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Caterpillar lays off 2,454 workers in 3 states

Caterpillar announced plans to lay off more than 2,400 employees at five plants in Illinois, Indiana and Georgia as the heavy equipment maker continues to cut costs.
/ Source: The Associated Press

Caterpillar Inc. on Tuesday announced plans to lay off more than 2,400 employees at five plants in Illinois, Indiana and Georgia as the heavy equipment maker continues to cut costs amid the global economic downturn.

Caterpillar, the world’s largest maker of mining and construction equipment, has seen its sales wither as the sluggish world economy and the credit crisis weaken demand for its products, used to build everything from houses to highways. The company had expanded dramatically in recent years, helped by a building boom in developing countries.

In response to the worsening conditions, Caterpillar in January announced job cuts that will ultimately eliminate 20,000 positions. It also said it would slash executive compensation by up to 50 percent and offer buyouts to about 25,000 U.S.-based employees. Caterpillar, which employs about 112,000 people worldwide, said it had imposed a global hiring freeze.

In the latest cuts, the Peoria, Ill.-based company said 2,365 support and management workers had been notified of layoffs expected to last at least six months — including 245 announced previously — and 89 workers will be let go permanently.

Among the affected workers are 1,726 people at plants in Illinois. They include 911 workers at a plant in East Peoria that makes track-type tractors and pipelayers and 815 at a factory in Aurora that produces hydraulic excavators and wheel loaders. Caterpillar notified the employees Tuesday of the layoffs expected to last at least six months starting in June.

In Indiana, Caterpillar said it notified 439 employees at its large engine factory in Lafayette of layoffs effective May 29, also expected to last at least six months. The plant makes diesel engines for boats, locomotives and other applications.

Caterpillar notified 89 employees at its Jefferson, Ga., fuel systems plant that they would be laid off permanently when the company closes the facility, expected by the end of June. Work currently done at the plant will be shifted to factories in Thomasville, Ga., and Pontiac, Ill.

Also in Georgia, Caterpillar said it had notified 200 employees at a plant in Griffin, where the company makes generators, engines and oil service units, of layoffs scheduled to begin in May.

Meanwhile, the company has implemented so-called rolling layoffs, which vary in duration, at plants across the country and around the world, according to Jim Dugan, a Caterpillar spokesman.

Caterpillar — perhaps best known for its yellow-and-black painted backhoes, tractors and paving machines — said more layoffs may be needed as the year continues, depending on business conditions.

In January, Caterpillar said its earnings plunged 32 percent in the last three months of 2008, and that it had lowered its 2009 profit expectations. Demand plummeted at the end of the year, pulled down by slumping commodity prices, tight credit markets and a decline in home building. It said a first-quarter loss is possible as costs may outstrip falling orders.

In February, Caterpillar said it planned to offer early retirement packages to about 2,000 production workers.

President Barack Obama, during a visit to a Caterpillar factory last month, said the company’s chief executive, Jim Owens, had promised to rehire some workers if Congress approved the president’s economic stimulus plan. But Owens later said more cuts were likely before the company could start hiring again, and that a stimulus plan was unlikely to have an effect on the economy until late 2009 or early 2010.

The White House tried Tuesday to sound a positive note despite the news of more layoffs at Caterpillar.

Press Secretary Robert Gibbs said the White House was confident the stimulus bill will create opportunities for Caterpillar and other companies to grow their businesses because of the many construction projects states will be breaking ground on.

“The president believes as the money begins to get let out as a result of the Recovery and Reinvestment plan, that businesses will make different economic decisions,” Gibbs told reporters.

Shares of Caterpillar rose 41 cents to close at $26.83 on Tuesday.