Caterpillar, the biggest manufacturer of construction and mining machinery, reduced its sales forecast for the second time in two months and said it will cut as many as 10,000 jobs over four years in response to a slowdown in the mining and energy industries.
The company lowered its 2015 revenue projection by $1 billion to $48 billion and said sales are expected to drop 5 percent next year. The job cuts are part of a plan that will save about $1.5 billion of operating costs annually, Peoria, Ill.-based Caterpillar said in a statement Thursday.
Caterpillar employs several thousand workers in North Carolina at a half-dozen locations, including sites in Clayton, Sanford and Winston-Salem. A company spokesman said Thursday that Caterpillar is not breaking out the job cuts by location.
“All cost reduction actions will be global in nature and across our sectors,” Spokeswoman Rachel Potts said in an email. “We will notify employees when decisions are made at each facility.”
Caterpillar is heading for its first four-year decline in sales in its 90-year history. The retrenchments come four years after the company spent $7.5 billion on its biggest ever deal, buying Bucyrus International Inc. to expand into mining equipment. Since then, a slowdown in China has sent coal and metals prices into a slump, hurting mining customers. Caterpillar also sells equipment to the energy industry, which is suffering from lower oil prices.
“The customer base is still cutting capex pretty dramatically so 2016 was not going to be a good year,” Karen Ubelhart, a Bloomberg Intelligence analyst, said by telephone. “They’re basically writing down next year.”
The cutbacks follow similar moves by its customers as investors push for operational improvements to protect returns. Earlier this month, rival mining equipment provider Joy Global Inc. cut its forecast for fiscal 2015 earnings and revenue.
The stock has lost 29 percent this year, which would be the biggest annual slump since 2008. The MSCI Emerging Markets Index has fallen 18 percent in 2015 while the Dow Jones Industrial Average is down 10 percent.
The job cuts represent as much as 9 percent of the company’s 111,247 headcount in the second quarter. They follow a 5.5 percent reduction in 2013, according to data compiled by Bloomberg.
Consolidation and closings of factories may affect more than 20 plants, the company said Thursday. In July, Caterpillar also lowered its sales guidance by $1 billion.
“We are facing a convergence of challenging marketplace conditions in key regions and industry sectors - namely in mining and energy,” Caterpillar Chief Executive Officer Doug Oberhelman said in the statement. “While they are the right businesses to be in for the long term, we have to manage through what can be considerable and sometimes prolonged downturns.”
Staff writer David Bracken contributed.