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Caterpillar Inc.
Company typePublic (nyse
IndustryHeavy equipment
Founded1925
HeadquartersPeoria, Illinois, USA
Key people
James W. Owens, CEO & Chairman
ProductsConstruction & Agriculture Machinery
RevenueIncrease$44.958 billion USD (2007)[1]
Increase$3.541 billion USD (2007)[1]
Number of employees
97,444
Websitehttp://www.cat.com/

Caterpillar Inc. (nyse|CAT) is a United States-based corporation headquartered in Peoria, Illinois. Caterpillar (commonly referred to simply as CAT) is, according to their corporate website, "the world's largest manufacturer of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines."

Famous for their products featuring caterpillar tracks and a distinctive yellow paint scheme, Caterpillar produces a wide range of engineering vehicles, including the Caterpillar D9 bulldozer.

Caterpillar is one of the thirty companies whose stock is tracked in the Dow Jones Industrial Average. It is a Fortune 100 company ranked first in its industry, with more than $40 billion in assets.

History

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Two Caterpillar 45 steam tractors team up to pull a long wagon train in the Mojave Desert during construction of the Los Angeles Aqueduct in 1909
 
D2 Caterpillar on display in the Serpentine Vintage Tractor Museum, Serpentine, Western Australia
 
D10N at work near Rishon LeZion,Israel.

The story of Caterpillar Inc. originates in the late nineteenth century, when Daniel Best and Benjamin Holt experimented with ways to fulfill the promise that steam tractors held for farming. By 1904, these large steam-powered tractors had been plowing California fields for 14 years, and occasionally got bogged down in the soft California soil, especially after heavy rains. These huge tractors were difficult to pull free, even with teams of horses. Benjamin Holt had an idea: why not carry the road with the vehicle? On November 24 1904 he added wooden block-linked treads around the idlers on Holt No.77, his test tractor. The results were impressive, and the modern tractor was born. Caterpillar became famous for its Caterpillar 30 and its Caterpillar 60 tractors.

In 1909 Benjamin Holt bought an abandoned but relatively new plant of a tractor company that had failed in Peoria, Illinois. The location offered Holt everything he needed in a manufacturing center, and despite the hefty amount of capital needed for retooling the plant, the venture proved so profitable that by 1911 the factory employed 625 people. Around that time Holt Manufacturing began exporting its tractors to Argentina, Mexico, and Canada.[2]

Caterpillar formed on April 15, 1925 with the merger of Holt Manufacturing Company of Stockton, California and the C. L. Best Gas Traction Company of San Leandro, California, forming the Caterpillar Tractor Co. Sales the first year were $13 million. By 1929, sales climbed to $52.8 million, and CAT continued to grow throughout the Depression of the 1930s. The Holt Manufacturing Company had earlier pioneered the use of the caterpillar track during World War I.

After the companies merged, Caterpillar went through many changes, including the adoption of the diesel engine. Caterpillar products found fame with the US Navy "Seabees" who built airfields in the Pacific War. Following World War II, the company grew at a rapid pace and launched its first venture outside the US in 1950, marking the beginning of Caterpillar's development into a multinational corporation.

Caterpillar products range from track-type tractors to hydraulic excavators, backhoe loaders, motor graders, off-highway trucks, wheel loaders, agricultural tractors, diesel and natural gas engines and gas turbines. They are used in construction, road-building, mining, forestry, energy, transportation and material-handling industries.

Caterpillar's crawler tractors inspired the first military tanks, which helped end World War I. Many of their machines helped build the Hoover Dam, tunnel under the English Channel, tumble the Berlin Wall and construct cities and neighborhoods across the United States.

Caterpillar was one of the "excellent" companies featured in the 1982 best-selling management book In Search of Excellence by Tom Peters. The company's written principles are the "Worldwide Code of Conduct" document that stresses integrity in every action.[3]

Corporate governance

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Caterpillar has a governance structure where the Chairman of the board acts as CEO. The Board of Directors is fully independent and is made up of outside (non-employee) directors. Several "group presidents" report to the CEO, and multiple vice presidents report to each group president.

