Caterpillar CEO Doug Oberhelman has announced plans to retire effective March 31, 2017 after a 41-year career with the company. And while Oberhelman led Caterpillar to its highest sales and revenue peak in its 91-year history in 2012, the company’s sales have steadily declined since then as a result of worldwide downturn in mining and commodities pricing as well declines in demand for construction equipment.
The company’s board of directors has elected Jim Umpleby to succeed Oberhelman as CEO. Umpleby, a 35-year veteran of the company, will join the Caterpillar board of directors and become CEO effective Jan. 1. Oberhelman will continue as board chairman until the end of March. Dave Calhoun will take over the role of non-executive chairman of the board at that time. Calhoun is senior managing director and head of private equity portfolio operations of The Blackstone Group.
Ed Rust, former chairman and CEO of State Farm Automobile Insurance Co. and currently presiding director of Caterpillar’s board, will remain on the board but will no continue as presiding director after Calhoun assumes his new role.
“During the last four years, Caterpillar has faced unprecedented global economic conditions that have significantly impacted the industries served by our customers, as those industries and economic growth in many regions around the world have slowed or severely contracted,” said Oberhelman. “Faced with these challenges, our employees have responded like champions. We have improved our market position and grown our field population. Our product quality is at historically high levels, and I believe we are leading the industry in digital capabilities. I am confident that Caterpillar is stronger than ever, with product quality, power, technology, and innovation that is the envy of our competitors. Add to that lean and agile manufacturing capabilities and an unrivalled global distribution channel. The future is bright.”
Umpleby joined Solar Turbines Inc. in San Diego in 1980. STI is a wholly owned subsidiary of Caterpillar and is a leading manufacturer of industrial gas turbine systems. Umpleby held numerous positions of increasing responsibility in engineering, manufacturing, sales, marketing and customer service. He lived in Asia from 1984 to 1990 with assignments in Singapore and Malaysia. The board of directors elected him as a Caterpillar vice president and president of Solar Turbines in 2010, and became group president of Energy & Transportation and a member of Caterpillar’s Executive Office in 2013.
Other Caterpillar achievements during Oberhelman’s tenure have included increased quarterly dividends by 83 percent since 2010; a strong balance sheet – at the end of the second quarter of 2016, Caterpillar’s Machinery Energy & Transportation debt-t0-capital ratio was 39 percent with $6,674 billion in cash as of June 30. Also global safety metrics for employees have improved with recordable injury frequency improving each year. Caterpillar has been granted nearly 7,300 patents worldwide. Also the company expanded its commitment to lowering owning and operating costs for customers by connecting new and existing equipment through digital technology and data analytics.
Despite great achievements, Oberhelman is retiring at 63, before the usual Caterpillar retirement age of 65. Some analysts believe that Oberhelman spent too much on building machines and engines when commodities markets were high early in his tenure. As commodities began to slump, Caterpillar sales declined and the company was forced to downsize significantly. However, the streamlining has enabled the company to improve its gross margins annually since 2013.
Caterpillar is scheduled to report its third quarter earnings on October 25.
