CATERPILLAR MOVES TO CUT 20,000 JOBS
January 26th, 2009WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
DISCLOSURE: I’m long DBA.
There are so many layoff stories that I decided to only mention the real shockers. There are just too many stories in the 1000 to 5000 magnitude to mention.
Perhaps you guys know of some good sites that cover the job cuts full time.
On a different topic, I would think that this Caterpillar situation will contribute to higher food prices down the road, but I’m not convinced of that argument. Maybe someone who knows more about this would like to comment.
How long does it take for lower investments in farm machinery to have an impact on yields? And how significant of an impact does it have?
These seem like hard questions to me. Maybe there’s an agricultural commodity nerd out there with three propellers in his or her beanie cap who can enlighten us.
Update 1: Pete Writes:
I can’t speak to how the futures market will take this. But on the
ground it won’t have much affect.1. Caterpillar is a small player in ag. And they sold the ag division to
Agco anyway.2. Farm machinery is a solved problem. The only people buying new
machinery do it for tax reasons. Many farm with 40 year old machinery
just fine.3. The only real innovation in farm machinery comes out of small farm
shops (case in point: Yeoman’s Plow). Anything new coming out of the big
guys is targeted at large corporate farms and are mostly wastes of money
anyway.4. The only real growth market in agriculture is in the local food
movement. And they are as likely as not to go without big steel or use
an ox.5. There are bigger factors on yield at work such as input costs (oil,
fertilizer, pestacides), GMO problems, and top soil loss.
There you go. Learn something new every day.
Update 2: Layoff Daily
Monica suggests Layoff Daily for tracking job cuts. Wow! That’s a VERY sobering site.
Via: New York Times:
The heavy equipment maker, Caterpillar, said Monday morning in a statement that it planned to cut 20,000 jobs as part of an aggressive effort to lower cost as the economy continues to slow.
The company said that it also planned to closely examine all of its costs and spending.
“We have initiated actions which will remove about 20,000 workers from our business and every indirect spend dollar will be heavily scrutinized,” Caterpillar said in a statement. The company had about 113,000 workers at the end of 2008.
“These are very uncertain times, and it’s imperative that we focus Team Caterpillar on dramatically reducing production schedules and costs in light of poor economic conditions throughout the world,” the chief executive, James W. Owens, said in a statement.
“We expect to have most of the actions needed to lower employment and cost levels in place by the end of the first quarter,” Mr. Owens said.
Future indexes on Wall Street, which had been trading higher, fell on the news, and the major exchanges are now expected to open slightly lower.
The announcement of the job cuts came as Caterpillar reported fourth-quarter sales and revenue of $12.9 billion, 6 percent higher than the fourth quarter of 2007. Earnings in the quarter dropped 32 percent, $1.08 a share or $661 million from $1.50 and $975 million. Analyst had expected $1.31 a share on revenue of $12.84 billion.
It also reported sales and revenue of $51.3 billion for the year, a 14 percent in crease from 2007.
Caterpillar also lowered its sales and profit for 2009.
Kevin, I lived for a while about 45 miles north of their Peoria plant and I always had the impression that their main product at least there was heavy industrial earthmoving equipment, about which I could be mistaken.
You might want to go to the http://news.google.com/news?ned=tus site and type in “Deere Layoffs” at the top of the page for an “agricultural look” at the situation.
This is surprising. Surely Israel is at least giving their armored bulldozer division enough business in Gaza.
You may end up posting this grim job-cut news yourself, but I just thought I would point out that 68K people losing their jobs is like three cities the size of my hometown becoming unemployed in just one day. One might even think of it as more than that once one remembers that not everybody who lives in a city is going to have a full-time job in the employment-economy.