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Joy Global to Cut Jobs at Franklin Facility on Weak Demand

Manufacturer of mining equipment Joy Global Inc.JOY is under tremendous stress due to the ongoing softness in demand for mining equipment. The company has decided to lay off 85 workers at its Franklin, PA facility nearly 70 miles north of Pittsburgh.

Joy Global continues to face choppy demand in the international markets on lackluster economic growth. Dwindling coal exports and slower-than-expected U.S. demand are expected to reduce U.S. coal production by more than 86 million short tons in 2015. In addition, slackness in the Chinese economy and its focus on lowering coal usage are also affecting demand for mining equipment. All of these factors are particularly going against Joy Global as coal miners contribute the largest share of its revenues.

Joy Global has already lowered its fiscal 2015 sales and earnings per share guidance based on weak demand for its products and services due to global worries, including lower oil and commodity prices. The company registered a 31% year-over-year decline in fiscal third-quarter 2015 bookings due to lower customer spending on new projects.

The coal mining industry is up against stricter regulations on coal usage, aggravated by the precipitous drop in natural gas and oil prices . Demand for other commodities like iron ore and metals is also to pick up given the persistent slowdown in China and other developing countries.

Recently, one of the largest mining equipment manufacturers, Caterpillar Inc. CAT reduced its revenue outlook for 2015 citing continued weakness in the mining industry. Caterpillar expects 2015 revenues to be $48 billion, nearly $1 billion lower than its prior guidance. It further expects revenues to drop by 5% in 2016.

Joy Global, currently carrying a Zacks Rank #5 (Strong Sell), has lost nearly 68.6% of its share value since the beginning of the year. Other heavy equipment manufacturers were not spared either with Terex Corporation TEX losing 36.1% and The Manitowoc Company, Inc. MTW shedding 31.4% of its share price year to date.

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TEREX CORP (TEX): Free Stock Analysis Report

CATERPILLAR INC (CAT): Free Stock Analysis Report

MANITOWOC INC (MTW): Free Stock Analysis Report

JOY GLOBAL INC (JOY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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