Tag Archives: Caterpillar

Mixed Q4 Results For Caterpillar

Profits were up significantly for Caterpillar in the fourth quarter of 2013, and the company on Monday issued a positive earnings forecast for the new year … but there wasn’t a lot of positivity in the sector South Milwaukeeans watch closest.

Here is MarketWatch coverage. From it:

Oberhelman said the company sees some signs of improvement in the global economy, which should bode well for sales in its construction and power systems businesses. However, despite expectations that mining production will continue to rise, the company sees mining companies further reducing capital spending this year.

“As a result, we’re expecting sales in resource industries to decline modestly,” he said. “ We’ve already taken a number of restructuring actions to help improve our financial results and expect to take additional actions in 2014.”

Reduced spending by mining companies has taken a toll on sales of mining equipment, while Caterpillar’s sales of construction equipment have benefited from a recovery of home building in the U.S. The heavy-equipment maker has been closing plants that make mining equipment and laying off workers to reflect a sharp drop in demand in the sector.

Of course, I always worry about the “additional actions in 2014.” The Reuters story included this …

He characterized the moves as “tough decisions necessary to better position us down the road when economic conditions improve and our sales rebound.”

I guess we’ll have to wait and see what “tough decisions” are to come. Let’s pray the worst is over.

Also, check out coverage from the Chicago Tribune and Wall Street Journal.

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Caterpillar Getting $1.2 Million Tax Refund Payment From City, Other Government Entities

The Wisconsin Department of Revenue recently found Bucyrus/Caterpillar overpaid on its property taxes during four of the past five years – and, because of it, the city, school district and other taxing bodies owe the mining company more than $1.2 million.

The South Milwaukee City Council last week approved an agreement that will refund that tax overpayment in varying amounts over the next four years. The $1,265,135.22 will be sent to Caterpillar in these installments …

  • 2014 (for 2008 overpayment): $283, 073.78
  • 2015 (for 2009 overpayment): $540,205.17
  • 2016 (for 2010 overpayment): $278,535.58
  • 2017 (for 2012 overpayment): $163,320.69

Caterpillar dropped its 2011 appeal as part of the settlement agreement.

Of course, as one of several taxing entities, the city is only on the hook for a portion of each year’s repayment, ranging from more than $56,000 in 2017 to more than $187,000 in 2015. All in, the city’s liability here is more than $437,000. The schools, for instance, are liable for more than $521,000 over the four years, with lesser amounts owed by the county, MATC and state.

I voted for this agreement because it was clear this was the best we can get.

Besides allowing for the gradual repayment plan – vs. requiring the city to pay one lump sum this Jan. 1 — the agreement waives any interest payments Caterpillar could have sought. In exchange, the city waives its right to challenge any Cat property tax assessments between now and 2017. I absolutely do not like that fact – but the benefit of retaining that right seemed relatively small since it is the state, not the city, that assesses industrial properties.

How did this happen? It’s hard to say, since the state makes the final call on industrial assessments. So we are reliant on what they determine (and must pay the price if they are wrong).

The issue in question dates to the days of Bucyrus more than five years ago, when the company first disagreed with the assessments on property outside of the tax incremental financing district (south of Rawson Avenue). The state disagreed. Bucyrus disagreed again. The state disagreed again. And so it went until a court found in favor of Bucyrus (now Cat) … and the state determined the manufacturer had overpaid for those four years. The city was informed of this final decision recently.

I’m certain the downturn in the economy had an impact here. Industrial land and property across the country was simply not worth as much during the time frame in question.

So, what does this mean for the city budget and property taxes? To be determined. The city will use its cash reserves to make the 2014 payment when it’s due in September. After that, future refund amounts can be added to the tax levy and not be subject to any state levy limits. That means it’s likely future homeowner tax bills will be affected by the ongoing refund payments.

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More Bad News For Caterpillar … And Exploring The Local Impacts Of The Layoffs

The hits just keep coming for Caterpillar …

The company reported Wednesday that profits are down more than expected, and they cut their forecasts again. From Reuters:

In an interview with CNBC, Caterpillar Chairman and Chief Executive Doug Oberhelman said he was confident mining customers would begin ordering again but acknowledged he did not have any idea when that would happen.

