Chicago: Several US manufacturers added their names to the growing list of companies making job or benefit cuts to weather the global financial crisis.
Caterpillar Inc, the world’s largest maker of heavy construction and mining equipment, said Monday it is cutting white-collar pay by up to 50% and offering buyouts to as many as 25,000 US employees as it looks to cut costs during what it characterized as “uncertain times.”
Textron Inc, the world’s largest maker of corporate jets, said it will eliminate 2,200 jobs worldwide to cope with a global downturn that has forced its customers to pare all but essential spending.
The Providence, Rhode Island based company, which employs about 44,000 workers worldwide, said “further headcount reductions” and other cost-cutting actions were likely.
Other companies announcing plans to cut jobs and bring production in line with fast-falling demand just days before the Christmas holiday included Steelcase Inc, a maker of furniture equipment, Kemet Corp, a maker of passive electronic components, and diversified manufacturer Roper Industries Inc .
Analysts said the moves, which follow other cost-cutting measures announced in recent weeks, suggest managers are desperately throwing as many levers as possible to bring operations in line with deteriorating fundamentals.
Caterpillar’s actions, in addition to an across-the-board wage freeze at the Peoria, Illinois-based company, are its broadest moves yet in response to weakening demand for its earth-moving equipment, diesel engines and gas turbines.
Until now, their cuts have been more surgical, confined to specific product lines, like residential construction equipment plants or factories making diesel engines for big-rig trucks, or to contract workers who were not, technically speaking, Caterpillar employees.
In 2009, it said that compensation for its most senior executives will be cut by as much as 50%, while pay for senior managers will be reduced 5 to 35%, and other management and support staff will see cuts of up to 15%.
The cuts will come via reductions in its incentive compensation program and equity-based compensation and not through cuts in base pay.
Analyst Eli Lustgarten at Longbow Research, who thinks Caterpillar’s earnings may fall as much as 33% next year, said the blunter approach was necessary, given the broad-based and fast-spreading deterioration in business.
The moves announced on Monday come just days after FedEx Corp said it was forcing salaried workers to take at least a 5% pay cut and was suspending its 401(k) retirement plan match.
Experts said the takebacks are an ominous sign of things to come at many other US companies as businesses - even relatively healthy ones like FedEx and Caterpillar - adopt defensive crouches in response to the worst economic downturn in decades.
According to the employment consulting firm Watson Wyatt, 11% of all the companies it recently surveyed either already had cut wages or planned to do so over the next 12 months, and 10% either have reduced their employer 401(k) match or planned to do so.
Caterpillar also warned that additional involuntary layoffs, like the one announced last week at its Mossville, Illinois diesel engine plant, could be necessary. It said it would also implement temporary factory shutdowns as needed “in response to economic conditions that impact the markets for its products.”
In the meantime, some members of Caterpillar’s management and most of its US-based support staff are being offered buyouts. Caterpillar said eligible employees would have three weeks to elect to take part in the program.