Caterpillar announced Thursday that it will temporarily close some of its manufacturing facilities in response to the coronavirus outbreak. The company has also withdrawn its 2020 earnings outlook due to the economic uncertainty surrounding the global pandemic.
The heavy equipment maker says that while the majority of U.S. facilities remain open and operational, operations have been temporarily suspended at “certain facilities” due to “uncertain economic conditions resulting in weaker demand, potential supply constraints and the spread of the COVID-19 pandemic and related government actions.”
Caterpillar does not name which facilities it has shut down, but at least one of those plants is the company’s cast iron foundry in Mapleton, Illinois. According to a report from CIProud.com, Cat provided no timeline on how long the foundry would be closed.
At the facilities that remain open, Cat says it has implemented several preventative safety measures to protect its employees, customers, dealers and suppliers. “They include increased frequency of cleaning and disinfecting of facilities, social distancing practices, remote working when possible, restrictions on business travel, cancellation of certain events and limitations on visitor access to facilities,” according to a press release.
As for further plant closings, Cat is not ruling that possibility out. The following is from the company’s press release sent out Thursday morning:
“The continued spread of the COVID-19 pandemic is starting to impact Caterpillar’s supply chain…The company is monitoring the situation closely and supply chain teams have been executing business continuity plans, which include, but are not limited to, being alert to potential short supply situations, and, if necessary, utilizing alternative sources and/or air freight, redirecting orders to other distribution centers, and prioritizing the redistribution of the most impactful parts…
“The company will continue to monitor the situation and may suspend operations at additional facilities as the situation warrants.”
Cat says that due to the fact that it cannot reasonably estimate the total financial impact the outbreak will have on its business, it has withdrawn the 2020 earnings forecast it released as part of its 4Q and full-year 2019 earnings report. In that forecast, Cat said it anticipated a sizable fall in profit with profit per share forecast to fall from $10.74 in 2019 to $8.50 to $10 per share in 2020.
The company says it remains financially strong.
“On a consolidated basis, Caterpillar ended 2019 with $8.3 billion of cash and available global credit facilities of $10.5 billion,” according to the press release.