Caterpillar slowing to a crawl

Mining equipment supplier Caterpillar has announced that it will slash 20,000 jobs after what chairman and chief executive Jim Owens has called, “an extraordinarily challenging year.”

According to Owens, demand was initially up on the year, but a sudden decline saw numerous order cancellations in the final months of 2008.

“Through the first three quarters we experienced booming demand from key global industries, notably mining and energy, and most emerging market countries.” He said.

“Delivery times for many products were extended, and we were focused on increasing production and expediting shipments to meet customer needs.

“Then we were whipsawed in the fourth quarter as key industries were hit by a rapidly deteriorating global economy and plunging commodity prices.”

The job cuts, which represent 16% of the company’s workforce, are regrettable but necessary, Owens said.

“While it’s painful for our employees and suppliers, it’s absolutely necessary given economic circumstances,” he said.

“These are very uncertain times, and it’s imperative that we focus Team Caterpillar on dramatically reducing production schedules and costs in light of poor economic conditions throughout the world.

“Without a doubt 2009 will be a very tough year.”

The present state of the market is a downturn rather than a collapse and Caterpillar is will be prepared when things turn around, Owens said.

“It’s important to remember that economic cycles aren’t new,” he said.

“When the economy does recover, the need for better housing, roads and capacity for energy and mining will still be there, and we will be prepared to respond.”

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