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Caterpillar plans ‘on track’ despite layoffs
Published January 27, 2009
SEGUIN — Officials say that Caterpillar’s recent layoffs will not affect the facility being constructed in Seguin.
Caterpillar announced plans on Monday to cut workers at plants throughout the country, bringing expected layoffs to a total of 20,000 this year. However, company spokeswoman Kate Kenny said in a Monday e-mail that the cuts would not affect the future of the Seguin plant.
“Everything remains on track for Seguin,” Kenny wrote.
Caterpillar broke ground last week on a $170 million facility, located just off State Highway 46, which will employ more than 1,400 people once it reaches full production by the end of 2011.
Seguin Economic Developoment Director Terry Treviño, said that construction is still on schedule and the layoffs nationally have not affected future jobs at the Seguin plant.
She said the layoffs and cuts Caterpillar appear to be in areas dealing with trucks and heavy equipment — which are tied to troubles in the building and automotive industries.
The Seguin plant, meanwhile, will manufacture engines for electrical generation, marine use and gas and petroleum production.
“We’re very fortunate that we’ll be making a product that is needed for quality-of-life,” Treviño said. “Ours will be producing for a niche market.”
She added that once production in Seguin begins, about 70 percent of the engines created here in town will be shipped overseas — hopefully making the plant less subject to whims of the United States economy.
Caterpillar Inc.’s fourth-quarter profit dropped 32 percent as the global economic slowdown sapped demand for heavy equipment, forcing the company to lower its 2009 profit expectations and make further job cuts that will ultimately wipe out 20,000 positions.
Earnings for the world’s largest maker of mining and construction machinery fell far short of expectations as customers pulled back on purchases of equipment used to mine quarries and help build homes, highways and offices. Demand hit a wall in the last month of the year, weighed down by the forces of recession: slumping commodity prices, tight credit markets and weak home building.
Caterpillar, an economic bellwether and component of the Dow Jones industrial average, reported fourth-quarter earnings of $661 million, or $1.08 per share, on Monday, down from $975 million, or $1.50 per share, a year earlier. Overall sales rose 6 percent to $12.92 billion.
Analysts, on average, expected earnings of $1.31 per share on revenue of $12.84 billion, according to a survey by Thomson Reuters.
Shares of Caterpillar, which makes yellow-and-black backhoes, tractors and paving machines, and offers loans to customers, fell $2.99, or 8.4 percent, to $32.67. Earlier, they touched a new 52-week low of $31.70. In response to worsening conditions, Caterpillar disclosed nearly 20,000 job cuts, most of which have already been made. Of the total, about 5,000 are new layoffs of white-collar workers which will occur globally by the end of March.
Earlier cuts included the elimination of 2,500 workers through a buyout offer announced in December. Another 8,000 contract and temp agency workers have also been laid off, steps the company had announced earlier without disclosing the figure. Finally, a total of 4,000 full-time production workers have been let go through firings and buyouts, a number that hadn’t been announced.
“These are very uncertain times, and it’s imperative that we focus ... on dramatically reducing production schedules and costs in light of poor economic conditions,” Caterpillar Chief Executive Jim Owens said in a statement.
The Associated Press contributed to this story.
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