Dive Brief:
- Construction equipment giant Caterpillar announced it will close five U.S. manufacturing plants and cut 820 jobs as part of a cost savings strategy, The Wall Street Journal reported.
- The plants — which will see their doors close in 12 to 18 months — are located in North Carolina, South Carolina, Florida and Mississippi and produce machine and engine parts.
- Caterpillar, which has 114,000 global employees, said its 2016 revenue will be 38% lower than its 2012 high of $66 billion, due in large part to a decline in international demand for mining and construction equipment.
Dive Insight:
Caterpillar's plans for a new headquarters in Peoria, IL, are reportedly still on hold, but the company said it would be razing an old engine plant in Peoria that has been out of service since 2011.
In September, Caterpillar announced it was implementing a $1.5 billion cost reduction initiative after three disappointing years of earnings results. At the time, the company said its plan would include closing facilities and cutting as many as 10,000 jobs and 20 facilities by 2018. According to The Journal, Caterpillar has eliminated 5,300 positions thus far.
The company then dealt a triple blow to shareholders in October when it announced a $2.5 billion decrease in year-over-year third-quarter sales, a lower 2015 earnings forecast and a prediction of lower sales in 2016. The company said decreased demand for its equipment was the result of a slowdown in China, Brazil and Russia, as well as weak infrastructure investment in the U.S.
Caterpillar stepped up its marketing efforts last year with a social media campaign, including a video that went viral featuring two construction workers lip-syncing a rap about the new Cat D6N bulldozer. The company also spent $5.7 million lobbying federal lawmakers in 2015 alone. Caterpillar has diversified into construction startups as well, and a recipient of one of its investments, Uptake Technologies, was named Forbes' hottest startup of 2015.
