It was only six months ago Peoria, Ill.-based Caterpillar Inc. was flying high on profits from sales of equipment as commodity prices soared and mining companies, among others, were demanding more products. These days, the world's No. 1 manufacturer of construction machinery, is singing the
same sad song heard around the globe as it forecasts a rough 2009 and announces a restructuring that
affects 20,000 jobs.
CAT says its lowering production costs in line with a 25% decline in sales volume. During a conference call, as
noted here, head of investor
relations Mike DeWitt warned that Caterpillar might even post a loss in the
first quarter -- its first in 17 years.
That's a far cry from July, when it said second quarter earnings shot up 34% thanks to sales in developing economies. A month before that, it
bought a Brazilian manufacturer as part of a global expansion plan. CAT had also
teamed up with Navistar International Corp. and set 2010 as the year they would introduce a CAT-branded heavy-duty truck in the U.S. No word on that deal as the firm copes with the current economic crisis.
Still, Cat CEO Jim Owens is confident about the long term, stating "throughout our 83-year history Caterpillar has successfully managed through the Great Depression, several recessions, a world war and numerous other adversities." He is also encouraged by government stimulus programs and is probably looking forward to President Barack Obama's
infrastructure plan, which may not have an immediate effect buoying the industry, but has promise for the future. -
Baz HiralalSee the Caterpillar announcement
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