With almost a century of experience, Caterpillar is currently the world’s leading mining and construction equipment manufacturer. It has also branched out into other services, including financial solutions, insurance, and brand licensing.
As of this writing, Caterpillar’s net worth sits at $101.32B. So, I can boldly say that it has a long way to go to join the esteemed squad of the most valuable US-based companies by market capitalization; the group is currently led by Steve Jobs’ Apple (now worth $3 trillion).
Nevertheless, Caterpillar has been featured on the Fortune 500 List, a feat achieved by many other well-recognized big-name companies, including Sam Walton’s Walmart. Like Boeing, Disney, Nike, and IBM, its stock is also a part of the Dow Jones, meaning it’s deemed a significant part of the U.S. economy.
In this article, I’ll enlighten you about Caterpillar’s business history. Read on to learn more about its opportune establishment, milestones, and how it has given back to society.
The Foundation of Caterpillar
Caterpillar Inc. only exists today because of the 1925 merger of California-based organizations C.L. Best Tractor Co. and the Holt Manufacturing Company. Factually, the foundation of this global giant comes down to World War I.
So, let me tell you about the events leading to the establishment of Caterpillar Inc.
Holt bagged military contracts to supply tractors during the war. Many of these machines were required, so the company couldn’t focus on utilizing the most innovative designs to meet the high demand. Nevertheless, it became known worldwide for manufacturing them and brought in massive revenue, which enabled it to plan its expansion.
Unfortunately for Holt, when the war ended, its government contracts were terminated, and its surplus of machines wasn’t designed for farmers. The company had difficulty transitioning to the new era and was forced to take loans to stay afloat.
On the other hand, Best, Holt’s main competitor at the time, leveraged advanced technologies to draw in the domestic market, and its tractors were perfect for agriculturalists. Aware of Holt’s predicament, Best decided to borrow to expand and make the most out of its advantage, even though its reach was a bit limited.
However, World War I tremendously affected the economy, leading to a nationwide depression. Both companies eventually found themselves in trouble.
Holt’s principal founder, Benjamin Holt, died on December 5, 1920, and Thomas A. Baxter replaced him as the company’s head. He decided to steer the company toward the agricultural market by manufacturing smaller tractors customized to suit farmers’ needs.
This birthed a series of legal disputes between Holt and Best. Both companies found themselves caught up in trademark, contractual, and patent infringement lawsuits that took place for about a decade (1907-1918). They spent large amounts of cash on legal fees, and the fact that they were already buried in debt only worsened the situation.
Holt’s shareholders resolved to consult Harry H. Fair, who’d helped solve Best’s financial problems, and he recommended that the two companies should merge.
After all, they needed each other – Holt was a market leader with a global audience, and Best came with the most innovative designs for the local market and was in a better position financially. This is how the Caterpillar Tractor Co was established in 1925.
Caterpillar’s Growth Story
When Caterpillar was founded, its head offices were in San Leandro. And they remained there until 1930, when the organization relocated to Peoria, Illinois.
Notably, at the time, Thomas A. Baxter was no longer the company’s CEO as he’d been replaced by Clarence Leo Best, C.L. Best Tractor Company’s founder. Best held this position until 1951.
As a new company, one of Caterpillar’s main agendas was to survive the Depression, recover from its losses, and hopefully thrive. Its journey to dominance in the machinery industry began with consolidating Holt and Best’s product lines.
And it started by providing the Caterpillar 60 and Caterpillar 30 (from Best) and 5 Ton, 10 Ton, and 2 Ton (from Holt). Though some of these tractor types were discontinued later, they massively boosted sales within the first year, and the company recorded $13M in sales.
In 1929, Caterpillar made $52.8M in total sales, and things got even better the following year when it began selling combine harvesters and tractors to Russia.
Caterpillar Before World War II
In 1931, Caterpillar felt the ramifications of the Great Depression, like every other company in the nation. Its sales declined. But fortunately, the company was intent on utilizing innovation to combat its financial crisis.
So, Caterpillar manufactured the world’s first motor grader (the Auto Patrol) in Minneapolis, Minnesota, in 1931. It had begun working on it in 1928 after attaining the Russell Grader Manufacturing Company.
