150 jobs pay price of economic downturn

Jun 20 2008 by Karen Dent, The Journal

THE economic downturn has cost more than 150 North East jobs at two companies making machines for the construction industry.

Caterpillar UK is shedding 75 temporary workers from its Stockton site but yesterday said it was unable to confirm whether jobs would be cut at its Peterlee plant, which employs more than 700 permanent and agency staff and is the worldwide production centre for the firm’s articulated trucks. Caterpillar’s announcement comes as Komatsu UK announced it is laying off 96 temporary workers from its Birtley factory and cut production from a five to a three-day week.

The Caterpillar jobs are being axed at the digger and excavator maker’s Building Construction Products Division. The US company, which employs more than 12,000 people in the UK, blamed the international economic slowdown for its decision.

A spokesman said: “This is a result of a re-evaluation of market conditions and production levels. Our previously very positive expectations have started to shift in the light of world financial events and a general softening in the European residential construction market.

“We regret this action is necessary but believe it is ultimately in the best interest of our business, and serving our dealers and customers.”

The Stockton plant is part of the same Caterpillar business unit as the company’s UK headquarters in Leicestershire, which has also laid off 320 temporary workers.

Komatsu UK has decided to cut its output by around 25% and to reduce agency staff. It has shed 90 temporary production posts and six temporary logistics workers, in addition to shortening the working week at its Birtley factory.

The business, which employs more than 700 people making earth-moving machines, has also extended its annual summer shutdown from two to three weeks.

Managing director of Komatsu UK, Peter Howe, said: “Production has been reduced since January this year in light of a reduction in demand. Our production volumes have risen sharply over the past three years and we have consistently seen record sales and production figures.

“The market now seems to be levelling out and this is reflected in our order intake.”

Mr Howe said that production would be cut by around a quarter to allow the bottleneck of finished machines to be sold. However, he stressed: “Everyone is getting paid as normal, they have not got a three-day pay, and we still have temporary staff here, between 40 and 50 will still remain. There is no danger to permanent staff. We have a great workforce here and I’m very confident for the future.

“Our market is the whole European market. The UK is a very important part of that but other markets such as Eastern Europe are growing tremendously.”

The business agreed the conditions with its staff advisory council. Employee representatives also agreed to make up some of the time lost to the shortened week before the end of Komatsu’s financial year in March 2009.

Komatsu UK, part of the giant Japanese Komatsu group, is the world’s biggest crawler excavator producer and last year became the number one producer in Europe.