CAT Caterpillar Inc

By Bob Tita 

Caterpillar Inc. will close a parts factory in Texas and may close an engine plant near Chicago as the machinery giant trims continues to pare back its manufacturing footprint.

The company told workers in Waco, Texas, last month that the Tool Works plant will close by the end of 2018, eliminating 200 jobs. That work will shift to a plant in Wamego, Kan., and to outside suppliers.

Caterpillar also said it would decide by the end of the year whether to close the plant in LaGrange, Ill., where about 600 people make diesel engines for railroad locomotives. The company said about 600 administrative and engineering employees would remain at LaGrange even if the engine manufacturing moves to a plant in Winston-Salem, N.C., or outside suppliers. The company said if it closes the plant, production would be moved by the end of the year.

Caterpillar has been shrinking its roster of factories since 2015, when executives said they would eliminate 10,000 jobs and reduce manufacturing capacity by 10% by 2018.

The company aggressively expanded its factory footprint in the U.S. and overseas after the financial crisis in anticipation of a lasting swell in sales. But demand for mining and construction equipment entered a prolonged slump in 2012.

Since sales of Caterpillar equipment rebounded in past year, Chief Executive Jim Umpleby has been working to raise margins by continuing to trim production costs. Caterpillar stock rose 1.6% on Friday to $157.08 a share, up 70% from a year earlier.

Deerfield, Ill.-based Caterpillar has cut back its manufacturing presence in its home state in recent years as it shifts work to new plants in the South, many of which have capacity to spare.

Caterpillar also is closing an excavator assembly plant near Aurora and a components plant in Joliet. That factory work will move to other Caterpillar plants by the end of the year..

Caterpillar also said in January that it will close technical center and demonstration site in Panama, eliminating about 80 positions there. The move is part of the company's plan to eventually sell its Panama Pacifico campus and relocate remaining employees in Panama to leased office space in Panama City.

General Motors built the LaGrange plant in the 1930s to manufacture diesel-electric train locomotives for GM's then-new Electro-Motive Division. Caterpillar acquired the business from private-equity firms in 2010 for $820 million.

Write to Bob Tita at robert.tita@wsj.com

(END) Dow Jones Newswires

March 16, 2018 14:52 ET (18:52 GMT)

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