Construction giant Caterpillar has announced factory closures and job losses, together with a 32% drop in fourth quarter profits.

The construction equipment manufacturer revealed it is axing almost 20,000 staff, laying off 17,000 workers, and buying out 2,500 others, to reduce costs in the face of what it predicted would be the weakest year for business since the end of the Second World War.

The company is also planning to operate shorter working weeks and close down some factories.

Referring to fourth quarter profits as ‘disappointing’, Caterpillar chief executive Jim Owens hinted that current quarter profits would be also weak.

“Without a doubt, 2009 will be a very tough year,” he said.

The news follows the announcement by steel maker Corus, which is to axe 3,500 jobs.

By staff writer.