Peoria Illinois

PEORIA, Ill. — Caterpillar Inc. said Monday about 2,500 laid-off employees will be permanently cut from the company and 550 others will be brought back to work by the end of next year.

The workers are among more than 22,000 laid off earlier this year as Caterpillar dramatically scaled back production due to weaker demand amid the global economic downturn. The Peoria, Ill.-based company has cut 16 percent of its work force, which now stands at just above 94,000.

But last week Caterpillar, the world's largest maker of mining and construction equipment, said it was seeing "encouraging signs" that a recovery may be under way, even as it reported a 53 percent decline in third-quarter earnings.

On Monday, Caterpillar said it had started notifying the 2,500 employees of the permanent cuts, but would not provide a breakdown of their locations. It plans to offer them severance packages.

Meanwhile, the company said about 550 other laid-off workers have returned to work or will return before the end of 2010.