Iconic yellow machinery manufacturer Caterpillar says it doesn’t expect much of a turnaround as it heads into 2014.
Across its global operations over 9,703 jobs disappeared in just 12 months.
At the end of 2013 Caterpillar’s worldwide full-time employment was 118,501 compared with 125,341 at the end of 2012, a drop of over 6,800 positions.
Its flexible workforce dropped 2,863 over the same period.
Caterpillar said the fall in jobs was the result of restructuring programs and lower production volumes.
These figures don’t include the jobs cut from Caterpillar’s distributors including WesTrac and Hastings Deering who have axed over 1000 positions combined.
After struggling through 2013 Caterpillar, the world’s largest mining and construction equipment supplier, said while there are some signs of improvement in the global economy it expects sales and revenues to be on par with last year.
"We expect sales of mining equipment will remain weak in 2014 and our outlook reflects a sales decline of about 10 per cent in resource Industries," Caterpillar said in its end of year results.
Releasing its guidance for 2014’s sales and revenues, Caterpillar said it expects this year to be plus or minus five per cent on last year.
Sales and revenues for full-year 2013 were $55.656 billion, down 16 per cent from $65.875 billion in 2012.
“The decline in sales and revenues was primarily driven by a sharp drop in sales of new machines for mining,” the company said.
Caterpillar said although the company expected a decline in mining sales last year, the drop was worse than anticipated, forcing it to take drastic action to cut costs including cutting thousands of jobs across both manufacturing and corporate sites.
Caterpillar Chairman and CEO Doug Oberhelman said the company was forced to navigate a challenging environment last year.
“Despite a sales and revenues decline of about $10 billion, we set a record for operating cash flow, strengthened our balance sheet and improved our overall market position for machines,” he said.
The company said with no significant increase in mining sales expected in the short term, Caterpillar is turning its focus towards structural cost reductions.
“We expect mining companies to further reduce their capital expenditures in 2014,” Oberhelman said.
“As a result, we're expecting sales in Resource Industries to decline modestly.
“We’ve already taken a number of restructuring actions to help improve our financial results and expect to take additional actions in 2014.”
This is despite some research firms predicting that “global demand for mining machinery is forecast to expand 8.6 per cent per year through 2017 to USD $135 billion”.
The study by research company Freedonia Group went on to highlight the Asia Pacific region and both Central and South America as the fastest growing markets for mining equipment.
Caterpillar added it has already announced the closure and downsizing of several facilities and is making an effort to source inputs from more cost effective locations – including Thailand.
The company also announced in will be buying back $10 billion worth of its stock, approving a new repurchase program set to expire in December 2018.
Caterpillar stated it is intending on repurchasing approximately $1.7 billion during the first quarter of 2014, completing an existing $7.5 billion authorisation that was due to expire at the end of 2015.
“The completion of our previous program and the decision to announce a new $10 billion program are a result of our record cash flow, the strength of our balance sheet and our confidence in the long-term future of Caterpillar,” Oberhelman said.