Caterpillar cutting more than 19,000 jobs
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Caterpillar blames increased operating costs for a flat year in 2008.
Caterpillar have announced they may need to cut as many as 19,000 jobs despite a record year for revenue in 2008.
A drop in sales in the giant’s heavy equipment, coupled with an increase in operating costs meant the company showed flat earnings for the year of 2008.
Caterpillar is also anticipating a rough 2009. Jim Owens, Caterpillar’s chairman and CEO believes that a drop in production by cutting jobs will help the company through the tough times.
Fourth-quarter earnings of $661 million were reported by the Illinois-based company. This works out at $1.08 per diluted share, a 32 per cent decrease from the 2007 fourth-quarter results.
Despite a 6.4 per cent increase in revenue, the fourth-quarter income of $12.9 billion was not enough to make 2008 successful.
Mr Owens said the company saw “booming demand” in the first three quarters of last year. Energy and mining sectors especially showed interest.
However, with the deterioration of the global economy, dealers have been cancelling orders and commodity prices have plunged.
Caterpillar Financial, the company’s financial services subsidiary based in Nashville Tennessee, reported fourth-quarter revenue of $869 million, a drop from the previous year’s fourth-quarter revenue of $888 million. Profit for the fourth-quarter was a mere $5 million, compared to the total of $106 million in the previous year.
Caterpillar are a long way from being safe, and making job cuts will be a necessity if the company is to stay afloat in the coming years.
