This week, Caterpillar announced significant restructuring and cost reduction actions that are expected to lower operating costs by about $1.5 billion annually once fully implemented. These steps will begin in late 2015 and reflect recent, current and expected market conditions. For 2015, the company’s sales and revenues outlook has weakened and are expected to be about $48 billion, or $1 billion lower than the previous outlook of about $49 billion. For 2016, sales and revenues are expected to be about 5% below 2015.
Cat plans to reduce its salaried and management workforce by 4,000-5,000 people between now and the end of 2016, with most occurring in 2015, and with a total possible workforce reduction of more than 10,000 people, including the contemplated consolidation and closures of manufacturing facilities occurring through 2018. The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015.
Chris Curfman, vice president of Cat’s Mining Sales & Support Division, will retire at the end of the year. He joined Cat in 1994 and was appointed vice president of the Global Mining Division in 2004. His division will be integrated into the existing Global Mining machine business divisions. The surface mining sales and support teams will join the Hauling & Extraction Division, which will be renamed the Surface Mining & Technology Division, led by Caterpillar Vice President Tom Bluth. The underground mining sales and support teams will join the Material Handling and Underground Division, led by Caterpillar Vice President Denise Johnson.
“We are facing a convergence of challenging marketplace conditions in key regions and industry sectors — namely in mining and energy,” said Doug Oberhelman, chairman and CEO, Caterpillar. “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.”
This year is the company’s third consecutive down year for sales and revenues, and 2016 would mark the first time in Caterpillar’s 90-year history that sales and revenues have decreased four years in a row.
Since 2013, Caterpillar has closed or announced plans to close or consolidate more than 20 facilities, impacting 8 million sq ft of manufacturing space. The company has also reduced its total workforce by more than 31,000 since mid-2012.