Heavy machinery maker Caterpillar Inc. (NYSE:CAT) is planning to reduce its workforce driven to it by high costs and the continuing weakness in the Eurozone economies.
The axe will immediately fall on about 1400 jobs at its plant in Belgium, which is one of its largest manufacturing plants in Europe. It is in this plant that it makes hydraulic excavators, loading vehicles and engine parts.
The company has invested about $275 million in this site over the last five years, which employs about 3700 people.
Stringent environmental rules has also added to expenses for the company, and complicated its production process. Given the high cost of production at the Belgian plant, it would be cheaper proposition to import the machines rather than producing them at the plant, the company said.
Layoffs have become the norm for companies, which are struggling to remain profitable and increase revenues in the Continent. For U.S. companies, Europe has been a large market for years now and the slowdown in that area has severely impacted operations.
There are estimates which say more than 60 percent of the business of U.S. companies comes from operations in Europe. In this scenario, any recession in Europe will have a severe effect for the corporate sector in the U.S.
In Oct 2012, Ford Motor Co. (F) also announced its plans to close its plant in Genk, Belgium that would render 4,000 employees jobless.
In February, ArcelorMittal, the world’s largest steelmaker in terms of volume and Europe’s largest steelmaker, announced plans to permanently close its plant in Liege, Belgium owing to the slack demand and weakening European economy.
