Caterpillar
Caterpillar Inc., commonly CAT, is an American manufacturer of construction, mining and other engineering equipment. It is the largest manufacturer of construction equipment in the world.
| Caterpillar Inc. | |
|---|---|
| Type | Public |
| Traded as | NYSE: CAT |
| Industry | Heavy equipment, engines, financial services |
| Founded | 1925, by merger of Holt Manufacturing Company and C. L. Best Tractor Company |
| Founder | Benjamin Holt, Clarence Leo Best |
| Headquarters | Irving, Texas, United States |
| Area served | Worldwide |
| Key people | Jim Umpleby (executive chairman), Joe Creed (CEO) |
| Products | Excavators, wheel loaders, bulldozers, motor graders, off-highway trucks, diesel and gas engines, turbines, locomotives |
| Services | Cat Financial, dealer support, remanufacturing |
| Subsidiaries | Perkins Engines, Progress Rail, Solar Turbines, SEM, Cat Financial |
| Website | caterpillar.com |
In 2018 Caterpillar ranked 73rd on the Fortune 500 and 265th on the Global Fortune 500. Its stock is a component of the Dow Jones Industrial Average.
The company traces its origins to the 1925 merger of the Holt Manufacturing Company and the C. L. Best Tractor Company, which created the California-based Caterpillar Tractor Company. In 1986 it reorganised as a Delaware corporation under the present name. It announced in January 2017 that it would move its headquarters from Peoria, Illinois to Deerfield, Illinois, abandoning a 2015 plan to build an 800 million dollar complex in downtown Peoria, and has been headquartered in Irving, Texas since 2022.
Caterpillar also licenses and markets clothing and workwear boots under the Cat name, and licensed the Cat brand of rugged mobile phones from 2012 to 2024. Its machinery is recognisable by the trademarked Caterpillar Yellow livery and the CAT logo, one of the most widely recognised industrial brands in the world.
History
Origins in the San Joaquin Delta
The company's roots lie in the steam tractors built by the Holt Manufacturing Company from 1890. These machines were extremely heavy, sometimes weighing 1,000 pounds per horsepower, and sank into the soft peat soil of the San Joaquin Valley delta farmland around Stockton, California.
Benjamin Holt first attempted to solve the problem by enlarging the wheels, increasing them to 7.5 feet tall and 6 feet wide and producing a tractor 46 feet across. The approach made the machines steadily more complex, expensive and difficult to maintain without solving the underlying difficulty, which was ground pressure rather than wheel size.
Another solution considered was to lay a temporary plank road ahead of the tractor, but this was slow, costly and interfered with the earthmoving work itself. Holt's insight was to wrap the planks around the wheels. He replaced the wheels of a 40 horsepower Holt steamer, number 77, with wooden tracks bolted to chains, and on Thanksgiving Day, 24 November 1904, successfully tested the machine ploughing the wet ground of Roberts Island.
Holt received the first patent for a practical continuous track for use with a tractor on 7 December 1907, covering an improvement in vehicles, and especially of the traction engine class, including endless travelling platform supports upon which the engine is carried.
The Hornsby patent and the name
Contemporaneously, Richard Hornsby and Sons of Grantham, Lincolnshire, developed a steel plate-tracked vehicle patented in 1904. It was the first tracked machine steered by differential braking of the tracks, dispensing with the forward tiller and steering wheel. Several were built and sold for service in the Yukon, one of which remained in operation until 1927. Hornsby found only a limited market and sold the patent to Holt five years after its development.
The name arose from an observation by the company photographer Charles Clements, who, looking at the inverted image through his camera lens, remarked that the track rising and falling over the carrier rollers resembled a caterpillar. Holt adopted the metaphor immediately. Some sources instead attribute the name to British soldiers who watched trials of the Hornsby tractor in July 1907.
Two years later Holt sold his first steam-powered tracked tractors at 5,500 dollars each, approximately 185,000 dollars in 2024 terms. Each side carried a track frame 30 inches high, 42 inches wide and 9 feet long, with tracks made of redwood slats three inches by four inches.
