Caterpillar Inc.

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 range of Caterpillar bulldozers.

Caterpillar is one of the thirty companies whose stock is tracked in the Dow Jones Industrial Average. It is a Fortune 500 company, ranked number 50 in 2008,^[2] and first in its industry, with more than $30 billion in assets.^[3]

History

Two Holt 45 gas crawler tractors team up to pull a long wagon train in the Mojave Desert during construction of the Los Angeles Aqueduct in 1909

Caterpillar D2 on display in the Serpentine Vintage Tractor Museum, Serpentine, Western Australia

The story of Caterpillar Inc. originates in the late 19^th 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 soil, especially after heavy rains. Once stuck in the mire, they were difficult to pull free, even with teams of horses. Their great weight typically rested on four metal wheels.

One solution employed to alleviate this problem was to lay a temporary plank road ahead of the steam tractor, but this was time-consuming, expensive, and interfered with earthmoving. Holt came up with the idea to 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 the abandoned but relatively new manufacturing plant of a tractor company that had failed in East 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, in addition to their domestic sales.^[4] The Holt Manufacturing Company later pioneered the use of the continuous track during World War I. Their crawler tractors inspired the first military tanks, which helped end World War I.

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 Great Depression of the 1930s.

After the companies merged, Caterpillar went through many changes, including the adoption of the diesel engine. During World War II, Caterpillar products found fame with the Seabees, Construction Battalions of the United States Navy, who built airfields and other facilities in the Pacific Theater of Operations. During the post-war construction boom, 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.

Acquisitions

In addition to increasing sales of its core products, much of Caterpillars growth has been through acquisitions, including:

Business lines

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 also licenses or subcontracts the manufacture of Caterpillar-branded clothing, hats, footwear, and other consumer products.

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.

Vehicles

Caterpillar D350D Articulated Off Road Truck

Caterpillar has a list of some 400 products for purchase through its dealer network. Caterpillar's line of vehicles range from tracked tractors to hydraulic excavators, backhoe loaders, motor graders, off-highway trucks, wheel loaders, and agricultural tractors. They are used in construction, road-building, mining, forestry, energy, transportation and material-handling industries.

Cat 365B demolition vehicle in action

Caterpillar is the world's largest manufacturer of wheel loaders. The medium size (MWL) and large size (LWL) are designed at their Aurora, Illinois facility. Medium wheel loaders are manufactured at: Aurora, Illinois, USA; Sagamihara, Kanagawa, Japan; Gosselies, Charleroi, Belgium; Piracicaba, São Paulo, Brazil;^[26] India and the People's Republic of China. Large wheel loaders are manufactured exclusively on three assembly lines at Aurora, Illinois.

Some of the company's current and historic vehicles include:

Engines

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

A portion of CAT's business is in the manufacturing of diesel and natural gas engines and gas turbines, which, in addition to their use in the company's own vehicles, are used as the prime movers in locomotives, semi trucks, and ships, as well as providing the power source for peak-load power plants and emergency generators.

Caterpillar Defence Products

The Caterpillar Defence Products subsidiary, headquartered in Shrewsbury, Shropshire, provides diesel engines, automatic transmissions and other parts for the UK's Titan armored bridge layer, Trojan combat engineering tank, Terrier combat engineering 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 use by 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.

This division also provides both propulsion engines and power generation systems to the naval shipbuilding industry, such as the Series 3512B turbocharged V-12 diesel engine for American Virginia class nuclear submarines. Caterpillar diesel engines are also used in San Antonio class amphibious transport docks, Spanish Alvaro de Bazán class frigates, British River class patrol vessels, Mexican Sierra class patrol boats,^[27] and Malaysian Kedah class MEKO A-100 offshore patrol vessels.^[28]

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.

Caterpillar Electronics

The Caterpillar Electronics business unit has formed Caterpillar Trimble Control Technologies LLC.,(CTCT), a 50:50 joint venture with Trimble Navigation 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.

Management

Caterpillar has a corporate governance structure where the Chairman of the board also acts as Chief Executive Officer (CEO). The Board of Directors is fully independent and is made up of non-employee directors selected from outside the company. 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 the corporate standard for honesty and ethical behavior. Management employees are retested on this code annually.

Current board of directors

In the 1990s, Caterpillar management adopted the Six Sigma quality management programme in an effort to reduce costs and inventory, and identify and correct defects in the company's processes and products.

Employment

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.^[29] Due to restructuring of business operations, the decades since the 1990s have seen the elimination of 20,000 high-wage union jobs in the Peoria, Illinois area, while employment has increased due to the use of more non-US and nonunion labor.

According to a 2001 article in the Nashville Business Journal, 60% of Caterpillar's employees work outside the United States.^[30]

Labor problems

Caterpillar came close to bankruptcy 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 internal slogan "encircle Caterpillar"^[31]) 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.^[32]

The results were layoffs and massive labor union strikes, primarily by the United Auto Workers against 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, locking out union workers in the 1990s and hiring what it termed "permanent replacements."

Caterpillar's response to these labor conflicts 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 tools traditionally available to organized workers. Caterpillar also made effective use of office staff during the disputes, suspending research and development work to send thousands of engineers and others into their factories to fill in for striking or locked out union members.

Caterpillar also embarked on its "southern strategy," opening new small plants, termed "focus facilities", in right to work states such as North Carolina (Clayton and Sanford), South Carolina (Greenville), Mississippi (Corinth), Tennessee (Dyersburg), and Georgia (Griffin and LaGrange), where labor laws provide fewer protections for workers seeking to organize.

