Caterpillar Inc., the world's biggest maker of earth-moving equipment by revenues, plans to cut 1,400 jobs at its Belgian plant, making it the latest large U.S. company over the past 12 months to shed hundreds of jobs because of the euro-zone crisis.
The global manufacturer said on Thursday that it was forced to make the job cuts at its Gosselies plant near Charleroi, which employs 3,700 people, because of the troubling state of the European economy and rising costs.
"Though they are painful, these measures are indispensable to allow us to be competitive and give a chance of survival to our factory," said Nicolas Polutnik, chief executive of Caterpillar Belgium.
Caterpillar's move reflects a broader trend in Europe, which has seen high-profile U.S. groups either shed thousands of jobs or shut plants all together as the euro-zone sovereign debt crisis has turned the old continent into a less attractive place to invest and do business.
Among the most distinguished groups to have announced closure or shed jobs are: Ford Motor Co., which announced the closure of its Belgium plant leaving 4,300 people unemployed; General Motors Co., which closed its Opel plant in Germany shedding more than 3,000 jobs; ArcelorMittal, which plans to slash tens of hundreds of jobs at its steel plants in France and Belgium; and Dow Chemical Co., which announced the closure of operations in the Netherlands, Belgium, Spain and the U.K.
"Europe is going to be slow-growth for a long time," Jeff Immelt, chief executive of General Electric, said last year at a conference in New York. "If they allow a bank to bust like what happened here in September 2008, it could be worse. So count on Europe being slow," he added. GE said last year that most its $2-billion (U.S.) planned cuts across all operations would occur in Europe because of the weak economic environment.
Several detailed studies examining the impact of the sovereign debt crisis that led Europe into the worst economic crisis since the 1930's Great Depression indicated that companies have lost trillions of dollars and shed millions of jobs.
Grant Thornton, a U.S. consultancy that interviewed more than 12,000 executives in 41 countries, said that companies have lost about $2-trillion since 2009 because of the euro-zone crisis, while unemployment has reached record levels with nearly 19 million unemployed.
However, the economic crisis is not the only reason why global companies are quitting Europe. The burden of costly regulation as well as the high cost of labour and taxation is forcing many to look for better opportunities in emerging markets.
"It currently costs less to import machines to Europe from some other Caterpillar locations than to produce them in Gosselies," the company said on Thursday.