Caterpillar to cut 20,000 workers
Construction equipment maker now set to slash a tenth of its workforce in attempt to cut costs in a challenging 2009.
NEW YORK (CNNMoney.com) -- Caterpillar said Monday it will cut 20,000 jobs in an attempt to "deal with a very challenging global business environment."
The heavy construction machinery manufacturer will cut roughly 4,000 production employees and around 7,500 management and support staff. About 8,000 of the job cuts will come from contractors not directly employed by the company.
The 12,000 direct cuts equal about 11% of the company's total workforce. Caterpillar currently employs about 113,000 workers.
"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," Caterpillar CEO Jim Owens said in a statement. "While it's painful for our employees and suppliers, it's absolutely necessary given economic circumstances."
The company did not give a timetable for the cuts, but said it has "initiated actions" to remove 20,000 workers from its business. It said the move will help to lower production costs in what should be a volatile 2009, and it expects to have most of the actions needed to lower employment and cost levels in place by the end of the first quarter.
Caterpillar said that by the fourth quarter of 2008, it had already put in place plans to cut 15,000 workers, though those cuts were never publicly announced. In reevaluating its cost-cutting needs, the company then added 5,000 more workers to its layoff plans, bringing the total to 20,000 on Monday.
The company also said that more layoffs may be necessary depending on business conditions as the year unfolds.
The company will also institute a hiring freeze for management staff, "significant" reductions of executive compensation, shortened workweeks and cutbacks in overtime work.
Caterpillar's (CAT, Fortune 500) announcement came on the same day it reported record sales and revenue of $51.3 billion for 2008. Fourth-quarter earnings, however, fell 32% on a sharp decrease in demand for construction services in the past three months.
Shares of the Dow Jones industrial average component fell 10% in early morning trading.
Caterpillar was only one of several companies announcing large-scale job cuts Monday morning. Home Depot (HD, Fortune 500) also cut 7,000 employees, Sprint Nextel (S, Fortune 500) slashed 8,000 and Deere & Co. (DE, Fortune 500) cut 700 workers.