Still, in 1931, Caterpillar engineered the first diesel tractors, and they were even selected to work in the King Albert Canal, an international project in Belgium. By the end of the same year, the company changed its machines’ standard paint color to a distinctive “Hi-Way Yellow” hue with black trim from grey with red trim.
In 1932, Caterpillar began selling the machines for commercial use, but it still recorded a loss at the end of the year.
The next few years saw Caterpillar machines work on various projects, including the Golden Gate Bridge, Hoover Dam, and the Pennsylvania Turnpike. In 1939, when World War II began, it also manufactured the D468, the world’s first diesel truck engine.
Caterpillar After World War II
There’s no doubt that Caterpillar engines and machines came in handy during the war. After it ended, the company developed at a fast pace. In 1950, it established its first venture outside the United States, paving its way to becoming an international corporation.
In 1965, Caterpillar launched Cat® Lift Trucks after acquiring a firm known as Towmotor. The company would later collaborate with the reputable Japanese-based Mitsubishi Heavy Industries to manufacture some of the most sought-after lift trucks.
It acquired more corporations as time went by, including the following:
- Balderson, Inc. (1990)
- Perkins Engines (1998)
- Kato Engineering (1998)
- Earthmoving Equipment Division (2000)
- Caterpillar Elphinstone (2000)
- Wealdstone Engineering Ltd. (2004)
- Progress Rail (2006)
- Forestry Division of Blount International, Inc. (2007)
- GE Inspection Products (2010)
- Bucyrus International, Inc. (2011)
- Berg Propulsion (2013)
- Marble Robot, Inc. (2020)
Caterpillar is keen on availing of the best services, explaining why it has established various websites and apps to make its products more accessible and help its customers use them for as long as possible. These include:
The Cat Rental Store
In 1998, Caterpillar figured that not all its customers wanted to buy equipment for long-term use; some just needed it for a few hours or days. Therefore, it started The Cat Rental Store to enable them to rent a wide range of products at available prices.
Caterpillar created this platform in 2012. It enables individuals to purchase Cat parts, including engine parts, electronics, and batteries.
The Cat® App
Caterpillar launched The Cat® App in 2019 to help users access machine data via their smartphones or tablet, enabling them to make informed decisions regarding the utilization and maintenance of their equipment. It’s handy when one wants to contact their Cat dealer to make an order or request other services provided by the company.
To make the most out of the application, you’re required to pair it with the company’s management tools. The good thing is it’s designed for both Android and iOS to make using it more convenient.
Distribution of Caterpillar Products
As of this writing, Caterpillar has built a reliable network of 200+ dealers to help distribute its products to end-users. I should mention that these merchants are independent, and the company has no say in how they run their operations. And apart from availing CAT offerings, they also help with maintenance and repair services.
One of Caterpillar’s largest distributors is Finning, founded in 1933. It has locations in South America, the UK, and Western Canada, but its head offices are in Vancouver, Canada. Another is United Tractor & Equipment (Pvt) Limited (UTE CAT) in Sri Lanka.
I found this interesting video on Caterpillar’s YouTube channel. It’s a brief sum-up of the company’s milestones throughout the years, so you shouldn’t miss it if you’re looking to discover some of its significant achievements. Thanks to it, you’ll catch sight of some of its equipment used in the 1920s, including the first diesel machine and power units.
Here’s another video you should watch to understand the Caterpillar brand better. It tells the tale of the company’s early beginnings and growth by always prioritizing what its customers crave to advance, regardless of whether they’re in mining, construction, or agriculture.
From this clip, I gathered that Caterpillar has a great work culture that enables its employees to earn a living, help positively impact the world and enjoy themselves while at it.
Where is Caterpillar Today?
As of this writing, Caterpillar is an award-winning global organization that continues to roll out a vast array of equipment, including loaders, trucks, excavators, and engines used in ships, locomotives, and electricity-generating systems.
Jim Umpleby serves as the CEO of Caterpillar following his appointment in 2017. In 2018, he became the chairman of the company’s board of directors, which also comprises the following (as of 2022):
- David L. Calhoun
- David W. Maclennan
- Debra L. Reed-Klages
- Rayford Wilkins, Jr.
- Susan C. Schwab
- Edward B. Rust, Jr.
- Gerald Johnson
- David L. Calhoun
- Daniel M. Dickinson
- Kelly A. Ayotte
Corporate Social Responsibility (CSR)
Organizations committed to improving society always attract talent and more customers. I believe Caterpillar already comprehends this, explaining why it has promoted education, health, environmental stewardship, and the community’s economic welfare.
