Steel Markets
Caterpillar Restructuring to Close 5 U.S. Plants
Written by Sandy Williams
February 2, 2016
Caterpillar says it plans to close five plants in the U.S. as part of a cost-cutting strategy it began last year. The closures at the mining and construction equipment company will mean layoffs for about 670 employees. In September 2015, Caterpillar said global restructuring actions would cut as many as 18,000 jobs through 2018.
“Cost management, restructuring actions and operational execution are helping the company while sales and revenues remain under pressure from weak commodity prices and slowing economic growth in developing countries. We took tough but necessary restructuring actions in 2015 – and they were significant,” said Chief Executive Doug Oberhelman. “We are benefiting now and expect to even more in the future when markets rebound.”
Fourth quarter revenue was $11 billion, down from $14.2 billion in the prior year. Overall sales and revenue for 2015 declined 15 percent from 2014.
Caterpillar is expecting another “rough and challenging” year in 2016 said Oberhelman. Revenue for 2016 is expected to be in the range of$40 billion to $44 billion.
The company said in a statement released on Friday, Jan. 29: “Caterpillar recognizes these restructuring actions are painful for its dedicated workforce, their families and the impacted communities. The decisions are difficult; however, it is necessary to have the right capacity in place for the tough market conditions the company is facing.
The restructuring actions, as released by Caterpillar, are:
-The company has finalized a contemplated decision previously announced on November 19, 2015, to consolidate manufacturing on its East Peoria, Illinois, campus. The consolidation includes the manufacturing of components made for equipment used in mining and construction. This decision will impact 230 positions, which is a combination of office and production employees. The company will relocate affected production to other Caterpillar facilities with a portion of the work moving to outside suppliers. As a result, Caterpillar will consolidate various production on its East Peoria manufacturing campus and will eventually close Building HH. This transition will begin in early 2016 and is expected to be complete in late 2018.
– Separate from long-term restructuring actions but in response to continued low demand for mining products, Caterpillar will place approximately 120 employees in office and production roles on the East Peoria campus on indefinite layoff. The reductions in East Peoria will take place over a period of time beginning on February 8.
– Caterpillar will consolidate two engine component manufacturing facilities into its existing Pontiac, Illinois, facility, resulting in the addition of about 160 new jobs in Pontiac. The company will close its fuel systems manufacturing facility in Thomasville, Georgia, and an after treatment manufacturing facility in Santa Fe, New Mexico. Approximately 200 jobs – a combination of office and production employees as well as agency workers – at the Thomasville facility will be impacted by the closure. Approximately 50 jobs in Santa Fe, which is a combination of office and production employees, will be impacted by the closure. The consolidation is expected to begin this year and be completed within the next 12-18 months.
– The production of large wheel loaders in Tongzhou, Jiangsu province in China will transition to the Caterpillar wheel loader facility in Aurora, Illinois. The Tongzhou facility is expected to close in the second quarter of 2016, impacting 40 positions. Total employment in Aurora is not expected to be impacted at this time as the work will be absorbed into existing operations.
January 29, 2016
– Caterpillar will close its forest products facility in Prentice, Wisconsin, and move production to existing Caterpillar facilities in LaGrange, Georgia, and Victoria, Texas. The transition, expected to be fully complete by the end of 2016, will impact approximately 220 positions in Prentice. Those positions include office and production employees as well as agency workers. Total employment in LaGrange and Victoria is not expected to be impacted at this time as the work will be absorbed into existing operations. Caterpillar is in negotiations with a third party to purchase the Prentice facility and there is potential that the third party will maintain a portion of the current Prentice facility workforce.
– The company will transfer some remanufacturing work currently being performed in Lafayette, Indiana, to the company’s remanufacturing hub in Corinth, Mississippi. No layoffs are anticipated in Lafayette as a result of this move. Caterpillar facilities in Mississippi plan to add about 45 positions over the next few years as a result of continued global consolidation of its engine remanufacturing business.
– In Texas, the company is contemplating consolidation of its Van Alstyne production warehouse operations into the Denison manufacturing operation. If finalized, the consolidation would begin in the first half of 2016 and be complete by the end of the year. Caterpillar will consolidate leased office space in Denison into its primary manufacturing building. This consolidation will begin immediately and be complete by mid-year 2016. Total employment for both locations is not expected to be impacted a result of these two consolidations.
– Separate from long-term restructuring actions but in response to continued low demand for mining products, Caterpillar will place approximately 10 production employees in Denison on indefinite layoff effective February.
Sandy Williams
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