Feb. 12, 2009 -- At a Caterpillar Inc. plant in Peoria, Ill., today, President Obama said that his proposed economic stimulus would allow the company's CEO to rehire recently laid-off employees. But the head of the company said he will have to fire more workers before he can rehire anyone who has been let go.

Obama has said twice in the past two days that Caterpillar CEO James Owens indicated his company would be able to rehire some of the 20,000 recently laid-off employees.

"Yesterday, Jim, the head of Caterpillar, said that if Congress passes our plan, this company will be able to rehire some of the folks who were just laid off," Obama said today in Peoria.

But when asked today if the stimulus could do that, Owens said, "I think, realistically, no. The honest reality is we're probably going to have more layoffs before we start hiring again."

Caterpillar announced last month that it will lose 20,000 jobs worldwide through layoffs and attrition, of which 15,000 had already occurred in 2008 or were in the process of happening. Caterpillar also reported that profits fell 32 percent in the fourth quarter of 2008 as a result of sharply declining sales.

Four days after that Jan. 26 layoff announcement, Caterpillar said it would let go of an additional 2,110 Illinois-based employees, including 584 at the Peoria plant. Caterpillar has lowered its profit expectations for 2009 as the global economic woes dampen the demand for heavy equipment. The company is betting on $40 billion in sales for this year, which would be a 22 percent drop from 2008.

Owens also cautioned that even if a stimulus is passed within the next month, the effects will not be immediate and are more likely to impact construction activity at the end of 2009 or spring 2010.

"As these projects kick in, one concern I have that we need to be mindful of, is that even if this stimulus package passes, not only here but around the world, it still takes a little time to bid the contracts and get the dirt work started," said Owens, who serves on the president's recently announced Economic Recovery Advisory Board and flew to Peoria aboard Air Force One.

"Adding jobs back just associated with what's in the stimulus plan is a little difficult because there are a lot of other moving parts," Owens said, citing stabilization of the housing market as critical.

The global economic crisis has hit the world's biggest manufacturer of earth-moving equipment hard and fast, as the demand for heavy machinery has plummeted.

Obama said that significant layoffs at the company are not just a local issue but an "urgent warning sign for America" and pushed for Congress to quickly pass the economic stimulus bill to provide relief.

"When a company as good, and successful, and efficient, and lean and mean as Caterpillar is cutting back production and shutting jobs, that means we're not building up this country," he said. "It means we're not building new homes and offices or rebuilding crumbling schools and failing infrastructure. In short, it means we're standing still. And in this new global economy, standing still is the surest way to end up falling behind. Standing still is not an option. It's not who we are; it's not who we have to be."

The Caterpillar that Obama visited today is a different company from the one that then-President George W. Bush addressed in early 2007.

In two years, the company has gone from a rapidly expanding global corporation that was benefiting from free trade agreements and strong export demand from China to a company facing significantly lower profit expectations and a downsized workforce.

Bush visited the Peoria Caterpillar plant in 2007 to showcase how the company was booming because of his administration's global trade policies and tax cuts.

Obama went back to Caterpillar to highlight it as the kind of company that would benefit from prompt passage of the economic stimulus plan because of the jobs that it would be able to create for itself and the construction industry.

"Think about all the work out there to be done," Obama said. "And Caterpillar will be selling the equipment that does the work."

In 2007, the Bush White House selected Caterpillar as an example of a beneficiary of the administration's global trade policies and tax cuts. At the time, half of Caterpillar's products were sold overseas. Exports to Australia and Chile dramatically increased as a result of free-trade agreements under the Bush Administration and exports to China grew by 40 percent and resulted in 5,000 new jobs in the United States.

Peoria Mayor Jim Ardis, who met with Bush in 2007, said today that the impact of the Caterpillar cuts has been "significant."

"The trickle-down effect is pretty significant," Ardis said, noting that layoffs in one sector spread to other sectors such as restaurants and other local businesses. "It happens pretty quickly. These are not just service-level jobs, these are very good professional high-paying jobs with good benefits. You don't just walk out the door and find another job like that."

Obama reiterated that point, adding that companies doing business with Caterpillar are cutting back as well.

"What's happening at this company tells us a larger story about what's happening with our nation's economy because, in many ways, you can measure America's bottom line by looking at Caterpillar's bottom line," the president said.

ABC News' Jake Tapper, Sunlen Miller and Charles Herman contributed to this report.