Caterpillar Slashes Over 70 Jobs To Restructure Human Resource

Caterpillar is following its restructuring plan as it had mentioned in its guidance for 2016.

Scenario in the equipment manufacturing industry does not look good. In an effort to control costs, such manufacturing companies have decided to slash jobs including Caterpillar Inc. and Deere, two of the major heavyweight machinery makers in the industry.

Both major machinery manufacturers are competing with each other to restructure themselves, as the global construction industry has slowed down. According to the announcement made by Caterpillar, it is likely to cut around 70 jobs in its ‘highway trucks production facility’ since it stalled its plant in Texas.

The equipment manufacturer has planned numerous other job cuts from a few of its plants. This plan of cutting jobs will start at the beginning of March. According to these plans of the company, it will continue to serve its existing customers but it will not be taking any new orders for the vocational trucks since it is ceasing its production activity.

During the earnings call of the fourth quarter, Caterpillar had provided guidance for 2016, which stated its big restructuring plan for the year; this announcement of job cutting is a part of the bigger restructuring plan as it had allocated over $400 million for restructuring cost, which includes news of slashing jobs.

Uncertain economic conditions have forced both construction equipment-manufacturing giants to control their losses by the management of its human resource structures. It is not the only cost cutting strategy that the company implements. Its focus right now is to streamline its workforce and human resource.

The construction and mining industry has mostly suffered because of the slow economic growth in the China. This has ultimately affected the equipment makers quite badly. Even though Chinese government has injected money into its economy for it to get better, it has not made much of a difference yet. Due to this reason, it is highly possible that the manufacturing industry will decline further. It might take a while for the industry to jump back.

Additionally, Caterpillar has also announced to stop the production of on-road dump trucks as the demand for the commercial and construction trucks has declined significantly. The company is the world’s largest construction and mining equipment maker. Caterpillar stock is traded at $66.87 per share showing an increase in the share price by $0.60%. 

Furthermore, the present market capitalization of the equipment maker is $39.17 billion with earnings per share of $3.45 and price to earnings ratio of $19.41.