PEORIA, Ill.–Heavy equipment manufacturer, Caterpillar, announced a round of layoffs and warned of a difficult year ahead as a global recession has led to a dramatic drop in orders for its earth-moving equipment.
The world’s largest maker of construction and mining machines said it was cutting 12,000 employees, or 11 percent of the workforce, and 8,000 additional contractors. The Peoria, Ill.-based company’s full-year earnings forecast missed the average estimate by 41 percent, and its shares dropped the most in eight weeks.
Caterpillar partners with Mitsubishi as a manufacturer and distributor of material handling equipment and parts under Mitsubishi Caterpillar Forklift America, Inc.
In a statement, CEO James W. Owens said Caterpillar had been “whipsawed” by a deteriorating global economy and plunging commodity prices.
He said the company had responded by encouraging dealers to align their inventory levels with falling volume and “they responded with significant order cancellations, particularly in December.”
The layoffs and buyouts represent the biggest wave of job cuts at Caterpillar since the early 1980s, when the company was losing about $1 million a day.
As a result, Caterpillar announced it was freezing salaries of most employees and significantly reducing the total compensation of executives and senior managers.