The board has four committees: Audit, Compensation, Governance, and Public Policy.

The behavior of all employees is governed by a Code of Worldwide Business Conduct, first published in 1974 and last amended in 2005, which sets a high standard for honesty and ethical behavior. All management employees are retested on this code annually.

Current board of directors

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Sales and facilities

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Twin Caterpillar 3208T engines powering Clogher Head lifeboat (Ireland)
 
Caterpillar boots

As of the first quarter of 2006, 44% of Caterpillar's sales are to overseas customers. Caterpillar products are sold in nearly 200 countries. The company has a worldwide network of 220 dealers: 63 dealers in the United States and 157 in other countries. Caterpillar products and components are manufactured in 51 plants in the United States and 58 plants in Australia, Belgium, Brazil, Canada, England, France, Germany, Hungary, India, Indonesia, Italy, Japan, Mexico, the Netherlands, Northern Ireland, the People's Republic of China, Poland, Russia, South Africa and Sweden.

Caterpillar's historical manufacturing home is in Peoria, Illinois, where its world headquarters and core research and development activities are located. Although Caterpillar has "farmed out" much of its local parts production and warehousing to outside firms, it still has four major plants in the Peoria area: the Mapleton Foundry, where diesel engine blocks and other large parts are cast; the East Peoria factory, which has assembled Caterpillar tractors for over 70 years; the Mossville engine plant, built after World War II; and the Morton parts facility.

The Caterpillar Defence Products subsidiary, headquartered in Shrewsbury, Shropshire, provides diesel engines, automatic transmissions and other parts for the UK's Titan and Trojan engineer tanks, Terrier combat engineer vehicles, and tank transporters; the Romanian MLI-84 armored personnel carrier and the Swiss Piranha III light armored vehicle, which is currently being developed for American light armored formations; large fleets of military trucks in both the US and UK; and the CV90 family of infantry fighting vehicles used by the armies of Sweden, Norway, Finland, Switzerland, the Netherlands and Denmark.

Caterpillar Defence Products also provides both propulsion engines and power generation systems to the naval shipbuilding industry, supplying the Series 3512B turbocharged V-12 diesel engine for the American Virginia-class nuclear submarines, and supplying the diesel engine for the San Antonio-class amphibious transport docks; the Spanish Alvaro de Bazán-class frigates; the British River-class offshore patrol vessels; the Malaysian A-100 type offshore patrol vessels; and the Mexican Justo Sierra Mendez-class gunships.[4]

The Russian Caterpillar facility was completed in 16 months and occupied in November of 1999. It had the first electrical substation built in the Leningrad Oblast since the Communist government was dissolved on December 26, 1991. The facility was built under harsh winter conditions, where the temperature was below -25°C.

Employment

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Caterpillar's worldwide employment was 96,315 at the end of the second quarter 2007, up 4,001, or 4 percent, from second quarter 2006. Of the increase, about 1,000 were the result of acquisitions, about 2,000 were salaried and management employees and 1,000 were hourly employees.[5]

According to a 2001 article in the Nashville Business Journal, 60% of Caterpillar's employees work outside the United States.[6]

Controversies

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Labor problems

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Caterpillar almost went under in the early 1980s, at one point losing almost $1 million per day due to a sharp downturn in product demand as competition with Japanese rival Komatsu (who at the time used the slogan "encircle Caterpillar"[7]) heated up. The company also suffered when President Ronald Reagan declared an embargo against the Soviet Union after they invaded Afghanistan, causing the company to be unable to sell millions of dollars worth of pipelaying equipment it had already built. The impact of the embargo on the company was about $400 million.[8]

The results were layoffs and massive labor union strikes, primarily by the United Auto Workers at plants in Illinois and Pennsylvania. Several news reports at the time indicated that products were piling up so high in facilities that temporary workers hired to work the lines could barely make their way to their work stations. Caterpillar suffered another long labor disagreement in the 1990s, in which the company hired what it termed "permanent replacements" for locked out union workers.

Caterpillar's response to these conflicts with the union was to "farm out" much of its parts production and warehouse work to outside firms: rather than fighting the union, Caterpillar has made itself less vulnerable to the union. Caterpillar also made effective use of office workers during the disputes, suspending research and development work to send thousands of engineers into their factories.

