Caterpillar lays off 120 in Texas as trade war saps growth

By Rajesh Kumar Singh

CHICAGO (Reuters) - Caterpillar Inc <CAT.N> has laid off 120 temporary workers at a plant in Texas following its decision to reduce production hit by U.S. President Donald Trump's trade war with China.

The layoffs, which took place at the hydraulic excavator facility in Victoria on Nov. 1, were confirmed to Reuters by a company spokeswoman on Monday. The facility had about 820 employees.

Kate Kenny, Caterpillar's spokeswoman, attributed the decision to "market conditions".

Caterpillar shares were last trading up 1.3% at $146.42.

In October, the world's largest heavy equipment maker said it was taking steps to cut production after sales fell across all product segments and in most regions in the latest quarter.

Sales in Asia-Pacific, its third biggest market, fell 13% as Caterpillar faced falling demand in China and competition from cut-price domestic rivals, while revenue in its main developed world market in North America fell almost 3%.

The Illinois-based manufacturer said trade tensions had made its customers wary of committing to large capital expenditures, hitting quarterly profits and forcing a cut in its full-year profit outlook. It expects the uncertainty to result in lower sales this year.

Kenny did not say whether the production cuts would lead to a reduction in workforce at other facilities. When asked, she said Caterpillar was taking "a variety of actions at its global facilities to align production with demand".

Caterpillar, an industrial bellwether and proxy for global economic activity, benefited in the past year from the strongest global growth since 2010. However, a tariff war between the United States and trade partners including China has sapped business confidence and weakened the global economy.

Last month, the International Monetary Fund warned the Sino-U.S. trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, adding the outlook could darken further if trade tensions remain unresolved.

Other manufacturers have also let go of workers, citing weak demand. Last month, farm equipment maker Deere & Co <DE.N> announced indefinite layoffs for 163 manufacturing workers.

In September, analysts at Moody's Analytics estimated the trade war had cost almost 300,000 jobs in the United States.

(Reporting by Rajesh Kumar Singh; Editing by Sandra Maler and David Gregorio)