Caterpillar Inc. is retreating from the slumping coal
industry, saying it plans to put its equipment lines for underground mines up
for sale and lay off workers.
The Peoria, Ill., company said Thursday it will cut the
workforce at its Houston, Pa., plant by about 155 jobs and will consider
closing the plant if a buyer can’t be found. The plant produces a variety of
coal-harvesting equipment and hauling vehicles and gear used in underground
mines.
About 40 jobs also will be cut from a mining-equipment plant
in Denison, Texas, where drills are made for underground mines. Caterpillar
said it will stop taking orders for the for coal-mining equipment made at the
Houston and Denison plants but will continue to support equipment already in use.
Demand for coal in the U.S. has fallen sharply in recent
years as stricter environmental standards and low prices for natural gas make
coal less attractive to burn in domestic power-generating plants. Caterpillar
acquired the underground equipment lines as part of its $8 billion-plus
purchase in 2011 of mining equipment company Bucyrus International.
“Caterpillar remains committed to an extensive
mining-product portfolio,” said Denise Johnson, president of the
mining-equipment business. “We firmly believe mining is an attractive long-term
industry. At the same time, we continue to manage through the longest
down-cycle in our history.”
Caterpillar is expected to log its fourth-straight year of
lower sales in 2016. The mining-equipment business has been among the company’s
weakest units recently amid slumping prices for mined commodities and reduced
investments in mine expansions and new equipment. Caterpillar’s mining unit
lost $163 million in the second quarter as sales dropped 29% during the quarter
from a year earlier.
Caterpillar also announced it will revamp its plant in
Winston-Salem, N.C. The plant has been producing powertrain components for
giant trucks used in surface mines. But slumping demand for the trucks has left
the Winston-Salem plant, as well as a plant in Decatur, Ill., where the trucks
are assembled, severely underused in recent years.
The company said it will move the component assembly work to
Decatur and repurpose the Winston-Salem plant for warehousing, machining or
fabrication operations for its railroad-equipment business, Progress Rail. The
Winston-Salem plant was opened in 2011 as part of a push by Caterpillar to
expand production capacity, particularly for big mining trucks. But demand for
the trucks began dropping shortly after the plant opened.
Credits: The Wall Street Journal