Move to Peoria
On 2 February 1910 Holt opened a plant at East Peoria, Illinois, led by his nephew Pliny Holt. Pliny had met the farm implement dealer Murray Baker, who knew of an empty factory recently built to manufacture farm implements and steam traction engines. Baker, later the first executive vice president of the Caterpillar Tractor Company, wrote to the Holt headquarters in Stockton describing the plant of the bankrupt Colean Manufacturing Company.
Pliny Holt bought the factory on 25 October 1909 and began operations with twelve employees, incorporating it as the Holt Caterpillar Company, although the Caterpillar name was not trademarked until 2 August 1910.
The Midwestern plant, despite the capital required to retool it, proved so profitable that within two years the company employed 625 people and was exporting tractors to Argentina, Canada and Mexico, with production continuing at both Stockton and East Peoria. The move placed the company at the centre of the American agricultural market and near the steel and coal of the industrial Midwest, and Peoria remained its home for more than a century.
The First World War
Holt tracked tractors played a substantial support role in the First World War. Even before the United States formally entered the conflict, Holt had shipped 1,200 tractors to England, France and Russia nominally for agricultural purposes. Those governments sent them directly to the front, where they were used to haul artillery and supplies.
When war broke out the British War Office ordered a Holt tractor and tested it at Aldershot. Sufficiently impressed, it selected the machine as a gun tractor, and over the following four years the Holt became a principal artillery tractor, hauling medium guns including the six-inch howitzer, the 60-pounder and later the 9.2-inch howitzer, over ground that no wheeled vehicle could cross.
Holt tractors also inspired the development of the tank. Major Ernest Swinton, sent to France as an army war correspondent, quickly recognised the potential of a track-laying vehicle. Although Britain chose an English firm, William Foster and Company of Lincoln, to build its first tanks, and although that firm had collaborated with Hornsby on the 1907 demonstrations by providing paraffin engines, the Holt tractor has been described as one of the most important military vehicles of all time for the tactical change it prompted.
Postwar difficulty
Military contracts had come to form the major part of Holt's production, and the end of the war terminated the company's planned expansion abruptly. The heavy machines the army required were unsuitable for farmers, and the position worsened as artillery tractors returned from Europe and depressed prices for new equipment alongside Holt's unsold military inventory. The company borrowed heavily to stay afloat.
Its principal competitor, the C. L. Best Gas Tractor Company formed by Clarence Leo Best in 1910, had received government support during the war that allowed it to continue supplying farmers with the smaller agricultural machines they wanted, and it emerged with a considerable market advantage. Best had also taken on substantial debt to fund expansion, particularly of its new Model 60 Tracklayer.
Both companies were damaged by the transition from wartime to peacetime economy and by the national depression that followed. Benjamin Holt died on 5 December 1920 at the age of 71 after a month-long illness.
Formation of Caterpillar, 1925
The banks holding Holt's debt forced the board to accept their candidate, Thomas A. Baxter, as Holt's successor. Baxter cut the large tractors from the range and introduced smaller agricultural models, and when the Federal Aid Highway Act of 1921 funded a one billion dollar federal road programme he began redirecting the company toward road construction equipment, a market that would prove far larger and more durable than agriculture. Both companies meanwhile faced fierce competition from Fordson.
Between 1907 and 1918 Best and Holt had spent about 1.5 million dollars in legal fees litigating contractual, trademark and patent disputes against one another. Harry H. Fair, of the San Francisco bond brokerage Pierce, Fair and Company, had helped finance Best's debt, and when Holt shareholders approached him about their difficulties he recommended that the two merge.
In April and May 1925 the financially stronger C. L. Best merged with the market leader Holt Caterpillar to form the Caterpillar Tractor Company. The new business was headquartered at San Leandro until 1930, when under the terms of the merger it moved to Peoria. Baxter had been removed as chief executive earlier in 1925, and Clarence Leo Best took the role, holding it until October 1951.
The merged company consolidated its ranges to five tracked tractors: the 2 Ton, 5 Ton and 10 Ton from the Holt line and the Caterpillar 30 and Caterpillar 60 from Best. The 10 Ton and 5 Ton were discontinued in 1926 and the 2 Ton in 1928. First-year sales were 13 million dollars, rising to 52.8 million dollars by 1929, and the company continued to grow through the Great Depression, when federal public works spending sustained demand for earthmoving equipment even as private construction collapsed.
