CHAMPAIGN – Caterpillar Inc. said Friday it will lay off more than 460 employees at its plant in Decatur, part of what the heavy equipment-maker says is an ongoing effort to deal with a slump in the mining business.
The news adds to tough times in the Decatur area. The town’s 13.7 percent unemployment rate in February was the highest of any metro area in the state.
Peoria-based Caterpillar said in a statement the employees will lose their jobs in June. The layoffs, which hit production workers at the plant that makes huge mining trucks, are permanent. The company has used short-term layoffs and temporary cutbacks at many plants that make products for the mining business this year.
“While some cost reduction measures such as temporary layoffs, shutdowns and shortened workweeks have already been implemented, more permanent measures must be taken in the near-term,” the company said.
“We know this is difficult for our employees and their families, but we are taking steps to position the company for long-term success.”
Rachel Potts, a spokeswoman for Caterpillar, said she couldn’t say whether more layoffs are coming in Decatur or elsewhere.
With 4,100 employees before the layoffs, the Decatur plant is one of the largest employers in the town of 76,000, second only to agribusiness leader Archer Daniels Midland Co. Craig Coil, president of the Economic Development Corporation of Decatur and Macon County, said the impact will reach beyond Decatur into Macon and several neighboring counties.
Local officials were told Thursday the layoffs were coming, he said. They follow ADM cuts that, between buyouts and layoffs, eliminated 335 jobs at the company’s Decatur headquarters last year.
“I think we’re seeing in real numbers the fact that things are not improving significantly on a global basis,” Coil said. “I think people are seeing what happens around the world really does affect us in central Illinois.”
Caterpillar started warning late last year that it would have to cut production based on slowing demand, particularly in Europe and Asia. Temporary layoffs have been used in Decatur, East Peoria and elsewhere.
Other manufacturers have taken similar steps. Japanese construction-equipment maker Komatsu last month said it will soon lay off an unspecified number of workers at its plant in Peoria.
In Decatur, the unemployment rate stood at 10.9 percent in February 2012, according to the state Department of Employment Security. The figure spiked to 13.7 percent this February, the most recent month for which the department has metro-level statistics.
The statewide unemployment rate has been increasing, too, hitting 9.5 percent in March. That’s one of the highest unemployment rates in the country.
Decatur’s job situation is strongly linked to the fortunes of Caterpillar and ADM.
“I think the reality is that that’s always been the situation in Decatur,” Coil said. “And if you look around in central Illinois ... it’s just the landscape that we live in.