Eaton Corp. (ETN) is counting on lower expenses to help the company meet its 2009 earnings guidance in the midst of a decline in demand from the automotive industry and other major markets, Chairman and Chief Executive Alexander Cutler said Wednesday.

Cutler said workforce reductions of more than 8,000 people since late 2008 will save Eaton at least $200 million this year. Unpaid time off for employees still on the job, suspending pension contributions and other expense reductions will save an additional $170 million this year.

As a result, he said the company should be able meet its 2009 earnings forecast of $2.50 to $3 per share, despite earnings for the first and second quarters that are expected to be no better than break even. In the first quarter, the company posted a loss of $52 million, or 30 cents a share.

The Cleveland-based company, which manufacturers components for the electrical, hydraulic, aerospace and auto industry, is facing lower end-market demand in the near term.

Cutler told an investor conference in New York sponsored by Sanford C. Bernstein that temporary shutdowns by General Motors Corp. (GM) and Chrysler LLC will reduce North American auto production in the second quarter by about 470,000 vehicles.

He sees no more than a minimal increase in commercial truck purchases ahead of new diesel-engine emissions regulations in 2010 that will raise the price of new trucks.

"The economic uncertainly [in trucking] is more than overwhelming the concerns about new technology," he said.

Cutler, who has headed the company since 2000, predicted Eaton will benefit from federal economic stimulus spending on energy efficiency for commercial building beginning in 2010. The company's aerospace business also is positioned to benefit from an increase in Pentagon funding for the new joint strike force fighter jet.

-By Bob Tita, Dow Jones Newswires; 312-750-4129; robert.tita@dowjones.com