Diesel, the Second World War and internationalisation
Caterpillar adopted the diesel engine in place of petrol during the 1930s, a decision that proved decisive: diesel offered greater torque at low speed, better fuel economy and lower fire risk, and it became the standard for heavy equipment worldwide.
During the Second World War Caterpillar machines became closely associated with the Seabees, the construction battalions of the United States Navy, which built airfields and other facilities across the Pacific theatre. The company ranked 44th among American corporations by the value of wartime military production contracts, and the global exposure of its equipment during the war laid the basis for its postwar export position.
During the postwar construction boom the company grew rapidly, and in 1950 established its first venture outside the United States, marking the beginning of its development into a multinational corporation.
The crisis of the 1980s
The early 1980s produced the most severe crisis in Caterpillar's history since its formation. A global recession, high interest rates, the collapse of the Latin American debt-financed construction market and a strong dollar that made American exports uncompetitive coincided with the arrival of a formidable competitor.
Komatsu of Japan had adopted an explicit corporate goal, summarised internally in the slogan Maru-C, meaning encircle Caterpillar. Assisted by a favourable exchange rate, it undercut Caterpillar prices substantially in export markets while improving quality, and took share across Asia, the Middle East and eventually North America.
Caterpillar lost approximately one billion dollars over three years from 1982 to 1984 and cut its workforce by tens of thousands. The response was a comprehensive restructuring known within the company as Plant With A Future, a programme begun in 1986 that spent roughly 1.8 billion dollars modernising factories, introducing flexible manufacturing cells, reducing inventory and shortening production cycles.
The company simultaneously broadened its range into smaller machines to compete in segments it had previously ignored, strengthened the dealer network and expanded the parts and service business. The combination of currency realignment after the Plaza Accord, which weakened the dollar against the yen, and the internal restructuring restored profitability by the end of the decade, and the episode became a standard case study in American business education on the response of an incumbent to a determined foreign challenger.
Notable machines
Several Caterpillar products have become reference points in their categories.
The Caterpillar Sixty, inherited from C. L. Best at the 1925 merger, was the machine that established the company's reputation in heavy agricultural and construction work, and surviving examples are extensively collected.
The D8, introduced in 1935 and produced in successive generations ever since, became the standard large bulldozer of the twentieth century, used in the construction of highways, dams and airfields across the world and in military engineering in every major conflict from the Second World War onward.
The D9, a larger machine introduced in 1955, is widely used in mining and heavy earthmoving and, in armoured form, in military engineering, the application that has made it the focus of political controversy.
The 797 mining truck, introduced in 1998 and produced in successive versions, is among the largest off-highway trucks in production, with payload capacity of approximately 400 tonnes, powered by an engine of more than 4,000 horsepower and standing more than seven metres tall.
The 336 and 320 hydraulic excavators are the volume products of the construction range, and the 950 wheel loader and 140 motor grader occupy comparable positions in their categories.
Headquarters moves
On 31 January 2017 the company announced that it would move its headquarters from Peoria to Deerfield, Illinois, by the end of that year, to a site at 500 Lake Cook Road formerly occupied by a Fiatallis plant that had manufactured wheel loaders. The decision abandoned a plan announced in 2015 for an 800 million dollar headquarters complex in downtown Peoria and was received badly in a city where the company had been the dominant employer for generations.
On 14 June 2022 Caterpillar announced a further move of its global headquarters from Deerfield to Irving, Texas, citing the best strategic interest of the company. Manufacturing and engineering operations remained in Illinois.
In 2018 the company was restructuring, closing a demonstration centre in Panama and an engine manufacturing facility in Illinois.
International operations
Russia
Caterpillar built its first Russian facility at Tosno near St Petersburg, completed in sixteen months, occupied in November 1999 and producing machine components from 2000. It included the first electrical substation built in Leningrad Oblast since the dissolution of the Soviet government on 26 December 1991. Construction took place in temperatures below minus 13 degrees Fahrenheit and was managed by the Lemminkäinen Group of Helsinki.
