MercoPress. South Atlantic News Agency

Caterpillar slashing white-collar pay and planning job cuts

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.”

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 The cuts will come via reductions in its incentive compensation program and equity-based compensation and not through cuts in base pay. 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. "We considered waiting until January to make this announcement" Jim Owens, Caterpillar's CEO, said in a statement, "but decided it was better to communicate these plans with our employees as we approach the completion of our 2009 planning process." On Friday, the company said it will lay off 814 production workers at an engine assembly plant in Mossville and also announced an unspecified number of temporary layoffs at two factories in North Carolina. In October, Caterpillar posted a 6% drop in third-quarter earnings and forecast essentially flat sales for 2009. At the time, Owens said the economic outlook for next year was "extremely uncertain". Owens, who received 14.8 million USD in compensation last year, had forecast pockets of strength in global mining, energy and infrastructure markets, but warned of a third consecutive year of sales declines in the US The credit crisis, he said, was likely to hamper markets in North America, Europe and Japan.