Caterpillar Incorporated announced Monday it would eliminate more than 20,000 jobs, and the heavy-equipment maker warned of a difficult year ahead as an economic downturn that started in the United States has become a global recession. The world's biggest maker of construction and mining machines, which also reported lower-than-expected fourth-quarter profits, said Monday it was laying off 17,000 employees and buying out 3,500 others to reduce costs amid what it predicted would be the weakest year since the end of the second World War. Caterpillar chief executive Jim Owens said the company had been hit by a rapidly weakening global economy and plunging commodity prices. He said Caterpillar had reacted by encouraging dealers to align their inventory levels with declining volume, and “they responded with significant order cancellations, particularly in December.” The layoffs and buyouts, to affect one in 10 of the company's regular workers and 8,000 contract workers, represent the biggest wave of job cuts at Caterpillar since the early 1980s. The company also said it was freezing salaries of most employees and significantly reducing the pay for executives and senior managers. Also on Monday, Caterpillar reduced its 2009 outlook and seemed to suggest that the company could report a loss in the current quarter. The news sent Caterpillar shares down as much as 10 percent.
