Caterpillar slashes jobs despite stimulus

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By Christina Bellantoni

Caterpillar Inc. of Illinois on Tuesday announced nearly 2,400 layoffs despite President Obama using his home state's company as an example of a struggling manufacturer that would benefit from his economic stimulus plan and save jobs.

The new round of job cuts will span five plants in Illinois, Indiana and Georgia, and follows the January news that Caterpillar would slash 22,000 people from its 112,000-person workforce.

Mr. Obama hosted an event in support of his stimulus plan at the company's Peoria, Ill., headquarters in mid-February, saying the $787 billion stimulus would be "a major step forward on our path to economic recovery."

He quoted the company's CEO, Jim Owens, as saying, "If Congress passes our plan, this company will be able to rehire some of the folks who were just laid off."

"That's a story I'm confident will be repeated at companies across the country -- companies that are currently struggling to borrow money selling their products, struggling to make payroll, but could find themselves in a different position when we start implementing the plan," Mr. Obama said from inside the plant. "Rather than downsizing, they may be able to start growing again. Rather than cutting jobs, they may be able to create them again."

"Jim is obviously confronted with some tough choices, like every CEO is right now, but what I'm absolutely confident in is he's thinking about the company's long-term growth and he cares about his workers; he cares about the long term and not just the short term," Mr. Obama said.

But Mr. Owens, an Obama economic adviser, disputed the president's theory at the time.

"I think, realistically, no. The honest reality is we're probably going to have more layoffs before we start hiring again," Mr. Owens told reporters after the event.

The White House did not have an immediate comment responding to the news about Caterpillar's new job cuts.

The Associated Press reported that 245 of the 2,365 support and management workers laid off Tuesday had been announced previously.

The AP reported that among the affected workers are 1,726 people at plants in East Peoria and Aurora, Ill.; 439 at a plant in Lafayette, Ind.; and 289 in Jefferson and Griffin, Ga.