Caterpillar also embarked on its "southern strategy", opening new small plants ("focus facilities") in right to work states such as North Carolina (Clayton and Sanford), South Carolina (Greenville), Mississippi (Corinth), Missouri (Boonville), Tennessee (Dyersburg), and Georgia (Griffin and LaGrange). This has cost nearly 20,000 high-wage union jobs in the Peoria, Illinois area, but overall employment has increased and Caterpillar has survived and grown stronger.

Not long after the 1990s situation was resolved and the economy started to pick up again, Caterpillar adopted the "6 Sigma" quality management program, so as to reduce costs and inventory, and identify and correct defects in the company's processes and products.

Environmental Record

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Caterpillar Inc. is helping the environment by creating the world’s largest coal mine methane plant.[9] Methane is a greenhouse gas that eventually could be used as a clean energy source.[10] They landed a contract with China and plan to provide 60 methane gas powered generators and produce 120 megawatts of power at the Sihe Coal Mine in Jincheng City, Shanxi province.[11] They say that the project with improve the environment, economy, and mine safety.[12] Also increase trade between the United States and China.[13] The project is to improve methane gas ventilation at the mine site and create an environmentally friendly fuel source to generate electricity.[14] William Wehrum, EPA acting assistant administrator for Air and Radiation states that “Pollution knows no political boundaries and in the U.S., we recognize that our environmental responsibility does not stop at our borders.” [15] The partnership with Asia- Pacific also promotes energy security, cuts in air pollution and the reduction of global greenhouse gas emissions.[16]Caterpillar Inc. also feels it is important to concentrate on the climate within our environment.[17] The Climate Leaders program will allow Caterpillar to develop a global approach in reducing greenhouse gasses, preserve, and protect our environment.[18]Caterpillar Inc. also created a type of spray coating for its trucks replacing the chroming process.[19] By doing so this reduces hazardous waste by 700,000 pounds annually and save 14 million gallons of water.[20] In general this process is environmentally friendly over spraying the trucks with chrome.[21]



Environment: Caterpillar has been criticized by many environmental groups. Products produced by the company include forestry equipment, mining equipment, and diesel engines. While providing higher fuel efficiency than gasoline engines, diesel engines usually produce higher levels of NOx and particulates.

In July, 1999, Caterpillar, along with five other diesel engine companies, signed a consent decree with the Justice Department and the State of California, after governmental investigations had revealed violations of the Clean Air Act, in the form of the sale of over a million diesel engines with "defeat devices," devices designed to regulate emissions during pre-sale tests, but to shut down during subsequent highway driving. Consequently, these engines, "emit up to triple the permissible level of smog-forming nitrogen oxides (NOx). In 1998 alone, these violating vehicles emitted 1.3 million tons of additional NOx – an amount equal to the emissions of 65 million cars."[22] The consent decree provided that $83 million be paid in civil penalties and determined new deadlines for meeting emissions standards. Caterpillar, however, was successful in lobbying for an extension of deadlines they considered too severe. Even so, in October, 2002, Caterpillar – the only diesel engine company (of those that signed decrees) to fail to meet the new emissions standards deadline – was forced to pay $128 million in per-engine non-conformance penalties.[23]

In 2004, the company came out with ACERT diesel engines that exceed federal guidelines for emission standards.[24] In 2007, Caterpillar released a second generation of ACERT to meet even stricter standards.[25]

Caterpillar actively[26] participates in initiatives such as the United States Environmental Protection Agency's National Clean Diesel Campaign program, which encourages retrofitting fleets of older buses and trucks with newer diesel engines that meet higher emissions standards.[27]

In 2005, Cat expressed a strong commitment to sustainability in its annual report's "letter to shareholders" and announced plans to publish an annual sustainability report.[28]

In 2005, Caterpillar donated $12 million dollars to The Nature Conservancy in a joint effort to protect and preserve river systems in Brazil, USA, and China.[29]

In recent years Caterpillar has expanded in the remanufacturing area. In 2006 they acquired Progress Rail Services Corporation, a provider of remanufactured locomotive and railcar products and services to the North American railroad industry. In 2007, they acquired Eurenov S.A.S., a remanufacturer of engines, transmissions and components for leading European automotive manufacturers.

