Everything about Caterpillar Inc totally explained
Caterpillar Inc. 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
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.
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.
Corporate governance
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
Sales and facilities
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.
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
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.
According to a 2001 article in the
Nashville Business Journal, 60% of Caterpillar's employees work outside the United States.
Controversies
Labor problems
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") 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.
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.
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." 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.
In 2004, the company came out with ACERT diesel engines that exceed federal guidelines for emission standards. In 2007, Caterpillar released a second generation of ACERT to meet even stricter standards.
Caterpillar actively 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.
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.
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.
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.
Caterpillar has been listed on the Dow Jones Sustainability World Index each year since 2001.
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.
Caterpillar divisions have won Illinois Governor's Pollution Prevention Awards every year since 1998.
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 wouldn't 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.
Israeli military sales and conversions
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.
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.
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. An Israeli government investigation claimed that the bulldozer team was clearing debris to uncover smuggling tunnels, not destroying homes, and that the operator didn't see Corrie.
The suit was dismissed by a U.S. District Court judge in Tacoma in 2005. The dismissal was upheld on appeal to the San Francisco-based 9th U.S. Circuit Court of Appeals on
September 17,
2007, saying it isn't 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 couldn't find in favor of the plaintiffs without implicitly questioning, and even condemning, United States foreign policy toward Israel."
Notable products
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:
Track-type tractors (bulldozers)
Excavators
Loaders
Trucks
Rollers
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; 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.
References in popular culture
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".
"Lipstick (Ascending) on Caterpillar Tracks" Sculpture (1969) by Swedish sculptor Claes Oldenburg
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..."
Sponsor of the number 22 Caterpillar Toyota Camry driven by Dave Blaney for Bill Davis Racing (NASCAR)
Sponsor the Top Fuel Dragster driven by Rod Fuller (NHRA)Further Information
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