Production at Tosno stopped in May 2022 following the Russian invasion of Ukraine. In November 2023 an agreement was reached to sell Caterpillar's assets to the Russian company PSK New Solutions, founded by former Sberbank personnel. Analysts considered the resumption of Caterpillar production unlikely and expected the plant to be repurposed.
China
The 125 million dollar Caterpillar Suzhou facility manufactures medium wheel loaders and motor graders principally for the Asian market, with first production scheduled for March 2009. Facility construction was managed by URS Ausino of San Francisco. China has been both a substantial market and a source of competition, with domestic manufacturers including Sany, XCMG and Zoomlion taking share in the domestic market and increasingly abroad.
Brazil and India
Caterpillar has manufactured in Brazil since 1960, and in 2010 announced a further expansion of backhoe and small wheel loader production with a new factory. It manufactures machines, engines and generator sets in India at three facilities, in Tamil Nadu at Thiruvallur and Hosur, and in Maharashtra at Aurangabad.
Business lines
Through the 2010 financial year Caterpillar divided its products, services and technologies into three principal lines: machinery, engines, and financial products, sold to private and governmental customers. As of 2022 it reports in four segments: construction industries, resource industries, energy and transportation, and financial products.
Machinery
Caterpillar offers some 400 products through its dealer network, ranging from tracked tractors to hydraulic excavators, backhoe loaders, motor graders, off-highway trucks, wheel loaders, agricultural tractors and locomotives. Its machinery is used in construction, road building, mining, forestry, energy, transportation and material handling.
It is the largest manufacturer of wheel loaders in the world. Small wheel loaders are designed and manufactured at Clayton, North Carolina. Medium and large wheel loaders are designed at Aurora, Illinois. Medium loaders are manufactured at Aurora; Sagamihara in Kanagawa, Japan; Piracicaba in São Paulo, Brazil; India; and China. Large wheel loaders are manufactured exclusively in the United States, on three separate assembly lines at Aurora.
The mining range includes very large off-highway trucks, hydraulic shovels and draglines, much of it derived from the 2011 acquisition of Bucyrus International, which made Caterpillar a full-line supplier to surface and underground mining and placed it in direct competition with Komatsu across every category.
On-road trucks
Caterpillar began selling on-road trucks in 2011 with the Cat CT660, a Class 8 vocational truck. It ceased production of on-highway vocational trucks in March 2016. Ramin Younessi, vice president responsible for the Industrial Power Systems Division, said that remaining a viable competitor would require significant additional investment to develop and launch a complete portfolio of trucks, and that an updated review had found insufficient market opportunity to justify it, adding that truck production had not yet begun in Victoria and that the decision allowed the company to exit before the transition occurred.
Engines and turbines
A substantial part of Caterpillar's business is the manufacture of diesel and natural gas engines and gas turbines, used in its own vehicles and as prime movers in locomotives, heavy trucks, marine vessels and ships, and as power sources for peak-load power plants and emergency generators.
The Caterpillar 3116 engine was used until 1997, when the company introduced the inline six-cylinder 7.2 litre 3126, its first electronic diesel engine for light trucks and buses. Emissions and noise were reduced in the 3126B the following year, and emissions improved further in 2002 with the 3126E, which had a better high-pressure oil pump and improved electronics. In 2003 Caterpillar began selling the C-7, a version designed to meet United States emission standards taking effect in 2004, retaining the overall design of the 3126 but with improved fuel injectors and electronics incorporating its Advanced Combustion Emissions Reduction Technology system. In 2007, as ultra-low-sulphur diesel became required in North America, the C7 was updated with common rail injectors and improved electronics.
In 1998 Caterpillar purchased Perkins Engines of Peterborough, England, a maker of small diesel and petrol engines. Perkins products are branded with the Perkins name for loose and original equipment sales and with the CAT name for engines used within Caterpillar machines.
In June 2008 the company announced that it would leave the on-highway diesel engine market in the United States before revised Environmental Protection Agency standards took effect in 2010, since the costly changes required would apply to a business constituting only a small share of its engine sales.
