Caterpillar

lays off

half its

workers

Cuts expected, but employees

anticipated

fewer layoffs

By CHRIS VETTER

Journal Staff Writer

NEW ULM -- Caterpillar Paving Products Inc. announced Thursday that half of its 90 full-time employees at the New Ulm facility have been laid off, and the functions at the site will be reduced.

The New Ulm building provided four major functions: machining operations, assembly, welding and painting.

All functions, except machining, will be closed immediately and absorbed into the Minneapolis division, said Terry Sharp, Caterpillar communications manager in Minneapolis.

Sharp said the layoffs were required because of a downtrend in sales.

"We've seen some changes in our business," Sharp said. "With the decline in the demand for our products, we had to make adjustments."

The cuts will be permanent, he added.

"Caterpillar looks at these things long and hard before a decision is made," he said.

Sharp said that employees knew some cuts would be made.

"I think we've tried to keep our employees abreast of what our conditions are," he said. "We've tried to be upfront about the state of the business."

A New Ulm machinist, who has worked with Caterpillar for 10 years and has asked to not be identified, agreed that some layoffs were expected, but not the elimination of so many departments.

"It was a big surprise in how big the layoff was," the worker said. "We didn't expect the plant to be turned into just machining. We were expecting some layoffs, but not this many."

According to the worker, management called two simultaneous meetings at 1 p.m. Thursday. The group of machinists -- about 30 total -- were told they still had a job. In the other meeting, approximately 35 welders, six assembly workers, four painters and two quality control inspectors were told that they were being laid off permanently.

The remaining workforce of 45 employees includes management, machinists and some senior welders who were offered jobs as material handlers, the worker said.

Workers were sent home after the 1 p.m. meeting and told to return to work Monday.

"They said they were concerned for our safety," the worker said. However, he doubted that his longtime co-workers would have caused any problems.

Sharp would not comment about severance packages, if any, that were given to laid-off employees.

The company had taken some steps to lowering payroll this summer. The New Ulm plant closed for a week during Independence Day and Labor Day. Employees were not paid for those weeks. The company also plans to close its doors for a week each over Thanksgiving and Christmas.

Sharp could not say if Caterpillar will have a continued presence in New Ulm.

"Caterpillar will continue to utilize the New Ulm facility as long as it fulfills our needs," Sharp said. "I would not want to speculate one way or the other for the future of New Ulm."