“These decisions are difficult and were not made lightly, but we must act with a sense of urgency to respond to this extremely challenging situation created by the pandemic,” Caterpillar spokeswoman Kate Kenny said in an email.
The decision comes less than a week after the American construction, quarrying and mining machinery producer pulled its 2020 outlook and announced the suspension of some operations, saying it doesn’t have clarity on how the pandemic will affect its business. Caterpillar earlier confirmed it laid off employees at its East Peoria building KK as part of actions taken to reduce production due to weaker customer demand.
“We have faced and overcome many challenges during our 95-year history,” Umpleby said in a note to employees announcing the cuts. “Working together, I am confident we will emerge even stronger after the impact of the pandemic subsides.”
Shares of the company rose 3.9% in New York after surging more than 10% last week, the biggest advance since November 2018 amid speculation that a government stimulus package would help bring stability to a market reeling from impact of the virus.
While the cut to pay is noteworthy, the company hasn’t announced whether it will eliminate the dividend it pays to investors.