After reading through the 2009 Profit Outlook of Caterpillar’s latest financial report (which was released and we blogged about yesterday), I’m more grateful than ever to have a job.
It’s pretty rough out there right now. And some of the manufacturers in our industry (like many of us) are being hit hard.
Cat Chairman and CEO Jim Owens said, “While 2008 was our sixth consecutive year of record sales and revenues, it was an extraordinarily challenging year.”
The company is taking “assertive action to respond to the global recession and a lower outlook for 2009” and getting prepared for a “very negative year.”
Owens says, “As a result of sharply declining sales, we expect 2009 profit to drop significantly from 2008, and we are taking actions to deliver our ‘trough’ profit target of $2.50 per share, excluding redundancy costs, at $40 billion in 2009 sales and revenues. We have initiated actions which will remove about 20,000 workers from our business and every indirect spend dollar will be heavily scrutinized. These actions support lowering our production costs in line with a 25-percent decline in sales volume and reducing SG&A and R&D costs supporting our Machinery and Engines business collectively by about 15 percent.
Actions include the following:
- Voluntary and involuntary separations and layoffs of about 4,000 full-time production employees.
- Depending on business conditions more layoffs may be required as the year unfolds.
- Sharp declines in overtime work. Factory overtime is a key element of volume flexibility and many
- facilities were working high levels of overtime through most of 2008.
- Several facilities have shortened workweeks, and thousands of employees have been, or will be,
- affected by temporary layoffs and full and partial plant shutdowns.
- Elimination of almost 8,000 temporary, contract and agency workers. While these workers are a key
- element of our “flexible workforce” they are not included among the 112,887 full-time employees at
- year end.
- Voluntary separations of about 2,500 support and management employees.
- Additional layoffs or separations of as many as 5,000 support and management employees.
- Hiring freezes and suspension of salary increases for most support and management employees.
- Significant reductions in total compensation for executives / senior managers.
- At $2.50 profit per share, our short-term incentive plan would not trigger payment.
- Reduction in indirect expenses of about 15 percent.
- Significant reduction in capital expenditures.
- Shifting more resources to work on short- and medium-term material cost reduction.
- Shifting more resources to work on inventory reduction projects.
The Chicago Tribune reports that Moline, Ill.-based Deere & Co. is also making job cuts. The farm and construction equipment manufacturer will lay off nearly 700 workers between factories in Brazil and Iowa, according to the report.
Deere says it plans to let go of 502 workers at an agricultural harvesting equipment plant in Horizontina, Brazil, and 190 employees at a plant in Davenport, Iowa, which makes construction and forestry equipment, will be laid off or temporarily reassigned effective Feb. 16, the Chicago Tribune reports, attributing its source to an e-mail sent Sunday to The Associated Press by Deere Spokesman Ken Golden.
In the past six months, Deere has placed 188 employees on indefinite layoff at the John Deere Dubuque Works in Iowa, according to the report.
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// –>Let’s hope the economy improves soon and that the proposed stimulus package is reworked so it will actually make a positive impact. (I’m not really sure how $21 million for sod at the National Mall and $200 million for contraceptives is going to create the jobs necessary to help jumpstart the economy. But that’s just my humble opinion.)