Notable achievements and controversies

Caterpillar has been involved in a number of "firsts." The crawler tractor that inspired the first military tanks, which helped end World War I were based on a track design that Benjamin Holt bought the patents to from Richard Hornsby & Sons of England.^[33] Their machines helped build the Hoover Dam, the U.S. Interstate highway system, the Channel Tunnel under the English Channel, and construct cities and neighborhoods across the United States. Caterpillar equipment helped to tumble the Berlin Wall but also to build the United States–Mexico border and Israeli West Bank border barriers.

Excellent Company designation

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 Code of Worldwide Business Conduct document that stresses integrity in every action.^[34]

Environmental impacts

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 manufacturers, 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 disable themselves in favor of better performance 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." For this reason, Caterpillar was named the "Clean Air Villain of the Month" for August 2000 by the Clean Air Trust.^[35] 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.^[36]

In 2004, the company came out with ACERT diesel engines that exceed federal guidelines for emission standards.^[37] In 2007, Caterpillar released a second generation of ACERT to meet even stricter standards.^[38]

Caterpillar actively^[39] 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.^[40]

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.^[41]

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.^[42]

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.^[43]

Caterpillar has been listed on the Dow Jones Sustainability World Index each year since 2001.^[44]

An example of how Caterpillar is helping the environment is by creating the world’s largest coal mine methane plant. Methane is a greenhouse gas that eventually could be used as a clean energy source. Caterpillar contracted with China to provide 60 methane gas powered generators and produce 120 megawatts of power at the Sihe Coal Mine in Jincheng City, Shanxi province. The project will improve methane gas ventilation at the mine site and create an environmentally friendly fuel source to generate electricity.^[45][46]

Caterpillar divisions have won Illinois Governor's Pollution Prevention Awards every year since 1998.^[47]

Caterpillar was awarded the 2007 Illinois Governor's Pollution Prevention Award for three projects: The Hydraulics and Hydraulic Systems business unit in Joliet implemented a flame sprayed coating for its truck suspension system, replacing a chroming process, reducing hazardous waste by 700,000 pounds annually and saving 14 million gallons of water. Caterpillar's Cast Metals Organization in Mapleton worked with the American Foundry Society to help produce a rule to reduce hazardous waste in scrap metal that would not only meet strict quality requirements, but would allow foundries to continue to recycle certain types of scrap and maintain a competitive cost structure. Caterpillar's Mossville Engine Center formed a team to look at used oil re-use and recycle processes that forced MEC to send large amounts of used oil off-site for recycling, and developed an updated system for reclaiming it for re-use on-site. The resulting benefits included a usage reduction of about 208,000 gallons of oil per year.^[48]

Israeli military sales and conversions

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.^[49][50]

Caterpillar D10N at work near Rishon LeZion,Israel.

A shareholder motion to examine the issue has been brought repeatedly at Caterpillar's annual meetings by investors opposed to Israeli policy. 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.^[51]

The family of Rachel Corrie, an American who was 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 joined her as plaintiffs.^[52] An Israeli government investigation claimed that the bulldozer team was clearing debris to uncover smuggling tunnels, not destroying homes, and that the operator did not see Corrie.^[53]

The suit was dismissed by a U.S. District Court judge in Tacoma in 2005.^[54] 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."^[55]

References in popular culture

• Earthworm Tractors^[56] 1936 movie based on stories in The Saturday Evening Post, is based on Caterpillar and premiered in Peoria
• The Fighting Seabees Movie starring John Wayne, Navy Seabees (construction battalions) use Caterpillar tractors during World War II
• The Grapes of Wrath Book by John Steinbeck
• The Grapes of Wrath Film, screenplay by Nunnally Johnson: "They come. They come and pushed me off. They come with the cats ... the Caterpillar tractors."
• Smokey and the Bandit: Movie, the character "Snowman" wears a "Cat Diesel Power" hat in his role as a "typical southern trucker".^[57]
• "Lipstick (Ascending) on Caterpillar Tracks" Sculpture (1969) by Swedish sculptor Claes Oldenburg^[58]
• The Monkey Wrench Gang Book by Edward Abbey: "They crawled all over a Caterpillar D-9A, world's greatest bulldozer, the idol of all highwaymen. Put so much sand in the crankcase..."
• Black Dog (film) Movie: "Ain't nothing like a Caterpillar engine..."
• From 1999 until 2008 they sponsored the various cars of Bill Davis Racing, scoring four wins, including two majors (2001 Mountain Dew Southern 500, 2002 Daytona 500). Beginning in 2009, the sponsorship will move to Richard Childress Racing's 31 car, driven by Jeff Burton. Ironically, it was Burton's brother Ward who scored all four of Caterpillar's NASCAR wins, including the two majors. Burton needs only to win the two restrictor-plate majors to finish off a Career Grand Slam.^[59]
• Sponsor the Top Fuel Dragster driven by Rod Fuller (NHRA)
• As of the 2008/09 Guinness Premiership Rugby season (UK), Caterpillar Inc. are the official shirt sponsors of Leicester Tigers RUFC.

See also

• G-numbers, U.S. Army cats.

References

External links

• Official Caterpillar website
  • Company History
  • Engine Development
  • North American Dealer Network
  • Westrac: One of the world's largest Caterpillar dealers
  • Customize a Caterpillar Machine
• Antique Caterpillar Machinery Owners Club
• Antique Caterpillar Machinery Enthusiasts
• http://mailer.fsu.edu/~akirk/tanks/UnitedStates/unarmored-halftracks/unarmored-half-tracks.html early holt pictures

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