Small backhoes will be manufactured in England.
It's a change that company officials say employees knew was coming. In august, Caterpillar announced plans to restructure when sales dropped from $51 billion to $32 billion in one year. The drop is blamed on the recession and the sinking construction business.
In November, employees were offered an incentives package to resign and many accepted. The remaining layoffs will happen in the next 60 days.
The news isn't all bad. Caterpillar said it's moving its global production of all wheel loaders to Clayton. That'll mean there will be construction on the various production lines. There will also be new jobs as the company gears up to comply with new emissions standards coming in 2012.
"In the long term, we feel we have a good long term plan in place particularily for the Clayton plant to be successful in the long term and to grow ultimately," said company spokesman Jim Dugan.
And residents believe in the company too.
"This is a tough strong community here in Clayton. I've lived here my whole life. And the people who work here are pillars in this community. I know they're going to come out stronger than they were before," said resident Greg Parrish.