For Peoria-based Caterpillar Inc., the second quarter results represented a step in the right direction. After years of struggles, revenues were up for the second straight quarter, the company increased its full year guidance and even added to its flexible workforce.
South Milwaukee.
The increase of 3,500 jobs in the company’s flexible workforce wasn’t enough to overcome a 5,200 job reduction in the full-time workforce, leaving the global headcount down by 1.5 percent. But the growing flexible workforce is still a good sign considering the overall decline was the smallest year-over-year drop in the last five years for a company that’s cut its global workforce by one-third since 2012.
“It’s certainly a great change in where we’ve been over the last several years,” said Caterpillar director of investor relations Amy Campbell on the company’s earnings call.
Campbell said the hiring has been broad-based around the globe. In particular she highlighted growing sales in China, but added some U.S. plants are also staffing up.
One place where hiring is not picking up is Caterpillar’s South Milwaukee plant which builds electric rope shovels, draglines and aftermarket parts for both. Lisa Miller, a company spokesman, said there had not been any additional hiring at the plant.
Ross Winklbauer, a sub-district director for the United Steelworkers union representing workers at the plant was a bit more direct when asked how things were going at the plant.
“Not good,” he said. “In South Milwaukee, Caterpillar is actually looking to decrease their footprint.”
A number of buildings on the campus have been shut down and a large portion is currently for sale. Miller said earlier this month the portion owned by the company is not for sale.
Winklbauer said orders at the plant are “super slow” and another 10 people were laid off within the last couple weeks, leaving the union with 208 members working , compared to the 830 when the last labor agreement was signed a few years ago.
Caterpillar has a total workforce of 590 in South Milwaukee, Miller said.
Employees recently finished building a mining shovel that there’s no buyer for and the company is considering building another shovel with no buyer, according to Winklbauer.
“We’re hoping they start selling some shovels and get things going there,” he said. “The parts are probably what’s keeping them going right now.”
Resource industries, the Caterpillar segment that includes mining, reported $1.8 billion in revenue during the quarter, a 21 percent increase. The segment also improved from a $163 million operating loss last year to a $97 million operating profit.
Caterpillar attributed the jump to higher sales volume for aftermarket parts and the favorable impact of changes in dealer inventories.
“Increases in certain commodity prices over the past year, along with continued commodity consumption, have resulted in increased mining activity, driving the need for maintenance and rebuild activities. The company believes commodity prices need to stabilize at these higher levels to drive stronger activity and longer-term demand for equipment,” Caterpillar said in its securities filings.
Winklbauer said the company has made some equipment investments in the facility, which give the union some reason for optimism.
“We continue facility optimization work in South Milwaukee to make that facility the premiere manufacturer of electric rope shovels and draglines,” Miller said.
