Caterpillar has announced restructuring that will includes eliminating thousands of jobs before the end of 2015, and potentially thousands more in the next three years.
The Peoria, Illinois-based company announced “significant restructuring and cost reduction actions that are expected to lower operating costs by about $1.5 billion annually once fully implemented,” in a statement issued Thursday, September 24, 2015.
The company cited sales and revenues decreasing for three consecutive years, and an anticipated continuation of that trend in 2016, as the motive behind the restructuring.
Nearly half of the overall cost reductions were expected to be from reductions in sales, general and administrative cuts at Caterpillar.
“An expected permanent reduction in Caterpillar’s salaried and management workforce, including agency, of 4,000 to 5,000 people between now and the end of 2016” is part of the company’s plan.
Most of those cuts will happen before the end of 2015.
Caterpillar planned to offer a “voluntary retirement enhancement program for qualifying employees” in 2015 as part of the cuts.
The remaining cuts will come from “additional contemplated facility consolidations and closures, which could impact more than 20 facilities and slightly more than 10 percent of our manufacturing square footage,” the Caterpillar statement said. Those reductions were expected to happen in 2016, 2017, and 2018.
A “total possible workforce reduction of more than 10,000 people” was expected according to the announcement.
Caterpillar expected to spend about $2 billion to complete the consolidations, including severance and termination benefits for employees.
The company did not yet announce which facilities would be impacted.
“Employees will be notified as decisions are made for each facility,” the Caterpillar statement said.
“We recognize today’s news and actions taken in recent years are difficult for our employees, their families and the communities where we’re located. We have a talented and dedicated workforce, and we know this will be hard for them,” said Caterpillar Chairman and CEO Doug Oberhelman.
Caterpillar employs more than 114,000 employees total at more than 20 facilities worldwide.