In October 2010 Caterpillar agreed to buy the German engine manufacturer MWM GmbH from 3i for 810 million dollars. Its Solar Turbines subsidiary manufactures industrial gas turbines used in oil and gas production and power generation, a business that has grown with demand for distributed generation and, more recently, for data centre power.
Financial products
Cat Financial provides retail and wholesale financing for equipment purchases by customers and for dealer inventory, together with insurance. The business is a significant profit contributor and also a strategic instrument, since the availability of finance at the point of sale is frequently decisive in capital equipment purchases and allows Caterpillar to support sales through downturns when bank credit contracts.
Remanufacturing
Cat Reman remanufactures used components to original specification, a substantial business that extends equipment life, supports residual values and provides a lower-cost option for customers. Because heavy machines are rebuilt repeatedly over lives measured in decades, the aftermarket in parts, service and rebuilds generates a large and far more stable stream of earnings than new machine sales, which are highly cyclical.
Acquisitions and divestitures
Much of Caterpillar's growth beyond its core products has come through acquisition.
The purchase of Perkins Engines in 1998 gave it a position in small diesel engines that it had never built organically and made it a supplier to other equipment manufacturers. Solar Turbines, acquired in 1981 from International Harvester, established the industrial gas turbine business now serving oil and gas production, pipeline compression and distributed power generation.
The acquisition of Bucyrus International in 2011 for approximately 8.8 billion dollars was the largest in the company's history and transformed its position in mining. Bucyrus brought electric rope shovels, draglines, and underground longwall systems that Caterpillar did not make, allowing it to supply an entire mine rather than the haulage fleet alone. The timing proved poor: the mining capital cycle peaked shortly afterwards and the company later wrote down a substantial part of the value, but the strategic logic of full-line supply held.
Progress Rail Services, acquired in 2006, and the locomotive manufacturer Electro-Motive Diesel, acquired in 2010, gave Caterpillar a rail business spanning locomotives, track work, signalling and rail services. MWM GmbH, bought from 3i in 2010, added gas engines for distributed generation.
Smaller acquisitions have added specialist capability, including the paving equipment manufacturer Bitelli, the articulated truck business of Blount, and a range of technology companies supplying telematics, autonomy and site management software.
Divestitures have been less frequent but deliberate. Caterpillar has exited businesses it judged unable to earn an adequate return or requiring investment disproportionate to the opportunity, including on-highway vocational trucks in 2016, on-highway diesel engines in the United States in 2008, and its Russian operations in 2023. It sold its forestry products division and has periodically divested logistics and remanufacturing operations serving other manufacturers.
Products in detail
Earthmoving and construction
The tracked bulldozer, descended directly from the original Holt crawler, remains the machine most associated with the company, ranging from compact models to the D11 used in large-scale mining and earthmoving. Hydraulic excavators span mini excavators of a few tonnes to mining shovels weighing several hundred tonnes.
Wheel loaders, motor graders, backhoe loaders, skid steer and compact track loaders, telehandlers and articulated trucks complete the construction range. The backhoe loader, a machine combining a front loader and a rear excavator on a tractor chassis, is the archetypal general-purpose construction machine and a substantial volume product in developing markets.
Mining
The mining range includes off-highway trucks of up to around 400 tonnes payload, electric rope shovels, hydraulic mining shovels, wheel dozers, and underground equipment including longwall systems, continuous miners, roof supports and load-haul-dump vehicles. Large mining trucks are among the most expensive single machines sold in any industry, and their uptime is critical to mine economics, which is why autonomy and condition monitoring were commercialised here first.
Power systems
Caterpillar supplies reciprocating engines from small industrial units to very large marine and generation engines, gas engines under the Cat and MWM brands, and gas turbines through Solar Turbines. Applications include marine propulsion and auxiliary power, locomotives, oil and gas drilling and compression, prime and standby electrical generation, and increasingly data centre backup power, a market that has grown rapidly with the construction of large computing facilities.
Rail
Progress Rail supplies locomotives, freight car and locomotive components, track work, signalling and maintenance services, principally in North America, together with Electro-Motive locomotives sold internationally.
Defence
Caterpillar supplies engines, generator sets and specialised vehicles to armed forces, including armoured variants of construction machines used by military engineers. Defence represents a modest share of revenue relative to the company's civil business.
