Caterpillar announces more layoffs
CAT announces more layoffs due to anticipated losses in 2017.
Caterpillar has announced an unspecified number of new lay offs, WEEK-NBC Peoria reports. The announcement was made at the 2017 Credit Suisse Conference. Caterpillar indicated that the chief reason behind the layoffs was the projected downturn in sales and revenue expected in 2017.
“Caterpillar expects 2017 sales and revenues to be lower than 2016. Caterpillar will be taking additional actions around the globe, including job impacts, to lower our cost structure,” Caterpillar said in statement Dec. 14. “We can confirm that notifications to impacted employees have begun today and will continue throughout the week. We will not be breaking out a total or confirm impact by location.”
Terminated employees will be given severance packages and job transition assistance.
“There is never a good time for announcements like this, but we recognize this is particularly difficult for employees and their families during the holidays,” said a Caterpillar spokesperson in a statement to WEEK-NBC Peoria.
Caterpillar’s latest announcement should come as little surprise.
Since January, CAT has announced plant closures and mass layoffs all over Illinois including in its East Peoria and Mossville facilities. In 2016 alone, Caterpillar has terminated nearly 1,000 positions in the Land of Lincoln, although that number will most likely rise in the wake of this latest development.
At the same time, Caterpillar’s presence in Arizona has grown. In May 2016, CAT announced its plans to add 600 jobs to its Tucson-based facility in the next five years. They also shifted office jobs from Illinois and other states to Tucson. These plans came despite the fact that Caterpillar experienced dropping sales and revenue in 2016.
In 2012, then-Caterpillar CEO Doug Oberhelman penned an op-ed in the State Journal-Register arguing the need for pro-growth reforms in Illinois:
“Despite the fact that we have announced plans for dozens of new factories in the last few years and that our work force in the United States has increased by more than 14,500 people in the last 10 years, we haven’t opened a new factory in Illinois in decades,” Oberhelman wrote. “Our work force in Illinois today is at the same level it was 10 years ago. In short, when Caterpillar and most other companies look to locate a new factory in the United States, Illinois is not in the running for such projects. It doesn’t have to be that way.”
Illinois’ multitude of bad economic policies makes it toxic for manufacturers and Caterpillar’s moves in 2016 only prove Oberhelman’s point. The reasons why Caterpillar is expanding in Arizona and reducing its presence in Illinois are legion.
Unlike Illinois, Arizona is a Right-to-Work state, which means the law does not compel workers to join a union in closed shop workplaces. Manufacturing companies, for the most part, prefer doing business in Right-to-Work states, and other Midwest states are likely to implement Right to Work after the results of the November election. Michigan, which enacted Right to Work in 2012, added 11,300 manufacturing jobs in 2015, while Illinois lost 6,200 manufacturing jobs.
Illinois also has the most expensive workers’ compensation system in the Midwest, some of the highest property taxes in the country, and more units of local government than any other state thereby driving up taxes. These factors and more make Illinois less competitive with other states.
However, there is reason to think many politicians, particularly those around Chicago, don’t care that Caterpillar and other manufacturers are leaving because they are downstate jobs.
Workers in downstate Illinois rely heavily on manufacturing jobs, while workers in Chicago and the surrounding suburbs work mostly in the service-sector. From October 2015 to October 2016, the Greater Chicago Area added 33,500 jobs while Downstate Illinois lost 2,700 jobs.
And it’s nothing new.
The disregard for downstate workers dominated the Great Recession era, the recovery and continues to the present. Illinois has added 67,400 jobs compared to before the recession, but it’s all been concentrated in the greater Chicago area. Since October 2007, the greater Chicago area is up 110,000 jobs, while the rest of the state is still down 43,000 jobs.
Lawmakers in Springfield need to come to terms with the manufacturing crisis Illinois is experiencing. Cities and towns across Illinois rely on manufacturing jobs and the for need pro-growth reforms is imperative if there is any hope of stemming the ongoing hemorrhage of good-paying, blue-collar jobs.