Caterpillar to Fire Additional 2,110 Factory Workers

Jan. 30 (Bloomberg) — Caterpillar Inc. said it will fire 2,110 factory workers at three Illinois factories as the global recession saps sales at world’s largest maker of bulldozers and excavators.

The cuts increase the 20,000 job losses Caterpillar outlined on Jan. 26, when it posted fourth-quarter profit that fell by almost a third. The latest firings will occur at a wheel loader factory in Aurora and plants that make off-highway trucks in Decatur and pipelayers in East Peoria, the Peoria, Illinois-based company said in a statement today.

Chief Executive Officer Jim Owens, 63, is steering the company through the worst recession in a quarter century. Sales may drop 22 percent to $40 billion this year and profit excluding some items may fall to $2.50 a share, less than the $4.22 average estimate in a Bloomberg analyst poll, he said this week. Goldman Sachs & Co. added the company to its “conviction sell” list.

“If the severity of the downturn worsens or lasts longer than we expect, the dividend could be at risk, though this is not our base case,” Terry Darling, a New York-based analyst for Goldman Sachs, wrote in the note dated Jan. 29.

Caterpillar posted today’s biggest decline in the Dow Jones Industrial Average, falling $1.60, or 5 percent, to $30.25 at 10:11 a.m. in New York Stock Exchange composite trading. The shares had fallen 54 percent in the 12 months before today.

Caterpillar also will fire 416 management workers, the first wave of 5,000 white-collar workers the company discussed on Jan. 26, today’s statement said.

Questions about the depth and duration of the U.S. recession triggered a plan to cut production costs, including the target of 20,000 jobs, in line with a 25 percent decline in sales volume. Caterpillar also plans to reduce overtime work, eliminate almost all temporary and contract workers and operate several factories with shortened workweeks and others with full or partial shut- downs.

Today’s firings include 500 at Aurora, 1,026 at Decatur and 584 at East Peoria.

This entry was posted on Friday, January 30th, 2009 at 10:38 am and is filed under Market news. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.