Coal Age

OCT 2015

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Page 41 of 51

40 October 2015 Caterpillar announced on September 24 that, in response to con- tinued weakening market conditions and the changing nature of its global dealer relations, it is reorganizing several divisions and plan- ning to permanently reduce its salaried and management work- force by 4,000 to 5,000 people between now and the end of 2016. This is part of a total possible workforce reduction of more than 10,000 people, along with contemplated consolidation and clo- sures of manufacturing facilities occurring through 2018. The company's reorganization plan will include major changes in its mining business structure. Chris Curfman, vice president with responsibility for Cat's Mining Sales and Support Division, is retiring, effective December 31. His division will be integrated into the existing Global Mining machine business divisions. The surface mining sales and support teams will join the Hauling and Extraction Division, which will be renamed the Surface Mining and Technology Division. The underground mining sales and support teams will join the Material Handling and Underground Division. Outside the mining business, other changes will occur, includ- ing a reduction in Distribution Services Divisions. This is the com- pany's primary interface with its dealers, and will be reduced to two from three. The two new divisions will include the Asia Pacific, CIS, Africa and Middle East Distribution Division, covering dealers in Asia Pacific, CIS, Africa and the Middle East; and the Americas and Europe Distribution Division, which will include dealers in North and South America and Europe. Four other divisions will be created: Global Aftermarket Solutions, to accelerate the growth of aftermarket sales and service solutions, combining the aftermarket sales and marketing resources; Wear Components and Aftermarket Distribution, which merges the design and manufacturing of components and after- market distribution into one division to enhance the company's focus on components availability and inventory improvements; Marketing and Digital, which will build on the current Analytics and Innovation Division; and Sustainable, Work Tools and Industry Solutions, which brings together the sustainable busi- nesses of Cat Reman and Caterpillar Safety Services with the com- pany's machine attachment business. Cat said it is placing added executive emphasis on three strate- gic initiatives — data analytics, digital and innovation capabilities; Lean Transformation; and the Across the Table initiative, designed to improve its dealer performance and collaboration. These restructuring and cost reduction actions are expected to lower operating costs by about $1.5 billion annually once fully imple- mented. The cost reduction steps will begin in late 2015. For 2015, the company's sales and revenues outlook has weakened, with 2015 sales and revenues now expected to be about $48 billion, or $1 billion lower than the previous outlook of about $49 billion. For 2016, sales and revenues are expected to be about 5% below 2015. The company will offer a voluntary retirement enhancement program for qualifying employees, which will be completed by the end of 2015. Slightly less than half of the $1.5 billion of cost reductions is expected to be from lower selling, general and administrative (SG&A) costs. The reduction in SG&A will largely be in place and effective in 2016 and occur across the company. The remaining cost reductions are expected to come from lower period manufac- turing costs, including savings from additional contemplated facil- ity consolidations and closures, which could impact more than 20 facilities and slightly more than 10% of its manufacturing square footage. This year is the company's third consecutive down year for sales and revenues, and 2016 would mark the first time in Caterpillar's 90-year history that sales and revenues have decreased four years in a row. Since 2013, Caterpillar has closed or announced plans to close or consolidate more than 20 facilities, impacting 8 million ft 2 of manufacturing space. The company has also reduced its total workforce by more than 31,000 since mid- 2012. KSB Inaugurates New Foundry at GIW Industries GIW Industries, a leader in the design, manufacture, and appli- cation of heavy-duty, centrifugal slurry pumps, held a grand opening for its new foundry during early October in Grovetown, Georgia. The foundry is part of a large expansion that includes a new distribution center, additional heat treat and casting clean- ing facilities, as well as CNC machines and an assembly center. This expansion is one of the largest in the company's history and is the biggest project ever undertaken by GIW. This is all just one step in a path of continuous investment for the compa- ny. Phase one included the new foundry, which features 72-ft ceilings and is about the size of a football field. These new facili- ties will more than triple the company's current manufacturing capability. Long term, this expansion will give GIW/KSB a significant advantage in the mining market. This investment will allow for bet- Cat Restructures Mining Business s u p p l i e r s n e w s For 2015, Cat expects revenues to be $1 billion lower than its previous outlook.

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