How Caterpillar’s Big Bet Backfired
Doug Oberhelman spent his first years as Caterpillar Inc.’s chief executive plowing billions of dollars into factories to build more of its familiar yellow machines and move the company deeper into mining equipment. Mr. Oberhelman bet he could grab an outsize share if he could just make more equipment. He spent almost $10 billion world-wide on plants and equipment from 2010 through 2013. Caterpillar said Monday that Mr. Oberhelman would be succeeded as chief executive by Jim Umpleby, a company group president and 35-year veteran. Caterpillar chiefs by tradition haven’t stayed beyond age 65, which suggests Mr. Oberhelman is leaving ahead of schedule. Mr. Oberhelman will remain as executive chairman of Caterpillar until March 31, when he will retire from the company. Caterpillar has reduced its workforce 20% in the past four years, about 30,000 jobs, and has said it expected to close or consolidate as many as 20 plants. In China, Caterpillar said, it has closed one plant and is operating many others at low production rates. Caterpillar in August said it would sell off some of the mining-equipment lines it gained with the Bucyrus acquisition. His strategy was to expand Caterpillar’s dominance into the developing world. In particular, he set sights on markets such as Brazil and China where mining and infrastructure construction were running full tilt. Meanwhile, strong crude prices were driving sales of oil-field-related equipment, especially in North America.
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