“Long term, the mining customers I’ve talked to lately are very bullish – as am I, and I have to be based on what they tell me,” Oberhelman said.

“But I don’t know if long term is next year, five years or 10 years. But it will come back. We’ve seen it every single time.”

Meanwhile, local impacts of the recent layoffs continue. WUWM has a good piece on those impacts, with interviews with area business owners and impacted workers. From it:

Across the street, sits a bar named Powers on 10th. Owner Joe Braun says, if not for the layoffs, the place would be packed this evening.

“A lot of those employees were people who like to come here at night after second shift or there’s a group of guys who would come after first shift. My group of guys who would stop here from 3:00 to 6:00 at night went from 10 or 12 people down to about four people, so yeah, it affects a lot,” Braun says.

Braun says business dropped so profoundly this past summer that by August he had laid-off several employees. He says he can’t afford to hire anyone right now, so he tends bar.

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Report: Caterpillar Confirms More South Milwaukee Job Cuts

Update: The number is 115 in South Milwaukee alone, Fox 6 is reporting.

Not good news … here is the Milwaukee Business Journal story. From it …

Caterpillar spokeswoman Rachel Potts confirmed to The Business Journal that layoff notices went out to employees in South Milwaukee and Oak Creek as recently as last week, but she declined to indicate the types of positions and number of jobs cut.

Potts said the latest local layoffs are in addition to 260 production jobs cut in South Milwaukee during the summer.

“We stated in our second quarter financial results released in July that the company would be taking actions to reduce costs in the second half of the year,” Potts told The Business Journal. “The employee notifications in both Oak Creek/South Milwaukee and Decatur are included in those actions. We are not breaking out specific location totals or details.”

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Another Tough Quarter For Caterpillar; More Job Cuts Coming?

Caterpillar’s second-quarter earnings report was another ugly one, with profit declines and a cut in the company’s annual earnings projections.

Of bigger concern: The potential for more job cuts. From the story in USA Today:

He said the company already has temporarily closed factories and had rolling layoffs. “We’ve taken significant action already, and we will be taking additional cost reduction measures in the second half of 2013,” he said.

Caterpillar cut its global full-time work force by more than 10,000 people compared with the second quarter of last year. The company had 122,402 employees at the end of June. The temporary work force also dropped by 9,633 during the quarter.

Also, check out coverage from Reuters, Bloomberg and the Milwaukee Journal Sentinel.

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Caterpillar Names New Mining Chief

It didn’t take Caterpillar long to find a new head for its mining business.

Dow Jones is reporting that Tom Bluth will succeed Luis de Leon as vice presidents of mining products — a role especially significant to South Milwaukee given the work performed at the large local plant and office building.

You will recall De Leon resigned in January after reports of “accounting misconduct” in China — conduct, sources told Dow Jones, that de Leon wasn’t involved in. De Leon is a former Bucyrus International executive.

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Report: Local Caterpillar Exec Leaving Company

Update: This Dow Jones story links the departure of de Leon with the accounting “scandal” in China, although “de Leon wasn’t being accused of accounting misdeeds.”

Luis de Leon, a vice president at Caterpillar’s mining division and Bucyrus International’s former chief operating officer, is leaving the company, according to this story in the Business Journal.

From it:

De Leon was vice president of Caterpillar’s mining products division. Peoria, Ill.-based Caterpillar (NYSE: CAT) has its mining equipment headquarters in Oak Creek and operates plants in South Milwaukee and Milwaukee.

“We wish Luis well in his new endeavors,” said Steve Wunning, Caterpillar group president with responsibility for resource industries, in a written statement.

Caterpillar said it will name a replacement for de Leon in the near future.

Also, “Caterpillar Inc uncovered ‘deliberate, multi-year, coordinated accounting misconduct’ at a subsidiary of a Chinese company it acquired last summer, leading it to write off most of the value of the deal and wiping out more than half its expected earnings for the fourth quarter of 2012,” according to this story from Reuters and other reports.

