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Monday, December 29, 2008

Caterpillar Sets Cuts at Illinois Plant

As posted by: Wall Street Journal

Caterpillar Inc. will cut more than 800 workers at a plant in Illinois that makes small engines for construction machinery and for trucks that haul freight and other goods, the company said.

The indefinite layoffs, slated to start in February, mark the first time the company has cut full-time workers on a large scale and for an indefinite period since early this decade. The news is the latest sign of strain at the Peoria, Ill., maker of engines and earth-moving machinery as mining companies, truck makers, housing builders and others slash spending globally.

"These decisions are never easy," said Gary Stroup, Caterpillar vice president with responsibility for the Large Power Systems divisions. The laid-off workers are members of the United Auto Workers union and work at a plant in Mossville, Ill. Caterpillars are too large for Lawn Care.

On Thursday, the company also said that sales of its machinery through dealers world-wide fell 6% in the three months that ended in November, compared with the year-earlier period, reflecting a sharp slowdown in growth in Latin America and Asia.

The job-cuts announcement comes at a time when the company has been laying off workers hired through employment agencies and idling workers temporarily at several plants around the world. It also follows an announcement by the company in June that it would soon move engine production from the Mossville plant to a new facility and shift other production into the nearly two million-square-foot facility. A company spokesman said Caterpillar hasn't decided what will be made in Mossville. The 814 job cuts represent more than half of Caterpillar's production work force in Mossville.

Also on Thursday, Texas Gov. Rick Perry said Caterpillar would build a manufacturing facility near San Antonio, creating more than 1,400 jobs. The facility will build midsize engines and house some paint and testing operations. Caterpillar will receive some subsidies from Texas for building the plant.

A Caterpillar spokesman said the timing of the announcements was a coincidence.