Caterpillar Sees Uncertainty for 2014

“This year has proven to be difficult, with expected sales and revenues nearly $11 billion lower than last year. That is a 17 percent decline from 2012, with about 75 percent of the drop from Resource Industries, which is principally mining. We expect Resource Industries to be down close to 40 percent for the full year and Power Systems’ and Construction Industries’ sales to each be down about 5 percent,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman. 

The huge drop in sales in 2013 caused Caterpillar to reduce its global workforce by more than 13,000 and temporarily lay off salaried and management employees.  The company has instituted austerity measures that include lower program spending, substantially lower incentive pay, and a reduction in capital expenditures. 

Caterpillar’s January outlook expected weak orders for mining equipment to pick up later in the year but the increase never materialized. The preliminary outlook for 2014 holds uncertainty said Oberhelman. The outlook in the third quarter report was as follows: 

“From an economic standpoint, the company expects better world growth in 2014. However, significant risks and uncertainties remain that could temper global economic growth. The direction of U.S. fiscal and monetary policy remains uncertain; Eurozone economies are far from healthy and China continues to transition to a more consumer-demand led economy. In addition, despite higher mine production around the world, new orders for mining equipment remain very low. As a result, the company is holding its outlook for 2014 sales and revenues flat with 2013 in a plus or minus 5 percent range. The company expects sales growth in Construction Industries, relatively flat sales in Power Systems and a decline in Resource Industries’ sales.”