Caterpillar Plans to Sell Underground-Mining Equipment Lines
August 18 2016 - 7:36PM
Dow Jones News
By Bob Tita
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.
Write to Bob Tita at robert.tita@wsj.com
(END) Dow Jones Newswires
August 18, 2016 19:21 ET (23:21 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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