Check out some of its noteworthy CSR initiatives so far.
Caterpillar established the Smile Foundation in India in 2002. Since its launch, this program has educated thousands of children and provided infrastructural support for many schools, including safe water drinking facilities, computers, lap equipment, furniture, and separate bathroom facilities for girls.
This NGO has also benefited empowered women and other members of society living in remote villages and slums.
In 2005, Caterpillar contributed $12M to help The Nature Conservancy (TNC) protect river systems in the US, China, and Brazil. In the previous year, it participated in various projects to replace the engines of old buses with newer ones to minimize air pollution. The company has also shared plans to reduce carbon emissions by 30% by 2030.
The Caterpillar Foundation
Ultimately, Caterpillar gives back to society through this initiative. It was part of the ‘It Starts with a Tree’ campaign that planted 290K trees in 95 regions. As of this writing, it has invested over $851M in enhancing people’s lives worldwide by creating job opportunities, installing dependable water sources, and helping victims of natural disasters and other tragic events.
Caterpillar has certainly achieved a ton of desirable feats, but it hasn’t been so successful in avoiding negative publicity. Here are some of this industrial giant’s major controversies that have tarnished its reputation and even cost it a great deal of cash.
In March 2017, The New York Times published a report postulating Caterpillar had intentionally committed tax fraud. Within the same month, US federal agents raided the company’s facilities in Illinois to confirm it had taken aggressive measures to minimize tax costs.
According to Leslie Robinson, one of Dartmouth College’s accounting professors, Caterpillar couldn’t account for up to $7.9B in offshore revenue for tax purposes. Robinson, who an unnamed US agency had hired to look into the company’s finances, stated that it was “deliberate,” not “negligent” in committing the tax fraud. Nevertheless, it was unclear if the government agreed with his conclusions.
Notably, former US Senator Carl Levin led a senate subcommittee in 2014 to probe Caterpillar’s tax strategy. The investigations confirmed that there were some discrepancies in the plan.
In 2014, a ship owned by Bender Shipbuilding and Repair Company Inc (now defunct) exploded, and the blame fell on an engine manufactured by Caterpillar. The latter agreed to pay a whopping $46M to settle those claims.
But this wasn’t the last time Caterpillar would be accused of making defective equipment.
In 2016, the company had to part with $60M to settle a lawsuit triggered by its allegedly C13 and C15 engines, which are currently off the market as countless users complained of sudden shutdowns.
Employee Disputes and Strikes
Caterpillar has bumped heads with its workers several times. For example, in 2012, it locked out some of its staff working at a Canada-based locomotive plant to coerce them to agree to a 50% pay cut. This act caused a lot of controversy in the country, with some alleging the company acquired the factory through shady means.
Additionally, the Union Auto Workers (UAW) held a 5-month strike against Caterpillar in 1992. The company threatened to fire and replace its unionized labor force in response.
Later, between 1994 and 1995, thousands of UAW members conducted another strike that lasted 17 months. Still, Caterpillar’s workforce was forced to resume work without signing any contract, even though the organization had recorded profits at the time.
Previously, UAW members had also struck against Caterpillar after it initiated layoffs due to a decrease in its products.
Frequently Asked Questions – Caterpillar Business History
Question: Why is Caterpillar so popular?
Answer: Caterpillar is well-recognized because it’s the world’s top mining, construction, and industrial equipment manufacturer.
Question: Did Caterpillar leave Illinois?
Answer: Yes. In 2022, Caterpillar transitioned its headquarters to Texas, leaving Illinois, where it’s been based for a long time. I should also mention that despite this recent relocation, the organization’s manufacturing jobs are still in Illinois.
Question: Where can I find Caterpillar products?
Answer: As of this writing, you can find Cat products in your country as the company has retail outlets and merchandise stores worldwide.
Question: Does Caterpillar provide financial services?
Answer: Yes, I know most people are unaware of this, but Caterpillar has a brand that avails reliable wholesale and retail financing solutions.
Question: Is Caterpillar competing against any companies?
Answer: Yes. As of this writing, Caterpillar has various competitors, including Komatsu Limited (JAPAN) and John Deere (USA).
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