Caterpillar to Axe Jobs by the Thousands

About 5,000 Caterpillar jobs will be lost by 2016 in a planned workforce reduction — with most taking place in Illinois. And the losses won’t stop there. Manufacturing operations could close through 2018, with a loss of another 5,000 jobs, the company announced on Thursday.

In March, Caterpillar announced that two production lines in Joliet would be shut down by 2018 and 230 jobs would be shifted to Mexico. The shift begins this year as the production of gear and engine oil pumps and valves moves to Monterrey, Mexico. About 770 workers are employed at Caterpillar in Joliet, down from a peak of 7,000 in the late 1970s.

More than 21,000 Illinoisans work for Caterpillar, headquartered in downstate Peoria, making the global firm one of the state’s largest employers. A company spokeswoman told the Chicago Tribune many of the jobs lost will be in Illinois, and plans for a new headquarters are on hold.

A spokeswoman for Gov. Bruce Rauner, Catherine Kelly, said this “announcement underscores the need to help improve the state’s economic climate. The reforms proposed by Gov. Rauner will help grow the economy to retain and attract companies to create jobs.” Two years ago, Caterpillar CEO Doug Oberhelman was among the first to endorse Rauner’s campaign for governor. Last month, the governor appointed a Caterpillar executive to the state’s labor advisory board.

Caterpillar’s job cuts are part of a corporate restructuring to lower annual operating costs by about $1.5 billion. Sales and revenues for 2015 are expected to be $1 billion lower than the projected $49 billion, according to a company statement.

“We are facing a convergence of challenging marketplace conditions in key regions and industry sectors—namely in mining and energy,” Oberhelman said in a news release. “While we’ve already made substantial adjustments as these market conditions have emerged, we are taking even more decisive actions now. We don’t make these decisions lightly, but I’m confident these additional steps will better position Caterpillar to deliver solid results when demand improves.”

State Rep. David Leitch, R-Peoria, told the Peoria Journal-Star that the news will be grim for Peoria.

“The challenges that Caterpillar is facing with all of those markets going down is troubling. It’s a frightening economic picture out there,” Leitch said. “It’s particularly devastating news for families and young people who are trying to get a start in life at Cat. ...

“This has far-reaching impact, because Cat contributes so much revenue to our hospitals and to other local institutions.”