Caterpillar Financial Services
Cat Financial, established in 1981, provides retail finance and leasing to equipment buyers, wholesale finance to dealers for inventory, and insurance through Cat Insurance. It operates in more than 35 countries and finances a substantial proportion of new Caterpillar equipment sales.
The business serves three purposes. It removes a barrier to purchase for customers whose capital is constrained; it gives Caterpillar visibility of and influence over the used equipment market, since returned lease machines flow back through its dealers; and it provides earnings that are less cyclical than machine sales, though it carries credit risk that rises precisely when the equipment market falls.
Brand and culture
Caterpillar Yellow, the livery applied to almost all its machines, is a registered trademark, adopted in 1931 in place of the grey used previously, chosen for visibility on construction sites and subsequently one of the most recognisable colour associations in industry.
The company's equipment appears widely in toys, models and children's media, and the CAT wordmark, with its distinctive triangular A, is among the most licensed industrial marks in the world. This consumer familiarity is unusual for a business-to-business manufacturer and underpins the footwear and clothing licensing programme.
Caterpillar operates visitor centres and a museum in Peoria, and its demonstration and learning centres in several countries allow customers to operate machines before purchase.
Safety and product liability
Heavy equipment operates in environments where the consequences of failure are severe, and Caterpillar has faced product liability litigation over rollover protection, visibility, quick coupler design and other matters over many decades. Industry-wide standards for rollover and falling object protective structures, blind spot mitigation, and proximity detection have developed substantially, in part in response to such litigation and to regulation by the Occupational Safety and Health Administration and equivalent bodies.
The company has invested in operator assistance technologies including object detection, fatigue monitoring and automated braking, and autonomous haulage has been justified to customers partly on the ground that it removes operators from the most hazardous positions in a mine.
Competition
Caterpillar's principal global competitor is Komatsu of Japan, which competes across construction and mining equipment and has at times led on particular technologies. Other significant competitors include Deere & Company in construction and forestry, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, CNH Industrial and JCB.
The most consequential competitive development of recent decades has been the emergence of Chinese manufacturers, particularly Sany, XCMG and Zoomlion, which built scale in a protected domestic market during China's construction boom and have since expanded into Asia, Africa, Latin America and Europe, competing principally on price. Caterpillar's response has been to emphasise total cost of ownership, residual value, parts availability and dealer support rather than purchase price.
Corporate responsibility
The Caterpillar Foundation, established in 1952, funds programmes in environmental sustainability, education and basic human needs, and has directed substantial funding to water, sanitation and disaster relief work.
The company publishes sustainability reporting covering operational emissions, water use, waste and product stewardship, and has set targets for the reduction of greenhouse gas emissions from its own operations, for increased use of renewable electricity and for growth in remanufacturing and rebuild services, which it presents as a circular economy contribution since a rebuilt machine consumes a fraction of the materials and energy required to make a new one.
Employment
Caterpillar employs approximately 110,000 people worldwide across manufacturing, engineering, services and financial operations. Its largest concentrations are in Illinois, North Carolina, Texas, Georgia and Indiana in the United States, and in the United Kingdom, Brazil, India, China, Japan, France and Mexico.
The workforce has contracted substantially from its peaks during downturns and has shifted geographically over four decades, from a heavy concentration in central Illinois toward a more distributed international footprint, a change that is the source of much of the criticism the company attracts in its historic home region.
Dealer network
Caterpillar sells almost exclusively through independent dealers, many of them family businesses that have held their territories for several generations. The dealers carry inventory, provide field service, hold parts stocks and finance customers alongside Cat Financial.
The network is widely regarded as the company's most durable competitive advantage. Heavy equipment out of service is extremely expensive for its owner, and the ability to deliver a part or an engineer to a remote mine or construction site within hours is worth more to customers than differences in machine specification. Competitors have found the network far harder to replicate than the products themselves.
Brand licensing
Caterpillar licenses its name for footwear and workwear, sold as Cat Footwear, and for a range of clothing. From 2012 to 2024 it licensed the Cat brand for rugged smartphones and mobile phones manufactured by Bullitt Group, which entered administration in 2024.
