- Heavy equipment manufacturer Caterpillar laid off 120 temporary workers at its plant in Victoria, Texas, last week, saying sales have been slowed by the U.S. trade war with China, according to Reuters.
- The Nov. 1 layoffs took place at a hydraulic excavator facility that employs about 820 workers. Kate Kenny, Caterpillar’s spokeswoman, told Reuters that the decision was due to “market conditions." The firm did not respond to Construction Dive's sister publication, Supply Chain Dive, by deadline.
- Last month, the Deerfield, Illinois-based manufacturer said it would ramp down production because sales had decreased by 13% in the Asia Pacific region due to falling demand in China and competition from less expensive domestic rivals and by almost 3% in North America, where trade tensions have made customers wary of large purchases. The company recently announced its third-quarter financial results, badly missing most analysts’ forecasts, according to Zacks. Caterpillar’s revenue and sales declined about 6% during the third quarter.
The OEM, seen as an economic bellwether for the construction industry, has been affected not only indirectly by its customers' worries over a U.S.-China trade war, but also directly by an increase in tariffs. In July, Caterpillar said it paid $70 million in tariffs in the second quarter of 2019. The tariffs, along with a loss of incentives in Brazil and warranty expenses, led to a $328 million increase in manufacturing costs during the quarter.
CFO Andrew Bonfield said the manufacturer expects to pay $250 million to $350 million in tariffs for the year.
Caterpillar's financial news — good or bad — can move markets, and this summer, Barron's named it one of seven publicly traded construction-related companies to watch in the coming months in the wake of analyst downgrades. Also worth tracking, Barron's said, are heavy equipment manufacturers Deere & Co.; Dana Inc., which makes drivetrain components for construction equipment; Volvo, which has a construction equipment division; crane manufacturer Terex; truck company Oshkosh; and parts supplier Allison Transmission.
Caterpillar is not the only manufacturer on that list facing layoffs. Deere & Co. announced in late September that it would place about 50 employees at John Deere Harvester Works in East Moline, Illinois, on indefinite layoff beginning Oct. 28 and another 113 production employees at John Deere Davenport Works in Iowa effective Nov. 18, according to the Des Moines Register.
The company, which is headquartered in Moline, Illinois, lowered its full-year sales and income expectations for 2019, due to decreased customer demand.