Caterpillar to outsource manufacturing to Thailand

Posted on 14 Apr 2015 by Michael Cruickshank

Caterpillar announced on Friday the planned closure of a manufacturing plant in Tasmania in order to move labour offshore.

The mining and heavy construction equipment manufacturer plans to close its Burnie plant in northern Tasmania, resulting in the loss of 280 local jobs.

Caterpillar plans to move this plant’s production to the port of Rayong in Thailand to reduce overall labour costs.

According to ABC News, company spokesman William Oie said the decision was not taken lightly:

“After completing a strategic review of its underground manufacturing operations Caterpillar Inc informed employees that it will transition its hard rock vehicle operations from Burnie, Australia to Rayong, Thailand.”

The factory closure and resulting job losses however will reportedly not be immediate, but rather will begin to come into effect in late 2015.

Tasmania remains Australia’s worst-performing state economy in terms of employment, and this latest closure will only worsen the problem.

“Today’s announcement from Caterpillar is a devastating blow for the North West Coast… The Hodgman Liberal Government is taking immediate action to support workers, their families and the local community,” said Tasmanian state deputy premier Jeremy Rockcliff in a statement.

He also expressed doubts that negotiations with the company will be successful.

“It is highly regrettable that Cat has had to come to this decision. The Government has had ongoing discussions with Cat about how to secure the future of the Burnie site, but this is a decision which has been made by the company’s overseas management, based on global factors.”

About 120 jobs will remain on site, primarily in the areas of R&D as well as distribution.

Aussie manufacturing continues to struggle

This latest closure exemplifies a perceived common trend in the Australian manufacturing sector with other Australian manufacturing stalwarts such as Electrolux shortly to make a similar move and the impending total loss of the OEM car assembly in Australia.

Despite some government intervention, announcements by companies such as Nissan showing support for local production and a weakening Australian dollar, manufacturing continues to be outsourced to cheaper labour markets, especially in Asia.

Research by the University of Melbourne has shown that since the GFC, more than 150,000 jobs have been lost in this sector, with a trend towards further losses.