Caterpillar may cut as many as 10000 jobs through 2018

Global equipment giant Caterpillar announced September 24 it could be cutting about 10,000 jobs in the coming years as part of across-the-board cost-cutting measures meant to save the company $1.5 billion a year once implemented.

In addition, Caterpillar, which is looking to reduce costs by around $1.5bn, said its sales and revenues outlook has weakened and it now expects 2015 sales to be about $48bn, down $1bn from previous guidance. If revenues also fall in 2016, that will be the first time in the company’s 90-year history of four straight revenue declines.

Shares of Caterpillar, which have fallen 31% over the past 12 months, fell 6.7% to $65.53 in morning trading.

“We are facing a convergence of challenging marketplace conditions in key regions and industry sectors – namely in mining and energy”, said Caterpillar chief executive Doug Oberhelman. Earlier this week the company said retail sales of its machinery slumped 11% between June and August.

Beyond the short-term expected layoffs, Caterpillar said that its total workforce reduction could amount to more than 10,000 people-including possible manufacturing closures through 2018.

Pre-tax costs associated with these actions are expected to be about $2 billion for employee-related severance and other termination benefits, and other exit-related costs associated with the consolidation of manufacturing facilities.

He added that while the decisions were not made lightly, the measures would put the company in a better position to “deliver solid results when demand improves”. Numerous employees at this division are contractors, all of whom were immediately concerned about their jobs. Our vision and plans for a new headquarters in downtown Peoria still stand, although given current conditions we can’t say when the project will begin. Even the Dow Jones felt the effects of Caterpillar’s announcement, an index the company is a component of; the DJIA had decreased around 210 points.