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Caterpillar announced Thursday that it expects to permanently reduce its workforce by 4,000 to 5,000 by the end of 2016.
This comes as part of a corporate restructuring that the firm said will lower operating costs by about $1.5 billion annually once implemented.
The company also lowered its guidance for 2015, saying sales and revenues for the year are now expected to be about $48 billion — $1 billion lower than the previous outlook of about $49 billion. The Thursday announcement also said that expected 2016 sales and revenues will be about 5 percent below this year.
Shares of Caterpillar — which has a market cap of about $42 billion — fell more than 6 percent in premarket trading right after the announcement. Once the market opened, the stock traded down more than 7 percent.
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.
"We are facing a convergence of challenging marketplace conditions in key regions and industry sectors — namely in mining and energy," Doug Oberhelman, the company's chairman and CEO, said in a news release. "While we've already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now. We don't make these decisions lightly, but I'm confident these additional steps will better position Caterpillar to deliver solid results when demand improves."
The construction and mining equipment manufacturer said it lowered its guidance because of "broadly weaker business conditions" in its three largest segments: construction industries, energy and transportation, and resource industries. The largest sales and revenue decline has come from the company's oil and gas-related business, Caterpillar said.