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Caterpillar to cut 10,000 jobs
Between EMD’s failure to meet Tier 4 emission standards and the failure of congress to renew the EX-IM Bank authorization, I think you can stick a fork in production of EMD locomotives in the U.S.A, because they are done…
This is always a quick fix to shore up the bottom line and impress the stockholders. Something that large corporations do to the labor force all the time. It hardly ever reaches management for some reason though. Why?
10,000 jobs is substantial especially as we are told the economy is robust and unemployment numbers low.
The US economy is in relatively good condition but other countries are suffering because of low oil and commodity prices. The resource industries are doing poorly because demand is down. Companies are slowing down or stopping development of new mines. In Canada, oil sands are hit hard by the very low price of crude so development has been slashed.
The question is where in the world will the cuts be made? Caterpillar shut the London, Ontario EMD plant because of high labor costs. With the high US dollar, building equipment in other countries may be more profitable. Build equipment for the US outside the country and then import it. I recall that EMD contracts with Bombardier to build equipment in Mexico for the US market, and has manufacturing capacity in Brazil. With strong global competition from China, Caterpillar must have low cost facilities outside the US to be competitive.
Loss of the Ex-Im Bank can’t help, since exports make up so much of the company’s production. Might make more business sense to build overseas where there is cheaper labor and/or a export credit agency. China has three of them, and Boeing is building a new plant there.
Ok now why did EMD not be able to be a self sustained company? GM, Buffet, Caterpillar. I never understood that.
Too many rules and regulations in place. EPA has hobbled U.S. industry.
Cat has said this morning that early retirement WILL be offered to middle management people as part of the downsizing.
Here is a good example of excessive regulation. Is Tier XXX really needed? The locomotive in general is a pretty efficient machine for moving tonnage. Also, look how hard it is for steel and mining operations to thrive in America. While the EPA isn’t 100% liable, it is significantly responsible for hastening the the demise of these industries.
Mr. Haws,
You are ’ dead wrong ', it happens to management too, more often than you know. I can speak from experience !
Much mis/incorrect information within these posts.
EMD staffing has run toward the lean end of the spectrum since private equity ownership. Much institutional knowledge has walked out the door for a variety of reasons…never to return.
Accordingly, I wouldn’t expect any substantial layoffs…especially during the onset of a new model program.
CAT’s CEO has presided over MANY quarters of sales decline. Surely, some of this has been due to the cyclical nature of the markets that CAT services, yet one has to wonder…
EMD has a significant presence in China and India, and is looking toward Russia to establish another one.
In a few months, EMD’s Tier IV design will hit the rails. Wouldn’t write them off just yet…
The issue of Tier IV is not relevant to the larger subject of CAT financial performance. A good CEO can develop better methods of growing the bottom line than mass layoffs.
Needless to say, GE managed to develop a technical solution to the Tier IV requirement.
Well said Robert Teed.
The majority of the cutbacks is because the Oil and Natural gas industry has cut way back. They have cut way back because prices for their products are to low. As for the Train division they are working on the T-4 compliant engine and have announced it will be out next year. The last time they had a delay and everyone thought they were dead they came out with something called the SD-40.
The Canadian plant was closed when the $CDN was near par with the $US. With the $CDN now around 75 cents US, maybe that closure was short sighted.