NEW YORK - Heavy equipment manufacturer Caterpillar Inc Friday confirmed plans to close its forest products facility in Prentice and four other plants in Illinois and several other states in the US and China, resulting in 670 job losses in the latest phase of a larger cost-cutting campaign announced last year.
The company said its decisions will affect seven US cities, as well as plants in China, and will enable Caterpillar to be "more efficient and better utilize its manufacturing assets."
The decision to further reduce its manpower was announced a day after the mining and construction equipment company reported sales and revenues of $11.0 billion, down from $14.2 billion in the fourth quarter of 2014.
Fourth-quarter 2015 was a loss of $0.15 per share, down from a profit of $1.23 per share in the fourth quarter of 2014. Excluding restructuring costs, profit per share was $0.74, compared with $1.35 per share in the fourth quarter of 2014. For the full year, Caterpillar reported 15 percent drop in sales and revenues in 2015 and 29 percent off the 2012 peak hit by steeper than expected declines in oil prices, a stronger US dollar, weaker construction equipment sales and lower than expected mining-related sales in the resources industries.
In a statement on its reorganization plans, Caterpillar said .closure of the plant at Prentice will impact approximately 220 positions including office and production employees as well as agency workers.
Caterpillar says they are negotiating with a third party to purchase the Prentice facility. According to Caterpillar there is a possibility that the third party will decide to retain part of the current workforce. The closure of the plant is expected to be complete by the end of 2016.
Caterpillar said other consolidation efforts will add some jobs at a facility in Pontiac, Illinois, while cutting more positions in Thomasville, Georgia; Santa Fe, New Mexico; Prentice, Wisconsin and other sites.
According to the company statement, in response to continued low demand for mining products, about 120 employees having office and production roles on the East Peoria campus will be laid off starting Feb. 8.
The company will consolidate two engine component manufacturing facilities into its existing Pontiac, Illinois, facility, resulting in the addition of about 160 jobs in Pontiac.
Caterpillar will close its fuel systems manufacturing facility in Thomasville, Georgia, and an after treatment manufacturing facility in Santa Fe, New Mexico. The move will affect about 200 employees in Thomasville and 50 in Santa Fe.
The production of large wheel loaders in Tongzhou, Jiangsu province in China, will move to a facility in Aurora, Illinois, eliminating 40 jobs in China without adding any in Illinois.
The company also plans to transfer some re-manufacturing work from Lafayette, Indiana, to Corinth, Mississippi. No layoffs are anticipated.
In Texas, the company is considering further consolidations.
"Caterpillar recognizes these restructuring actions are painful for its dedicated workforce, their families and the impacted communities," the company said in a prepared statement Friday.
"The decisions are difficult, however, it is necessary to have the right capacity in place for the tough market conditions the company is facing."
