Construction and mining equipment maker Caterpillar, Inc. (CAT) announced Monday plans to reinstate laid off U.S. employees as it intends to selectively align production levels with current demand schedules and resource requirements, citing demand increases in the coming months.
The company has already recalled or will recall about 550 laid off U.S. employees, who will return to work before the end of 2010, including support, management and production employees.
In a statement, chairman and chief executive officer, Jim Owens said, "We are pleased that signs of recovery in the global economy allow us to return a selected group of laid off employees to work. But it's important to remember that we are not close to the record-breaking demand we experienced from 2004 through 2008."
Meanwhile, Peoria, Illinois-based Caterpillar also began notifying another about 2,500 laid off U.S. employees on a separation package. However, details of impacted employees are not provided by the company.
Further, the company said it would adjust its workforce at various business units from time-to-time as production levels and resource requirements change, and added that the requirements could vary from unit to unit.
The company adopted drastic cost-cutting measures to combat the economic crisis. As at the end of the third quarter, Caterpillar's worldwide employment came down 17,900 to 94,225 employees from the year-ago quarter.
Since the end of 2008, Caterpillar has reduced full-time employment by about 17,100 and also reduced its flexible workforce by more than 17,000 since late 2008. In mid-March, Caterpillar said it was laying off 2,454 workers in Illinois, Indiana and Georgia, citing the reduction in demand for its construction equipment. This was in addition to the 2,110 layoffs of its production employees at its three Illinois manufacturing facilities, announced in January, as well as the 20,000 job cuts revealed while announcing its fourth-quarter results last year.
Last week, Caterpillar reported a 53% drop in profit for the third quarter to $404 million, or $0.64 per share, hurt by lower machinery and engine sales. Total quarterly sales and revenues dropped 44% to $7.30 billion from $12.98 billion last year.
Caterpillar also then tightened its earnings outlook for fiscal year 2009, saying that the third quarter was its low point in the recession and it was now seeing signs of a recovery. It now forecasts fiscal 2009 earnings in a range of $1.10 to $1.30 per share, compared to the prior range of $0.40-$1.50 per share, including redundancy costs of about $0.75 per share.
Excluding redundancy costs, the company now forecasts profit for the year between $1.85 and $2.05 per share, compared to the prior range of $1.15 to $2.25 per share. Analysts currently expect the company to report earnings of $2.01 per share for the full year 2009.
While updating the forecast last week, Owens noted, "Caterpillar's improved profit outlook for 2009 is a clear demonstration of our ability to implement our economic trough plans, which we announced as part of our corporate strategy in 2005. While we are still navigating through a very difficult environment in 2009, we see signs of improving economic conditions throughout most of the world."
Caterpillar also then tightened its sales and revenues outlook for the full-year 2009 to a range of $32 billion to $33 billion from the prior range of $32 billion to $36 billion. Analysts currently have a consensus revenue estimate of $32.51 billion for the year.
Providing initial forecast for fiscal 2010, the company projected sales and revenues to increase 10% to 25% from the midpoint of the 2009 outlook range, partly due to the end of dealer inventory reductions, which significantly impacted sales in 2009. This increase represents sales of between $35.75 billion and $40.625 billion. The Street is currently looking for fiscal 2010 revenues of $35.76 billion.
Caterpillar also noted that industrial production has improved in the vast majority of major economies, signaling an end to the world's worst postwar recession. According to the company, world economic growth should be positive in the last half of 2009. Led by developing economies, the company expects that economic recovery will strengthen in 2010, with worldwide growth of about 3%.
The global recession has had a negative impact on Caterpillar, affecting customer demand and increasing inventory levels. In April, the company reported its first quarterly loss in 17 years, hurt by lower sales and charges related to job cuts. Going by its latest announcements, the situation is slowly improving for the company. In early August, Caterpillar indicated that its strategic planning, including inventory reduction and cost management, has positioned it for long-term profitability.
Last week, Caterpillar also elected Group President Douglas Oberhelman as vice chairman and chief executive officer - Elect, to be effective January 1, 2010. However, Oberhelman would succeed James Owens to the office of chief executive officer after Owens retires from the position on July 1, 2010. Owens would then remain as chairman of the board through October 31, 2010, when he retires under a mandatory retirement policy.
Oberhelman, who would be elected chief executive officer and a member of the board of directors at the annual meeting in June 2010, would also succeed Owens as chairman of the board, when he retires in October 2010. Oberhelman, a 34-year Caterpillar veteran, joined the company in 1975. Owens has been serving as the chairman and chief executive officer of Caterpillar since February 2004, and had joined the company in 1972 as a corporate economist.
In Monday's regular trading session, CAT is currently trading at $57.52, down $0.08 or 0.14% on a volume of 3.66 million shares. In the past 52-week period, the stock has been trading in a range of $21.71 to $61.28.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.