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Alertness Pays Off: More On How A Cat Security Guard Caught A Suspected Bank Robber

Update: Fox 6 has a story on the criminal complaint alleging the suspect “wanted to be caught.”

Oak Creek Patch has the story of Josh Najda, a Caterpillar security guard whose oberservation skills helped nab a South Milwaukee man suspected in an Oak Creek bank robbery.

Here is the story. From it:

Najda is a firefighter with the town of Vernon who was off duty at the time but listening to his police scanner about 11 a.m., when word came of a robbery of TCF Bank in Oak Creek. He heard the initial description of the suspect — a white man with thin build, wearing a gray hooded sweatshirt and tan pants — and filed it away in his memory.

Later that day, he was at his job at Caterpillar’s South Milwaukee facility when he saw a person walk past his guard house and speak with a CAT employee. The man seemed nervous and made a lot of unusual movements, Najda told me. But his actions didn’t pose a threat, so Najda didn’t call police.

“Honestly, I just thought that he may have been talking to a family member,” Najda said.

It was what he did next that gave Najda pause. The man put on a fake black mustache and a pair of sunglasses, which struck Najda as weird (rightfully so, I might add). So he wrote down his exact description and tucked it into his pocket.

And the rest is history …

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Caterpillar’s Continued Gloomy Outlook

Caterpillar further reduced its 2012 forecasts and reiterated its concerns for global growth as it reported its third-quarter earnings on Tuesday.

Check out coverage from Reuters, the Wall Street Journal and Associated Press. From the Journal:

Last month, Caterpillar predicted revenue for the year would be about $2 billion lower than the midpoint of its July revenue range of between $68 billion and $70 billion. On Monday, it chopped an additional $1 billion from its revenue forecast and shaved its 2012 profit outlook, reinforcing a view of rapidly deteriorating end-market demand.

“As we’ve moved through the year, we’ve seen continued economic weakening and uncertainty,” Chairman and Chief Executive Doug Oberhelman said. “It’s definitely impacting our business with dealers intending to lower inventories and mining customers delaying some projects and reducing orders.”

Caterpillar has dialed down production rates, temporarily idling some assembly plants and laying off workers. It said lowered production rates would likely accelerate during the fourth-quarter and extend into the first quarter of 2013. But executives stressed that the slowdown is likely to be temporary.

“We think the opportunity for growth still exists in 2014 and 2015, and you have to make sure you’re ready,” said Chief Financial Officer Ed Rapp during an interview.

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Report: South Milwaukee Man Arrested In Oak Creek Bank Robbery

Oak Creek Patch has the story …

According to the Oak Creek Police Department logbook, a security guard at Caterpillar’s South Milwaukee facility reported seeing a man matching the description of the suspect talking with a Caterpillar employee.

The employee told police the suspect is his roommate. A detective then went to the suspect’s South Milwaukee apartment and arrested him.

Online court records show the man, who had not been charged as of noon Monday, has open cases in Milwaukee and Racine counties for misdemeanor retail theft. He remains in Milwaukee County Jail.

Nice job, Caterpillar security guard.

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“Anemic” Growth: Bad News For Caterpillar

Update: Here is the Journal Sentinel story.

Caterpillar has lowered its profit expectations, with the company saying it expects “fairly anemic and modest growth through 2015.”

Check out coverage from Bloomberg and Reuters. From Reuters:

The company now expects to earn $12 to $18 per share in 2015, down from its previous forecast of $15 to $20.

“It’s prudent, especially with what’s happened in 2011 and 2012 in the economy, to readjust,” Oberhelman said. “I, for one, am still thinking $15 to $20 (earnings per share by 2015), but we need better economic growth.” …

The new forecast comes a year after Caterpillar paid $7.6 billion for mining equipment maker Bucyrus International, the most in Caterpillar’s 87-year history.

The buyout added mining shovels and draglines to the company’s lineup of trucks and excavators to become the world’s largest producer of mining equipment. Given the weak economy, though, some on Wall Street have questioned the timing of the deal.

