Caterpillar Cuts From The Top
Machinery maker will slash executive pay by up to 50%.
Caterpillar is taking the high road to cutbacks: the maker of tractors and other construction and mining equipment, said Monday it would drastically slash senior-level compensation, while making shallower cuts lower down in the ranks.
“Good companies become great companies when facing and addressing adversity, and over the decades that has been the case for Caterpillar,” said Chief Executive Jim Owens. “During these uncertain times we will position the company for long-term growth, continued industry leadership and global competitiveness.”
For 2009, the company will cut executive pay by up to 50.0%, compensation for senior managers by 5.0% to 35.0%, and other management and support staff by up to 15.0%. The company will also halt merit pay increases for management and support employees and has instituted a hiring freeze.
Caterpillar is also offering buyouts until Jan. 12 to management and support employees in the United States.
The news comes on the heels of another announcement by the company that it would lay off 814 workers at its Mossville, Ill., engine assembly.
Even as the economic downturn hit the United States, Caterpillar was able to weather the storm because of its strong international presence and the global commodities boom, which motivated its clients to continue investing in equipment. (See “Caterpillar Shifts Into Low Gear.”) But by November commodity prices were receding, and although Caterpillar hadn’t felt the pain yet, falling demand for raw materials was expected to hurt its international sales. (See “The CAT’s Meow.”) Last month, Owens said the company would lay off or transfer an unspecified number of employees at U.S. plants in Sanford, N.C., and Mossville, and in Leicester, England and Grenoble, France.
Caterpillar said its individual business units will continue to reduce costs through temporary factory shutdowns and job cuts as economic conditions call for action.