Caterpillar Inc. announced Friday, Sept. 6, it will lay off 470 employees from its engine division in response to the expected drop in demand for heavy-duty truck engines.
The layoffs, which will take effect Oct. 4, will occur at the company’s engine plant in Mossville and its fuel systems facility in Pontiac, both in Illinois.
The layoffs of the full-time, hourly workers will be temporary, said spokesman Carl Volz. How long they last will depend on demand during the fourth quarter, he said.
Also, the company said it will release 290 supplemental workers hired specifically to handle the increased workload when the trucking industry was placing large orders for engines before new federal emission standards take effect Oct. 1.
Those employees knew when they were hired that it was likely they would be released in October, Volz said.
A Caterpillar statement said additional employment decisions will be based on demand.
There are about 3,000 hourly employees in the engine division at Mossville and Pontiac.
"Caterpillar is working diligently to minimize the impact of these employment reductions on our workforce," the Caterpillar statement said. "Some employees could be transferred to other business units. Moreover, we believe expected retirements in the fourth quarter will offset the need for some layoffs."
The drop in demand for truck engines is expected because the truck manufacturing industry has been in a pre-buying mode for several months. Manufacturers are ordering engines ahead of the Oct. 1 deadline for new federal emission standards to take effect.
Pre-buying has occurred for two reasons:
--Engine manufacturers unable to have engines meeting or exceeding the new emission standards by Oct. 1 will be fined by the U.S. Environmental Protection Agency for each engine they sell after that date that doesn’t meet the standards. Truck manufacturers were concerned those fines would be passed on to them.
--The engines that have been certified, particularly one from Cummins Engine Corp., are largely untested on the road and truck manufacturers are leery of buying them until they are tested and proven to be efficient.
The Cummins engines, Caterpillar contends, use what are known as defeat devices to get emissions low enough to be certified. The devices shut off when peak performance is needed from the engine and when that occurs, Caterpillar contends, the emissions are at least twice what is allowed after Oct. 1.
Caterpillar has certified a "bridge engine" that produces lower emissions than its previous engines, but still falls short of the new standards of emitting no more than 2.5 grams of nitrogen oxide per braking horsepower. Therefore, they are still subject to fines of between $3,000 and $4,500 per engine sold.
Caterpillar, said Volz, does not intend to pass any fines on to their customers. Still, the company hopes any truck manufacturers who need to buy engines after Oct. 1 will order the bridge engine, which is basically the same technology as its current engine but modified to lower emissions.
Caterpillar still intends to roll out its new truck engine in the first quarter of 2003. That engine will use the company’s new Advanced Combustion Engine Reduction Technology (ACERT) that will not rely on defeat devices. Volz said the new engines will be tested before they are sold.
