovels, draglines and aftermarket parts at the facility, which it from Bucyrus International in 2011.

As part of the restructuring, the company announced the closure of its corporate office in Oak Creek last year and planned to move 250 jobs to South Milwaukee. The Oak Creek facility was sold and now is becoming the headquarters of Master Lock.

The former Caterpillar facility in Oak Creek.
The former Caterpillar facility in Oak Creek.

In May, Caterpillar confirmed plans to move engineering operations from South Milwaukee to Arizona as part of the creation of a central hub for its surface mining and technology offices.  The company said Wisconsin was part of its review in considering where to locate the hub, but Caterpillar did not seek incentives from the Wisconsin Economic Development Corp. before announcing the move.

As many as 200 jobs are expected to move from South Milwaukee to Arizona over the next five to seven years.

The restructuring also included the closure of the forestry products facility in Prentice, Wisconsin. The company sold the facility to Minnesota-based CMW Industrial Properties LLC on Oct. 3 for $436,409. While some operations continued at the site, Caterpillar told state officials 152 positions would be eliminated from the company.

The update on the company’s restructuring came as part of its third-quarter earnings release. Net income was down 49 percent, to $283 million, with earnings of 48 cents per diluted share, down from 94 cents last year. Excluding restructuring costs, which totaled $324 million, earnings for the quarter were 85 cents per share, down from $1.05.

Revenue was down 16 percent, to $9.16 billion. In the resources industries segment, which includes the mining equipment operations located in South Milwaukee, revenues were down 25 percent, to $1.4 billion. The company said the decline was from lower end-user demand and was split between mining products and large construction equipment.

The segment reported an operating loss of $77 million, up from a $42 million loss in 2015.

Caterpillar said nearly all of the segment’s sales decrease was the result of declining new equipment orders. Part sales have been up over the past two quarters.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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