Caterpillar Inc. continues to scale down its manufacturing portfolio, now taking steps to optimize its mining equipment products. The heavy-equipment group indicated it is pursuing “strategic alternatives, including possible divestiture” for room-and-pillar mining equipment, which are horizontal excavating machines used in underground soft-rock mining (e.g., coal, sedimentary minerals); and that it will divest its track drill product line, which are used in surface exploration of ore and mineral deposits.
Caterpillar emphasized its focus is on “those products with the greatest growth potential,” but also that, together with its dealer network is committed to existing customers and will support those room-and-pillar and track-drill fleets currently in operation.
"These moves, which align with Caterpillar's ongoing restructuring, will allow us to focus resources on those areas of the business that provide the highest, sustainable growth and best long-term returns," stated Denise Johnson, group president with responsibility for Resource Industries.
The room-and-pillar underground mining products under review include continuous miners, feeder breakers, coal haulage systems, high-wall miners, roof bolters, utility vehicles and diesel vehicles. Caterpillar will stop taking new orders for these products.
Production of track drills will be discontinued, and Caterpillar has stopped taking new orders for such equipment.
Caterpillar confirmed it plans to cut jobs at the Houston, Penn. plant where the room-and-pillar products are manufactured, and a closure of that plant may take place in the future. Up to 155 jobs will be affected by the room-and-pillar products downsizing.
A further 40 jobs will be eliminated at the Denison, Tex. plant where track drills are produced.
In addition, Caterpillar will repurpose its Winston-Salem, N.C. plant, shifting it from producing mining equipment to rail systems, beginning later this year. The plant will be reassigned to Progress Rail, a wholly owned Caterpillar subsidiary, and Caterpillar will relocate the manufacturing of some components used in large mining trucks from Winston-Salem to Decatur, Ill.
Earlier this year, Caterpillar scaled back its forest products equipment division, closing five plants.
Last September, Caterpillar unveiled an extensive restructuring and cost-saving program that it indicated would involve management and workforce reductions as well as plant closings, in an effort to address its third-consecutive year of reduced sales and revenues. The plan was expected to lower operating costs by about $1.5 billion.
At that time, Caterpillar noted 2016 would be the first time in its 90-year history that sales and revenues will have decreased for four consecutive years.