The licensing programme is unusual among industrial manufacturers in its scale, and reflects a recognition that the brand carries meaning to consumers who will never buy an excavator, associating it with durability and physical work.
Technology
Caterpillar has invested substantially in autonomous and semi-autonomous operation, particularly in mining, where its Cat MineStar system operates fleets of driverless haul trucks that have collectively moved billions of tonnes of material. Autonomy in mining has proved commercially viable earlier than on public roads because sites are private, controlled and repetitive.
Cat Connect telematics transmit machine condition and utilisation data, supporting predictive maintenance and giving the company visibility of the installed base. The company has also developed battery electric versions of several machines and hydrogen and alternative fuel capability for its engines, though the energy density required by large earthmoving equipment makes electrification harder than in road transport.
Financial performance
Caterpillar's results are strongly cyclical, following construction activity, commodity prices and mining capital expenditure. Downturns are severe: the company recorded losses in the early 1980s and again following the commodity contraction after 2012, and reduced its workforce substantially on each occasion.
The aftermarket, financial products and energy businesses have progressively reduced that volatility, and management has for two decades pursued a strategy of raising trough profitability rather than peak, accepting lower highs in exchange for less severe lows. Services revenue has been targeted for growth explicitly on those grounds.
Labour relations
Caterpillar's relationship with the United Auto Workers has been among the most contentious in American industry. A strike beginning in 1991 lasted, across two phases, until 1998, during which the company continued production using replacement workers, managers and crossing employees. The dispute was widely regarded as a turning point in American industrial bargaining, demonstrating that a major manufacturer could withstand a prolonged strike by a powerful union and settle on substantially its own terms.
Subsequent disputes have followed a similar pattern. A 2012 strike at the Joliet, Illinois, hydraulic parts plant ended after more than three months with a contract freezing wages for most workers despite record company profits, and a 2022 agreement was reached after a further strike threat. The company has also shifted production toward lower-cost locations within and outside the United States, and has operated a two-tier wage structure paying new hires less than established employees.
Controversies
Use of equipment in Israel and the Palestinian territories
Caterpillar equipment, particularly armoured D9 bulldozers supplied to Israel, has been used in the demolition of Palestinian homes and in military operations, making the company a long-standing target of divestment campaigns.
The American activist Rachel Corrie was killed by an armoured Caterpillar bulldozer in Rafah in 2003 while attempting to prevent a demolition. Her family brought proceedings against Caterpillar in the United States, which were dismissed on the ground that the sales were made through the United States Foreign Military Sales programme and that adjudicating them would require the court to rule on foreign policy.
Human rights organisations including Human Rights Watch and Amnesty International have criticised the company's continued sales, and it has been listed in a United Nations database of businesses operating in connection with Israeli settlements. Several church denominations and pension funds have divested. Caterpillar's position is that it sells equipment through established channels and cannot control how it is used after sale, a position critics regard as inadequate where the use is foreseeable and documented.
Tax arrangements
In 2014 the Permanent Subcommittee on Investigations of the United States Senate examined arrangements under which Caterpillar had allocated profits from its parts business to a Swiss subsidiary, reducing its American tax liability by an amount the subcommittee put at approximately 2.4 billion dollars over thirteen years. The structure had been designed with advice from PricewaterhouseCoopers, and internal communications disclosed at the hearing showed advisers discussing how the arrangement would be presented.
Federal agents subsequently executed search warrants at Caterpillar facilities in Illinois in 2017 in connection with the investigation. The company maintained throughout that its filings complied with the law, and the matter was resolved without charges, with the company recording a settlement of its disputed liabilities.
Emissions
Caterpillar has faced regulatory action over engine emissions on several occasions, including a 1998 consent decree, entered into with other diesel engine manufacturers, concerning software that allowed engines to meet nitrogen oxide limits during testing while emitting more in normal operation. The company paid civil penalties and agreed to accelerate the introduction of cleaner engines. It later withdrew from the on-highway engine market in the United States rather than meet the 2010 standards.
Right to repair
Caterpillar has been criticised by farmers, contractors and repair advocates over restrictions on access to diagnostic software and parts that make independent repair of its machines difficult. The dispute parallels that affecting agricultural equipment more broadly, and has prompted legislative proposals in several American states. The company has expanded access to some diagnostic tools while maintaining that restrictions protect safety, emissions compliance and machine integrity.
