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Cat announces more restructuring moves; EP plant to close

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Caterpillar Inc. announced Friday it will, as anticipated, close one of its oldest existing buildings in East Peoria as well as place additional employees on indefinite layoff.

Caterpillar announced Building HH in East Peoria will close by the end of 2018, a move the company said earlier was being contemplated. That closure will affect 230 jobs. Also, an additional 120 employees, a combination of office and production workers, will be laid off indefinitely, beginning Feb. 8.

Along with other decisions that are a continuation of its global restructuring and cost cutting program that started last September, the company said it will close five facilities worldwide and reduce 670 jobs. These are part of the plant closings and job reductions announced in September, when Caterpillar said it would cut up to 10,000 jobs and close or consolidate up to 20 facilities by the end of 2018.

These announcements will bring to 14 the number of plants affected and a reduction of more than 5,600 jobs, including 2,100 positions eliminated through early retirement buyouts.

In its statement Friday, made first to employees, the company said these actions “are expected to significantly lower operating costs in the face of challenging marketplace conditions in key regions and industry sectors.”

Further, Caterpillar said, “These decisions enable the company to be more efficient and better utilize its manufacturing assets.”

“Caterpillar recognizes these restructuring actions are painful for its dedicated workforce, their families and the impacted communities. The decisions are difficult; however, it is necessary to have the right capacity in place for the tough market conditions the company is facing,” the statement said.

The investment community on Friday looked favorably on Caterpillar’s decision to continue restructuring. Caterpillar stock was at $62.24 a share at the close of trading on the New York Stock Exchange, a gain of $1.16 from Thursday’s close.

Below is Caterpillar’s announcement:

  • The company has finalized a contemplated decision previously announced on November 19, 2015, to consolidate manufacturing on its East Peoria, Illinois, campus. The consolidation includes the manufacturing of components made for equipment used in mining and construction. This decision will impact 230 positions, which is a combination of office and production employees. The company will relocate affected production to other Caterpillar facilities with a portion of the work moving to outside suppliers. As a result, Caterpillar will consolidate various production on its East Peoria manufacturing campus and will eventually close Building HH. This transition will begin in early 2016 and is expected to be complete in late 2018.
  • Separate from long-term restructuring actions but in response to continued low demand for mining products, Caterpillar will place approximately 120 employees in office and production roles on the East Peoria campus on indefinite layoff. The reductions in East Peoria will take place over a period of time beginning on February 8.
  • Caterpillar will consolidate two engine component manufacturing facilities into its existing Pontiac, Illinois, facility, resulting in the addition of about 160 new jobs in Pontiac. The company will close its fuel systems manufacturing facility in Thomasville, Georgia, and an after-treatment manufacturing facility in Santa Fe, New Mexico. Approximately 200 jobs – a combination of office and production employees as well as agency workers – at the Thomasville facility will be impacted by the closure. Approximately 50 jobs in Santa Fe, which is a combination of office and production employees, will be impacted by the closure. The consolidation is expected to begin this year and be completed within the next 12-18 months.
  • The production of large wheel loaders in Tongzhou, Jiangsu province in China will transition to the Caterpillar wheel loader facility in Aurora, Illinois. The Tongzhou facility is expected to close in the second quarter of 2016, impacting 40 positions. Total employment in Aurora is not expected to be impacted at this time as the work will be absorbed into existing operations.
  • Caterpillar will close its forest products facility in Prentice, Wisconsin, and move production to existing Caterpillar facilities in LaGrange, Georgia, and Victoria, Texas. The transition, expected to be fully complete by the end of 2016, will impact approximately 220 positions in Prentice. Those positions include office and production employees as well as agency workers. Total employment in LaGrange and Victoria is not expected to be impacted at this time as the work will be absorbed into existing operations. Caterpillar is in negotiations with a third party to purchase the Prentice facility and there is potential that the third party will maintain a portion of the current Prentice facility workforce.
  • The company will transfer some remanufacturing work currently being performed in Lafayette, Indiana, to the company’s remanufacturing hub in Corinth, Mississippi. No layoffs are anticipated in Lafayette as a result of this move. Caterpillar facilities in Mississippi plan to add about 45 positions over the next few years as a result of continued global consolidation of its engine remanufacturing business.
  • In Texas, the company is contemplating consolidation of its Van Alstyne production warehouse operations into the Denison manufacturing operation. If finalized, the consolidation would begin in the first half of 2016 and be complete by the end of the year. Caterpillar will consolidate leased office space in Denison into its primary manufacturing building. This consolidation will begin immediately and be complete by mid-year 2016. Total employment for both locations is not expected to be impacted a result of these two consolidations.
  • Separate from long-term restructuring actions but in response to continued low demand for mining products, Caterpillar will place approximately 10 production employees in Denison on indefinite layoff effective February 2.
About the Author
Paul Gordon is the editor of The Peorian after spending 29 years of indentured servitude at the Peoria Journal Star. He’s an award-winning writer, raconteur and song-and-dance man. He also went to a high school whose team name is the Alices (that’s Vincennes Lincoln High School in Indiana; you can look it up).