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Caterpillar Announces Restructuring & Cost Reduction Plans

Caterpillar may lay off up to 10,000 in order to cut annual costs by $1.5 billion.

September 24, 2015

Caterpillar may lay off up to 10,000 in order to cut annual costs by $1.5 billion. The company said moves will begin later this year and extend through 2018, based on weak 2015 sales and 2016 expectations.

Key Caterpillar reductions:

  • An expected permanent reduction in Caterpillar’s salaried and management workforce, including agency, of 4,000 – 5,000 people between now and the end of 2016, with most occurring in 2015, and with a total possible workforce reduction of more than 10,000 people, including the contemplated consolidation and closures of manufacturing facilities occurring through 2018;  
  • The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015;
  • Slightly less than half of the $1.5 billion of cost reduction is expected to be from lower Selling, General and Administrative (SG&A) costs. The reduction in SG&A will largely be in place and effective in 2016 and occur across the company; and
  • The remaining cost reductions are expected to come from lower period manufacturing costs, including savings 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. A portion of these cost reductions are expected to be effective in 2016, with more savings anticipated in 2017 and 2018. 

Since 2013, Caterpillar closed or announced plans to close or consolidate more than 20 facilities, impacting 8 million square feet of manufacturing space. The company has also reduced its total workforce by more than 31,000 since mid-2012.

 

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