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Tue 27 Jan 2009 09:51 AM

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20,000 jobs to go at Caterpillar

Construction and mining giant Caterpillar has announced plans to axe 20,000 jobs in the US and elsewhere, as sales and profits tumble.

Construction and mining giant Caterpillar has announced plans to axe 20,000 jobs in the US and elsewhere, as sales and profits tumble.

Fourth-quarter results show a net income drop of around 32%, though sales had actually been up on 2007 through the first three-quarters.

‘Emerging markets’ such as the UAE, as well as mining sectors did well at the start of the year, with a sharp increase in sales. However, the market crashed, leaving Cat exposed with excess production capacity and stock as orders were cancelled.

"While 2008 was our sixth consecutive year of record sales and revenues, it was an extraordinarily challenging year," said Caterpillar Chairman and Chief Executive Officer Jim Owens. "Through the first three quarters we experienced booming demand from key global industries, notably mining and energy, and most emerging market countries. Delivery times for many products were extended, and we were focused on increasing production and expediting shipments to meet customer needs," Owens added.

"Then we were whipsawed in the fourth quarter as key industries were hit by a rapidly deteriorating global economy and plunging commodity prices. In anticipation of lower demand we encouraged dealers to align inventory with declining volume, and they responded with significant order cancellations, particularly in December."

He concluded that better times lay ahead. “Throughout our 83-year history Caterpillar has successfully managed through the Great Depression, several recessions, a world war and numerous other adversities. We're a strong company with a management team that's been through tough times before. We are the global leader, with an unparalleled dealer network.”

For 2009, Caterpillar expects sales to be "in a range of plus or minus 10% of $40bn," significantly lower than its record sales of $51.3bn in 2008.

The news came just after Caterpillar and others warned President Obama against a ‘Buy American’ drive, which the firm believes could spark an unwanted trade war with emerging markets.

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