Winston-Salem - Cost-cutting measures are being implemented by the world's largest maker of construction and mining equipment, and the $426 million plant in Winston-Salem soon could see the effects of what has been caused by a significant earnings shortfall.
Caterpillar, Inc. reported earnings fell 43 percent. It had earnings of $930 million, compared to the $1.7 billion dollars in earnings last year. Revenue fell almost 16 percent to about $14.6 billion. Company inventory dropped by $1.2 billion, and the company CEO said he expects inventory will drop even further to possibly $2 billion in the second half of the quarter.
Of the second quarter earnings report, the Caterpillar, Inc. CEO said in a statement that 2013 has turned out to be a "tough year" with the sharp reduction in dealer inventory and the decline in mining. He also said he predicts profit improvement during the second half of the year with further cost-cutting measures.
Caterpillar said it will close a Summerville, SC manufacturing plant next year, which would affect almost 300 employees and expected layoffs of about 60. Winston-Salem plant officials have expressed hope about the fate of jobs at that plant, and no cost-cutting measures have been announced yet for that plant. At a June shareholders meeting in Greensboro, the company CEO praised the plant's success.
Caterpillar spokesman Jim Dugan talked with the Winston-Salem Journal and said, "Cost-cutting measures will be rolled out across the company and will be customized to each division and their locations...when and where we take steps, we will communicate those steps to employees first. We are not going to provide specific information for each facility at this time." Dugan did not address specific plans for the Winston-Salem plant.
Caterpillar has said there has been a significant decrease in demand from Asia for having mining equipment, especially as the use of natural gas becomes more popular. Dealers have begun cutting inventories, which means there are not as many mining trucks. Thus, there is a lesser demand for mining truck axles.
Axles for heavy mining trucks are what the Winston-Salem plant primarily manufactures. Almost 400 full-time and part time employees work at the plant, which is one of nine in North Carolina.
News 2 will continue to be on top of this story as it develops.