The good news is that Caterpillar, the engine that makes central Illinois' economy hum, had a record year in 2008, cracking the $50 billion barrier in revenues for the first time.

The good news is that Caterpillar, the engine that makes central Illinois' economy hum, had a record year in 2008, cracking the $50 billion barrier in revenues for the first time.


The bad news is that the gravy train is over, for the time being, and that Cat is battening the hatches against an economic storm this nation hasn't seen the likes of in 60 years. Unfortunately, the storm cellar is only so big, and 20,000 employees across the globe will have to find shelter elsewhere.


We may not be in "Would the last person out of Peoria please turn off the lights?" territory, but clearly this is the most formidable challenge to face this part of central Illinois - Cat CEO Jim Owens called it "seismic" - since the early 1980s. Cat isn't yet saying how many of those 20,000 are local - they do include the 814 layoffs at Mossville and the some 2,500 management personnel who accepted the company's recent buyout offer - but we should brace ourselves against a blow, nevertheless. Area suppliers can expect a hit, too.


Peoria is not quite the company town that it was nearly 30 years ago, but we're still pretty darn reliant on the U.S. Fortune 50 company headquartered here. When Cat burps, the rest of us still know it.


While 2008 represented the sixth consecutive record annual profit at Cat, in the what-have-you-done-for-me-lately department, the company reported a 32 percent decline in profits in the fourth quarter. Cat's revenue and sales projections for 2009 show a dramatic downturn, 30 percent being the worst-case scenario - to $36 billion from last year's $51.3 billion - with profit per share being cut in half, potentially.


Cat first hit $30 billion in revenues in 2004, so obviously it has enjoyed phenomenal growth in the last handful of years. As such this would be a significant step back. We can hope that a stimulus package out of Washington will soften the impact, though it's already getting resistance from Republicans on Capitol Hill, so we wouldn't count on it making a big splash this year.


It was unrealistic to expect that central Illinois would be insulated against this crash. We suspect most folks don't pay cash for Cat equipment, so the credit crunch isn't helping. Obviously sales have fallen off a cliff that many didn't see coming.


Lest we feel sorry for ourselves, Cat was hardly alone in delivering bad news on Monday. Some 62,000 job cuts were announced yesterday by the likes of Sprint Nextel, Home Depot, General Motors. Last week it was Microsoft and even Harley-Davidson.


That which does not kill you makes you stronger. So it was in 1981 and 1982 in Peoria, when Cat took a punch like it never had before, only to come back with a vengeance and trounce all other competitors. That should give central Illinoisans hope. We've been resilient and resourceful before, and there's no reason we can't be again.


Peoria Journal Star