Caterpillar Factory Shut Down

Caterpillar Inc. has started a consultation process that may lead to closing its plant in Gosselies, Belgium, and the loss of 2,000 jobs there, as part of a global restructuring and cost-savings plan announced a year ago.

The Peoria, Ill.-based heavy equipment maker on Friday said the construction equipment manufactured at the site may be shifted to its facility in Grenoble, France, and other sites outside Europe. The company also may allocate component production to external suppliers and other Caterpillar facilities, and consolidate support functions to other sites, it said.

Caterpillar previously said it would cut an unspecified number of additional jobs later this year on top of the more than 10,000 it had already planned to eliminate through 2018. Caterpillar’s workforce has fallen by 20%, or more than 30,000 jobs, since the end of 2012. The company has said it planned to close or consolidate up to 20 plants by the end of 2018.

“We have to contemplate actions to reduce manufacturing capacity and take operating costs out of our business to align with lower demand,” said Tom Pellette, group president with responsibility for construction industries.

Frédéric Cauderlier, a spokesman for Belgian Prime Minister Charles Michel, said the government had been in touch with Caterpillar and expects the Gosselies site to close for good.
“We are in contact with the directors of Caterpillar, but all the signs point toward a closure of the site,” he said.

Mr. Michel will work with Paul Magnette, minister-president of the Walloon region, and the unions to either change the company’s mind or find other employment for the workers affected by the closure. “They agreed to work together to find a solution,” Mr. Cauderlier said.
“The closure of Caterpillar is an absolute catastrophe,” said Elio Di Rupo, president of Belgium’s opposition Socialist Party.

Mr. Di Rupo, who was prime minister of Belgium between 2011 and 2014, said the Caterpillar site had received a lot of support from the government in recent years and its employees had made sacrifices, including on salaries and working hours, to keep the plant alive.

“This makes this decision all the more violent and brutal,” he said.

In July, the company reported a fall in second-quarter profit and trimmed its full-year guidance after saying it didn’t anticipate a rebound this year for its construction and mining equipment.

For the quarter ended June 30, the company reported a profit of $550 million, or 93 cents a share, down from $802 million, or $1.31 a share, a year earlier. Excluding restructuring costs, earnings per share were $1.09. Revenue slid 16% to $10.34 billion. Analysts were expecting 96 cents a share with $10.1 billion of revenue.

Caterpillar also lowered its full-year profit outlook to about $2.75 a share, or $3.55 without restructuring costs. The company had previously forecast $3 a share, or $3.70 without restructuring. The company narrowed its revenue range for this year to $40 billion to $40.5 billion from $40 billion to $42 billion.

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