Komatsu will lay off workers at Peoria plant
DAVID ZALAZNIK/JOURNAL STAR
Komatsu in Peoria.
Call it the China slowdown. It hit Caterpillar Inc., and now it’s hitting Komatsu.
The Japanese-owned construction equipment company has confirmed that layoffs will be conducted at its Peoria facility, which employs 575 people.
In a statement issued earlier this week, Komatsu America Corp. management warned that layoffs were coming but didn’t provide details.
“In accordance with its contract with the International Brotherhood of Boilermakers, no numbers of affected employees can be released until first being provided to the union,” the company noted in its statement.
Dave Gullette, president of Boilermakers Local 158, said he met with company officials earlier in the week.
“We’re supposed to hear on Friday about the first wave of layoffs. We’ll probably get the numbers (of employees laid off) one week at a time,” he said.
The Komatsu statement said layoffs would be spread out over several weeks.
“We will inform the union on a weekly basis as to the employees impacted each week,” related the Komatsu statement.
The reason for the layoffs is reduced demand, the company stated.
“The Peoria facility manufactures equipment for the international mining community. The order rates of our global mining customers has slowed significantly due to lower demand for commodities, forcing capital expenditure reductions and cost-cutting measures, which has directly impacted the demand for Komatsu’s machines,” the company’s statement noted.
“We believe that what we are currently seeing is a temporary drop in demand, and remain confident in the long-term viability of the mining market, and are equally confident that as the market picks back up that we will be recalling these laid-off employees.”
The decline in demand in what had been the red-hot mining segment was the same reason Caterpillar gave in announcing a production slowdown last year.
Gullette said that Komatsu workers have experienced the mining boom first hand. “We’ve been extremely busy for the past eight years,” he said.
Mining activity slowed last year in China, a country where Komatsu gets about 8 percent of its sales, according to the Wall Street Journal, noting that Caterpillar derives about 3 percent of its sales from China.
Both Komatsu and Caterpillar look for mining sales to improve in 2013, particularly over the second half of the year.
Steve Tarter can be reached at 686-3260 or email@example.com. Follow his blog, Minding Business, on pjstar.com and follow him on Twitter @SteveTarter