) is contemplating to cut 1,400 jobs at its Belgium plant due to
high costs and weak European economy.
The plant, located near Charleroi in Belgium, is one of
Caterpillar's largest facilities in Europe. It manufactures
hydraulic excavators, loading vehicles and engine parts. Over the
last five years, Caterpillar's investment in the site has run up
to around 210 million euros ($275.3 million). The plant currently
has 3,700 employees and the planned layoff will leave 38% of the
total manpower jobless.
Apart from the economic slowdown in Europe and increased
competition, Caterpillar cited environmental rules, which made
its production process more complicated as another reason for the
layoffs. Given the high cost of production at the Belgian plant,
it would be cheaper proposition to import the machines rather
than producing them at the plant.
This follows a series of other layoffs by other companies in
Belgium. In Oct 2012,
Ford Motor Co.
) also announced its plans to close its plant in Genk, Belgium
that would render 4,000 employees jobless.
), the world's largest steelmaker in terms of volume and Europe's
largest steelmaker, announced plans to permanently close its
plant in Liege, Belgium owing to the slack demand and weakening
European economy. The company also announced the idling of its
liquid phase in Oct 2011 due to structural over-capacity in
These plans, however, faced protests from the country's
leaders. In response, ArcelorMittal has agreed to stall its
restructuring programs through June until the European Union
Commission publishes its plan to help Europe's steel
Caterpillar's results have borne the brunt of continued
economic turmoil in Europe and its domino effect on the rest of
the world. Reduced sales, lower production and a decline in
inventory primarily resulted in lower fourth quarter 2012
earnings for Caterpillar. Caterpillar remains challenged by
slowing demand and inventory correction as a result of higher
production than demand.
The company expects sales in the first quarter of fiscal 2013
to decline more than $2 billion annually, as dealers are expected
to continue to resize inventory levels to match demand. Earnings
will be affected by lower-than-expected sales and negative cost
impact of continuing low production levels and declining
Furthermore, the recent loss of sales momentum, declining
backlog, negative impact of the European debt crisis and a
slowing Chinese economy remain concerns. Caterpillar currently
retains a short-term Zacks Rank #3 (Hold).
Other construction machinery makers with a favorable Zacks
Astec Industries, Inc.
H&E Equipment Services Inc.
), carrying Zacks Rank #2 (Buy).
ASTEC INDS INC (ASTE): Free Stock Analysis
CATERPILLAR INC (CAT): Free Stock Analysis
FORD MOTOR CO (F): Free Stock Analysis Report
H&E EQUIP SVCS (HEES): Free Stock Analysis
ARCELOR MITTAL (MT): Free Stock Analysis
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