Caterpillar announces major cost-cutting steps

Global – Caterpillar, the global manufacturer of machinery for the recycling, mining and construction sectors, is introducing ‘significant’ restructuring and cost reduction measures. These are expected to trim annual operating costs by more than US$ 1.5 billion (Euro 1.3 billion) once fully implemented.

‘We are facing a convergence of challenging marketplace conditions in key regions and industry sectors – namely in mining and energy,’ explains Caterpillar chairman and ceo Doug Oberhelman. According to the company, the cost reduction steps will begin in late 2015 and reflect ‘recent, current and expected market conditions’.

The business outlook has weakened for Caterpillar, with 2015 sales and revenues now anticipated to be US$ 48 billion (Euro 43 billion), or US$ 1 billion less than the previous estimate. For 2016, sales and revenues are expected to be around 5% short of 2015 levels.

Key steps planned by Caterpillar include a permanent reduction in its salaried and management workforce while slightly less than half of the cost cutting is expected to be from lower selling, general and administrative costs.

Reductions are also expected to come from lower period manufacturing costs, including savings from additional contemplated facility consolidations and closures.