The media is abuzz as Caterpillar Inc. announced Thursday the closing of five factories to cut capacity in response to slowing demand for construction and mining equipment.
The company seems to be keeping the issue quiet though, as no official press release has been issued from the company’s website.
Caterpillar’s Oxford, MI, plant employs 240 individuals for stamping metal hose couplings. According to the Washington Times, quoting the Associated Press, the plant “will continue work into 2017, then shift some production to Caterpillar’s plant in Menominee, Michigan plant and some work to outside suppliers.”
Five closures will cut 820 jobs over the next 18 months according to the news source:
- “A 325-employee electric generator packaging facility in Newberry, South Carolina and a 75-employee generator assembly panel plant in Ridgeway, South Carolina will shift work to company plants in Seguin, Texas; Lafayette, Indiana and Griffin, Georgia.”
- “A 70-employee bucket and work tool plant in Jacksonville, Florida will shift work to outside suppliers.”
- “A 110-employee engine undercarriage component plant in Morganton, North Carolina will shift work to other company plants and suppliers.”
The Associated Press also states that Caterpillar will be demolishing a mostly-vacant engine manufacturing building in Mossville, Illinois, “to save money.”
5,300 Caterpillar employees have been laid off between September 2015 and March 2016.
“With Thursday’s announcement, Caterpillar is closing or consolidating 20 facilities,” the Associated Press states. “Company spokeswoman Rachel Potts wrote in an email that severance packages are being offered, as well as some employee transfers. None of the closing factories are unionized.”
According to the Mississippi Business Journal, Caterpillar’s move is part of a restructuring announced in September, in which 10,000 of its 114,000 jobs worldwide will be eliminated over three years.
“Revenue in the first quarter, which ended March 31, was USD$9.5 billion, compared with USD$12.7 billion a year earlier, according to its filing with the Securities and Exchange Commission,” the Mississippi Business Journal wrote.
The journal quotes an elusive news release from Caterpillar stating, “Caterpillar recognizes that these restructuring actions are painful for its dedicated workforce, their families and the impacted communities… The decisions are difficult. However, it is necessary to have the right capacity in place for the tough market conditions the company is facing.”
Caterpillars shrinkage in response to a slowing demand in construction and mining equipment may be indicative of a shrinkage in those industries.
Prices in commodity metal prices are weak and a slowing demand for construction equipment could be tied to the economic weakness the United States is currently experiencing.
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