Caterpillar Cuts 2,500 Idled Workers

Caterpillar will permanently eliminate the jobs of 2,500 already laid off workers, but will put another 550 back to work.
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PEORIA, Ill. (TheStreet) -- Caterpillar (CAT) - Get Report announced Monday that 2,500 of the approximately 22,000 workers it has laid off since the recession began will be permanently "separated from the company."

It didn't say what divisions or what geographies would be effected by the move.

At the same time, the heavy-equipment bellwether, which reported steep third-quarter declines in profit and revenue last week, said that it planned to put 550 laid-off U.S. employees back to work before the end of 2010. The group will include support, management and production employees, Caterpillar said.

The simultaneous cuts and additions are meant, of course, to boost the headcounts at segments experiencing increased demand and reduce staff at units the company believes will struggle over the long term. Recently, Caterpillar's engines division has been the class of the entire operation. While the machinery segment has lost money, its sibling, which manufactures turbines and generators as well as engines for all kinds of heavy equipment, has posted profits.

The bad news/good news mix continues a theme that Caterpillar has been hitting for the better part of a year. When it reported its quarterly results last week, the company also essentially proclaimed its belief that business would begin recovering in 2010. It expects sales and revenue to be 10% to 25% higher next year compared with the nadir it reached in the middle of 2009.

"We are pleased that signs of recovery in the global economy allow us to return a selected group of laid-off employees to work," said the company's chief, Jim Owens, in a prepared statement, before offering the obligatory qualification. "But it's important to remember that we are not close to the record-breaking demand we experienced from 2004 through 2008."

Also last week, Caterpillar announced that Douglas Oberhelman, head of the company's engines segment, will take over the CEO post from Owens, who will retire in June.

Caterpillar shares were trading Monday midday at $56.89, down 1.2%.

-- Written by Scott Eden in New York

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Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.