Among the world’s eight largest miners, only three are boosting capex spending next year. Vale (VALE5.SA), which has the largest capex budget among miners, plans to cut its 2013 mining budget by 4 percent from 2012 levels.

Capital expenditures in the mining sector could slip at least 10 percent by 2014, JPMorgan estimates.

Since roughly 70 percent of spending in mines is for large trucks, capex cuts are not good news for Caterpillar and peers that include Komatsu (6301.T).

Caterpillar spends roughly 30 percent of its own capex and most of its research and development dollars on mining products.

Also, Caterpillar’s new $37 million Visitors Center is expected to open next month in Peoria, Ill. Learn more in the Peoria Journal Star.

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More On Black’s Firing And Other Headlines

The Milwaukee Journal Sentinel spoke with South Shore Supervisor Pat Jursik about the firing Milwaukee County Parks Director on Monday. According to the story:

Supervisor Jursik, who is a lawyer, said she feared that Abele’s firing of Black exposed the county to potential damages. Jursik said Black likely has a good argument that her 2011 raise given to keep her in her county job created a contractual right to her job. If a judge or jury agreed, the county would be forced to argue the firing was justified for cause, Jursik said.

Check out the full story here … and these other local headlines.

Also, NOW has published a new police blotter, including reference to a $3,000 theft from a safe on Southtown Place.

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Caterpillar Reports Huge Profits

$1.7 billion. That’s how much profit Caterpillar reported for the quarter ended June 30, the company reported on Wednesday.

Check out coverage in the Milwaukee Journal Sentinel, Wall Street Journal and Reuters. From the Journal Sentinel story:

Last year’s acquisition of mining equipment maker Bucyrus International, of South Milwaukee, and engine maker MWM Holding GmbH provided a $1.37 billion boost to sales during the quarter.

Caterpillar is the world’s largest maker of construction and mining equipment, and its results are watched closely because they are considered an indicator of industrial activity and the health of the overall economy.

The company’s success this year is occurring even as U.S. construction activity remains depressed and well below the prior peak, and amid problems facing Europe and economic concerns in China, CEO Doug Oberhelman said in a statement.

“The good news is this doesn’t feel like 2008. Interest rates are low, central banks are prepared to inject more liquidity if needed, and housing is coming off lows, not a peak, and seems to be improving,” Oberhelman said.

Of course, word of the huge profits comes amid the ongoing strike in Peoria, Ill., where Caterpillar is seeking significant concessions from workers even during these boom times. WUWM, a National Public Radio station, tackled that issue in a piece this week, following up on a New York Times story published on Monday.

From the story:

At the Caterpillar factory in South Milwaukee, workers are wondering about the implications of the Joliet dispute on their contract. It’s up for renewal next spring.

Barry Lewis is a gear cutter at the plant, and vice president of United Steel Workers, Local 1343.

“Some people are very worried. We’re not sure how it equates to us, I mean, we’re aware that they’re United Auto Workers, we’re Steel Workers. The product lines are completely different,” Lewis says.

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More Headlines

Check out these local headlines:

Also, state Sen. Chris Larson has published a new Larson Report. The headline: “Looking Forward.”

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More Milwaukee-Area Growth For Caterpillar?

BizTimes.com is reporting that Caterpillar “plans to expand its presence in the Milwaukee area.”

See the story here. From it:

Caterpillar has considered leasing about 25,000 square feet of space in the Liberty Corporate Preserve I building at 10050 S. 27th St., Oak Creek, said Neal Driscoll, vice president of leasing and development at Liberty Property Trust, which recently sold that building and most of its southeastern Wisconsin portfolio.

One source said Caterpillar was seeking space in Oak Creek to create a data center.

Another source said the company is considering plans to create a data center, an engineering technology center and a plant in southeastern Wisconsin. The company is expected to announce its plans by early June, that source said.

Of course, my hope is that growth comes in South Milwaukee, even if that sounds unlikely. I’ll keep you posted.

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