AN articulated truck maker has warned it faces a challenging future as weaker demand hits sales.

Caterpillar, which runs a factory at Peterlee, east Durham, says troubles in the construction, oil and gas, mining and rail sectors have damaged its progress.

Bosses say the slowdown mean sales and revenues fell to $9.5bn (£6.4bn) in its first quarter of 2016, from $12.7bn (£8.7bn) a year ago, adding they have been forced to cut nearly 12,000 full-time jobs across the business’ global operations.

In Europe, Caterpillar saw sales dip across all divisions, with its construction arm falling 17 per cent fall to $847m (£582m).

However, the company, which employs about 1,000 people in the North-East, says rising commodity prices, allied to better Chinese construction markets and stronger trade fair orders, offer hope.

The business’ Peterlee plant makes articulated vehicles for all conditions, from -40C in Arctic tundra to 40C in the Sahara, and exports about 90 per cent of its trucks, with models previously used on a Brazilian hydro-electric dam project and the Suez Canal, in Egypt.

Its trucks form part of the firm’s construction equipment division, and Doug Oberhelman, chairman and chief executive, said they will form a key part of the company’s future as it bids to reverse its fortunes.

Mr Oberhelman said the organisation has already cut costs globally by $500m in the first quarter compared to a year ago, adding it is focusing on research and development to improve machinery for customers to retain their business.

He said: “Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail, and while we are seeing a few positive signals, other parts of our business remain challenged.

“(However), we remain focused on what we can control; the quality of our products, our market position, safety and continued restructuring and cost reduction.

“We have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity.

“We’re hard at work developing data and applications that will make our products smarter and help customers improve productivity

“Our goal is to help them to make more money with us than with our competitors.”

Mr Oberhelman added the challenges mean Caterpillar’s sales outlook for 2016 is expected to be around $41bn (£28bn), down from earlier estimates of $44bn (£30bn).

Phil Handley, managing director at Caterpillar’s Peterlee plant, previously told The Northern Echo its east Durham base is a key site.

He added: “This factory is very significant; we are the only Caterpillar factory that makes these products; we are the only one in the world.

“Somewhere out there, there are parts of our team’s work they can take pride from; there is a little piece of Peterlee in every part of the world.”