In 2006, the company issued its first annual sustainability report, touting its remanufacturing, recycling, and environmental projects around the world. This report can be found on their website.

Caterpillar has, for many years, been a member of the World Business Council for Sustainable Development based in Geneva, Switzerland.[30]

Caterpillar has been listed on the Dow Jones Sustainability World Index each year since 2001.[31]

Israeli military sales and conversions

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Israel Defense Forces armored Caterpillar D9L (right) and D9N (left) bulldozers

Caterpillar equipment, especially the D9 bulldozer, has been equipped with armor and military equipment by third parties, and used as a combat engineering vehicle. Caterpillar has been criticized by activists for selling its equipment to Israel, which has used it in the destruction of Palestinian homes.[32][33]

A shareholder motion to examine the issue has been brought repeatedly by socially responsible investors at Caterpillar's annual meetings. In recommending a vote against the motion, Caterpillar's board stated, "Caterpillar shares the world's concern over unrest in the Middle East and we certainly have compassion for all those affected by the political strife. However, more than two million Caterpillar machines and engines are at work in virtually every country of the world each day. We have neither the legal right nor the means to police individual use of that equipment. We believe any comments on political conflict in the region are best left to our governmental leaders who have the ability to impact action and advance the peace process." The motion received 4% of shareholder support at the 2004 annual meeting.[34]

The family of Rachel Corrie, an American who was inadvertently killed by a Caterpillar tractor while protesting Israeli military action in Gaza, sued Caterpillar alleging it violated human rights and committed war crimes by knowingly selling its equipment to the Israeli army. Four Palestinians whose homes were bulldozed were also named plaintiffs.[35] An Israeli government investigation found that the bulldozer team was clearing debris to uncover smuggling tunnels, not destroying homes, and that the operator did not see Corrie.[36]

The suit was dismissed by a U.S. District Court judge in Tacoma in 2005.[37] The dismissal was upheld on appeal to the San Francisco-based 9th U.S. Circuit Court of Appeals on September 17, 2007, saying it is not the court's role to criticize foreign policy. "The executive branch has made a policy determination that Israel should purchase Caterpillar bulldozers," the appeals court decision stated. "A court could not find in favor of the plaintiffs without implicitly questioning, and even condemning, United States foreign policy toward Israel."[38]

Notable products

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Cat 365B demolition vehicle in action

Caterpillar has a list of some 400 products for purchase through its dealer network. Of those, these are some of the more well known and notable:

Caterpillar is the world's largest manufacturer of wheel loaders. The medium size (MWL) and large size (LWL) are designed at the Aurora, Illinois facility. Medium wheel loaders are manufactured at: Aurora, Illinois, USA; Sagamihara, Kanagawa, Japan; Gosselies, Charleroi, Belgium; Piracicaba, São Paulo, Brazil;[39] and the People's Republic of China. Large wheel loaders are manufactured at Aurora, Illinois exclusively, on three assembly lines.

Caterpillar Electronics business unit has formed a joint venture with Trimble Navigation called as Caterpillar Trimble Control Technologies LLC.,(CTCT). The 50:50 joint venture is to develop the next generation of advanced electronic guidance and control products for earthmoving machines in the construction, mining and waste industries. Caterpillar Trimble Control Technologies LLC is based in Dayton, Ohio and started its operations on April 1, 2002.