Plant closures and offshoring
The company has closed or relocated numerous North American facilities, including the loss of production at Joliet and the 2014 closure of an Illinois plant, and moved work to Mexico, Brazil, China and lower-cost American states. The moves have been criticised by unions and by affected communities, particularly in Peoria, where the relocation of the corporate headquarters compounded the effect.
Russian operations
Caterpillar's continued Russian presence after 2014 drew criticism, and its exit in 2022 and subsequent asset sale in 2023 was examined by campaigners tracking the terms on which Western companies left, since sales to Russian buyers at discounted prices have been argued to transfer productive assets rather than deny them.
Environmental record
As a manufacturer of diesel machinery for construction, mining and oil and gas, Caterpillar's products are associated with substantial downstream emissions, and the company has been pressed by shareholders to disclose the emissions arising from the use of its products and to set targets covering them. It has published operational emissions targets and invested in alternative fuels, electrification and rebuild programmes, while arguing that the equipment it supplies is essential to the infrastructure and mineral extraction on which any energy transition depends.
Leadership
Clarence Leo Best led the merged company from 1925 until October 1951. Among later chief executives, Donald Fites, who led the company from 1990 to 1999, presided over the prolonged confrontation with the United Auto Workers and over the strengthening of the dealer network and the aftermarket strategy. Jim Owens led the company through the financial crisis, Doug Oberhelman through the commodity downturn, and Jim Umpleby from 2017, becoming executive chairman when Joe Creed succeeded him as chief executive.
Corporate governance
Caterpillar is governed by a board of directors drawn principally from industrial, financial and technology backgrounds. The roles of chairman and chief executive were held jointly for most of the company's history and were separated on the appointment of Joe Creed as chief executive in 2025, with Jim Umpleby continuing as executive chairman.
Shareholder proposals in recent years have concerned the disclosure of lobbying and political spending, human rights due diligence in relation to the use of equipment in conflict zones, the reporting of emissions arising from the use of products, and the independence of the board. Most have been opposed by the board and defeated, though several have attracted substantial minority support, and the company has expanded its human rights and climate disclosure in response to sustained engagement.
In popular culture
Caterpillar machines occupy an unusual place in popular imagination for industrial equipment. Toy versions manufactured under licence are among the most widely sold construction toys, and the company's machines appear routinely in children's books, television programmes and films depicting construction.
The word caterpillar itself, coined for the track mechanism, entered general use to describe tracked vehicles, and the tank, whose development the Holt tractor prompted, is a direct descendant of the machine Benjamin Holt tested on Roberts Island in 1904.
Peoria, Illinois, was for most of the twentieth century identified with the company to a degree unusual even in American company towns, and the phrase asking whether something would play in Peoria, used to test mainstream appeal, is associated with a city whose economy the company dominated.
Timeline
- 1890: Holt Manufacturing Company begins producing steam tractors
- 1904: Benjamin Holt tests the first successful track-type tractor
- 1907: Holt receives the first patent for a practical continuous track
- 1910: Caterpillar trademarked; East Peoria plant established
- 1914 to 1918: Holt tractors used as artillery tractors and inspire the tank
- 1925: Holt and C. L. Best merge to form Caterpillar Tractor Company
- 1931: Caterpillar Yellow adopted
- 1935: D8 bulldozer introduced
- 1950: First operation established outside the United States
- 1981: Solar Turbines acquired; Cat Financial established
- 1982 to 1984: Approximately one billion dollars lost during the Komatsu challenge
- 1986: Reorganised as Caterpillar Inc.; Plant With A Future programme begins
- 1991 to 1998: Prolonged dispute with the United Auto Workers
- 1998: Perkins Engines acquired
- 2010: Electro-Motive Diesel acquired
- 2011: Bucyrus International acquired
- 2017: Headquarters moved from Peoria to Deerfield
- 2022: Headquarters moved to Irving, Texas; Russian production halted
- 2025: Joe Creed succeeds Jim Umpleby as chief executive
See also
References