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Cramer: Tough times ahead for Caterpillar

Caterpillar announces layoffs, cost cutting

Caterpillar's future could be a grim one, CNBC's Jim Cramer said Thursday.

The construction equipment company announced Thursday it would cut between 4,000 and 5,000 jobs by the end of next year as part of a plan to reduce its annual operating costs by $1.5 billion.

Caterpillar also lowered its guidance for 2015, saying it expects sales and revenue to come in at about $48 billion, $1 billion less than previously projected.

The CAT logo is displayed on Caterpillar construction equipment.
Justin Sullivan | Getty Images

"I think they're a precursor for more layoffs because of the strong dollar and China," Cramer said on "Squawk on the Street."

The greenback has risen about 6 percent this year, while the preliminary Caixin China manufacturing purchasing managers' index (PMI) fell to a 6 ½-year low in September.

"This is a company that's challenged in a lot of places. It's challenged in China; a lot of their end markets are weak. When you see this, you know the company's addressing what is a very slow roll on a lot of their businesses," Cramer said. "I don't know how you can address these challenges other than to have more layoffs

Caterpillar's stock was down more than 6 percent midmorning Thursday.