Aug 19, 2016 3 min read

The Caterpillar plant in Houston is facing the possibility of closure, according to the construction equipment giant, which expects to lay off more than 150 people at the plant.

Peoria, Ill.-based Caterpillar said in a news release Thursday that it “intends to pursue strategic alternatives, including a possible divestiture, for its room and pillar products, which serve a segment of underground soft rock mining customers.”

The release also states it planned “to take actions to reduce the workforce in Houston, Pennsylvania, where the room and pillar products are manufactured.”

Caterpillar said total workforce reductions “of up to 155 positions associated with the room and pillar business are expected, with some occurring immediately.”

A Caterpillar spokeswoman did not return calls seeking additional information on the company’s announcement.

According to information received from anonymous sources by the Observer-Reporter, layoffs were announced at the local plant Thursday. It was unclear what the impact of the announcement would have on the company’s equipment service center on Berry Road in South Strabane Township.

While Caterpillar said it intends to sell the room and pillar division, it will also “assess other options, including a possible closure of the Houston facility.”

The company said the moves being made locally are part of a broader restructuring of its business, according to a statement from one of its executives.

“These moves, which align with Caterpillar’s ongoing restructuring, will allow us to focus resources on those areas of the business that provide the highest, sustainable growth and best long-term returns,” said Denise Johnson, group president with responsibility for Caterpillar’s Resource Industries.

While it will continue to support existing customers of its room and pillar products, used in the extraction of coal, the company said it will stop taking new orders for its continuous miners, feeder breakers, coal haulage systems, highwall miners, roof bolters, utility vehicles and diesel vehicles.

The local manufacturing operation is the latest victim of a massive downturn in the coal industry due to tighter regulations for coal-fired power plants as well as the impact of cheaper natural gas prices that have caused many utilities to switch to the cleaner-burning fuel.

The current situation is a far cry from when the local operations became a part of the Caterpillar family in July 2011 when it completed its $8.6 billion takeover of Bucyrus Inc., which previously owned the Houston operation.

At the time, Caterpillar’s Houston plant employed several hundred workers, producing machinery for mining companies CONSOL Energy, Alpha Natural Resources, Arch Coal, Peabody Coal and Cliffs. In recent years, some of those companies entered bankruptcy proceedings, while CONSOL Energy divested many of its coal assets as it shifted its focus to natural gas production.

When it began operations under the Caterpillar banner five years ago, the Houston plant also had responsibility for two other plants in Virginia and one in West Virginia – all of which contributed underground machinery to Caterpillar’s global mining division.

In recent years, the Virginia and West Virginia operations were consolidated at Houston.

Thursday’s news from Caterpillar wasn’t a complete surprise.

The company announced last year that it intended to reduce its workforce by 5,000 positions by the end of 2016.

“Caterpillar remains committed to an extensive mining product portfolio,” Johnson said Thursday. “We firmly believe mining is an attractive long-term industry, and we continue to invest in a broad range of products, both surface and underground. We are targeting our investments within the mining product portfolio to concentrate on those areas with the highest profitability potential.”