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References

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  1. ^ a b Microsoft Word - 4Q 07 Cat Inc. Release.doc
  2. ^ http://www.fundinguniverse.com/company-histories/Caterpillar-Inc-Company-History.html
  3. ^ Caterpillar Worldwide Code of Conduct
  4. ^ "Caterpillar Defence Products". Armed Forces - The Defence Suppliers Directory. R & F Defence Publications. Retrieved 2007-08-04.
  5. ^ Microsoft Word - FINAL Caterpillar Inc 2Q Press Release v2.doc
  6. ^ "Execs: Adapt to culture when working internationally". Nashville Business Journal. 2001-02-22. Retrieved 2007-08-05. {{cite web}}: Cite has empty unknown parameter: |1= (help); Unknown parameter |firstname= ignored (help); Unknown parameter |lastname= ignored (help)
  7. ^ commitment | strategy | japanese philosophy
  8. ^ http://www.usaengage.org/archives/studies/append2.html
  9. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  10. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  11. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  12. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  13. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  14. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  15. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  16. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Environment News Service May 22, 2006. Retrieve May 8, 2008
  17. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Climate Leaders May 7, 2008. Retrieved May 8, 2008
  18. ^ http://www.ens-newswire.com/ens/may2006/2006-05-22-09.asp Climate Leaders May 7, 2008. Retrieved May 8, 2008
  19. ^ http://dnr.state.il.us/PUBAFFAIRS/2007/Oct/illinois.html Illinois Department Of Natural Resources October 25, 2007. retrieve May 8, 2008
  20. ^ http://dnr.state.il.us/PUBAFFAIRS/2007/Oct/illinois.html Illinois Department Of Natural Resources October 25, 2007. retrieve May 8, 2008
  21. ^ http://dnr.state.il.us/PUBAFFAIRS/2007/Oct/illinois.html Illinois Department Of Natural Resources October 25, 2007. retrieve May 8, 2008
  22. ^ "Six Diesel Engine Companies". Clean Air Villain of the Month. Clean Air Trust. 2000-08-01. Retrieved 2007-08-05. {{cite web}}: Check date values in: |date= (help)
  23. ^ "Justice Department Announces FY2003 Record Year For Recovery Of Civil Penalties In Environmental Cases". United States Department of Justice. 2003-12-16. Retrieved 2007-08-05.
  24. ^ "Caterpillar Brings Engines with ACERT Technology to Off-Road Machines". Caterpillar Inc. Retrieved 2007-08-05.
  25. ^ "Caterpillar demonstrates 2007 compliant on-highway engine". Pit & Quarry. Retrieved 2007-08-31.
  26. ^ "Diesel Engine School Bus Retrofit Technology Workshop, Baltimore, MD, [[April 29]], [[2004]]". Maryland Department of the Environment. Retrieved 2007-08-31. {{cite web}}: URL–wikilink conflict (help)
  27. ^ "Cat backs plan to cut school bus emissions". Trailer/Body Builders. Retrieved 2007-08-31.
  28. ^ "Cat Annual Report 2005" (PDF). Caterpillar Inc. Retrieved 2007-08-31.
  29. ^ "$12 Million from Caterpillar Inc. to The Nature Conservancy Launches Ambitious Global Freshwater River Project and Establishes a Great Rivers Center". The Nature Conservancy. Retrieved 2007-08-31.
  30. ^ "WBCSD member companies". World Business Council for Sustainable Development. 2007-08-03. Retrieved 2007-08-04.
  31. ^ "Dow Jones Sustainability World Index Recognizes Caterpillar's Leadership for the Fifth Consecutive Year". PRNewswire. 2005-09-21. Retrieved 2007-08-31.
  32. ^ Caterpillar digs in on Israeli bulldozer battle Chicago Sun-Times, June 15, 2006 by David Roeder
  33. ^ Caterpillar faces an intifada. Salon.com May 13, 2004
  34. ^ University of Wisconsin System Trust Funds. Caterpillar and Human Rights in Israel December 2004
  35. ^ Roxana Popescu, Seattle Times: Court of Appeals takes up Corrie lawsuit
  36. ^ Caterpillar Escapes Liability For Israeli Bulldozer Operations - September 18, 2007 - The New York Sun
  37. ^ Federal appeals court panel refuses to reinstate lawsuit by family of U.S. activist killed by Israeli bulldozer - International Herald Tribune
  38. ^ Court dismisses suit over Israeli bulldozing | U.S. | Reuters
  39. ^ http://brasil.cat.com
  40. ^ http://www.bandittransamclub.com/Snowman.jpg
  41. ^ "Lipstick (Ascending) on Caterpillar Tracks"
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