Caterpillar Streamlines Corporate Structure; Greater Emphasis on Agility, Cost Management and Meeting Customer Needs
Thursday, May 6th, 2010
Supporting its long-term strategy, considering officer retirements and recognizing the need to create a leaner, more agile, customer-focused company, Caterpillar Inc. (NYSE: CAT) today announced a number of executive changes and a streamlined corporate structure. Vice Chairman and CEO-Elect Doug Oberhelman is leading a team that is updating the company’s strategy, which was first introduced by Chairman and CEO Jim Owens in 2005. The changes recently announced will support this updated strategy.
“Six months ago we announced our leadership transition to give Doug the time to develop and refine the next phase of our strategy and structure and to devote energy to thinking about how Caterpillar can elevate itself to the next level,” said Owens. “The updated strategy will be unveiled shortly. I am excited about how we’ve positioned the company and where the updated strategy will take us. The new organization is positioned well for execution and will help assure the realization of our Vision 2020,” Owens added.
The structural changes for Caterpillar start within the company’s executive office. Once he becomes CEO, effective July 1, 2010, Oberhelman will not be replaced as a group president. As such, the number of Caterpillar group presidents will be reduced from six to five. In addition, each of the remaining five group presidents will have divisions reporting to them that will provide greater clarity and structure so the group presidents and their organizations can deliver best-in-class products and services with attractive profitability across the entire company. As part of the new structure, the Chief Financial Officer (CFO) and Chief Legal Officer (CLO) will report directly to the Chairman and CEO. Group President Ed Rapp will become CFO and will lead many of the company’s corporate services divisions. Jim Buda, Vice President, General Counsel and Secretary, will also report directly to the Chairman and CEO.
“We are sharpening our focus and creating a leaner, more responsive Caterpillar by giving each group president greater responsibility and accountability for the ultimate success and profitability of their businesses,” Oberhelman said. “We are assigning resources to the leaders of these businesses so they will have all the levers to pull to deliver results, design and produce the highest-quality products, and lead and develop a team of people around the world with the goal of reaching new levels of excellence,” Oberhelman added.
Caterpillar developed this more efficient corporate structure to better position the company to support and serve its customers. The new structure will consolidate the number of traditional corporate divisions, reducing the number from 32 to 29. These changes will also result in a number of new responsibilities for some vice presidents.
“In response to the recession of late 2008 and 2009, Caterpillar made significant reductions to our workforce, while also reducing costs across the company,” Oberhelman said. “Our response to the recession helped reveal the opportunity to change Caterpillar’s structure by also reducing the number of divisions and group presidents. I’m proud to work for the global leader in our industry, but we cannot take our leadership position for granted. The only way we can maintain our leadership position is by helping our customers be more successful with us than they can be working with anyone else. This new structure will make our company and our people more responsive, more decisive and more accountable,” Oberhelman added.
Group President responsibilities
Group Presidents Rich Lavin and Steve Wunning will be responsible for leading Caterpillar’s machine businesses. They will lead divisions supporting machine product design and development, focused industry sales execution and a greater emphasis on quality and manufacturing excellence. Recognizing the growth potential and opportunities for Caterpillar in the key emerging markets of Asia, Lavin will relocate to Asia later this year to provide senior executive leadership in this critical region of the world.
Group President Stu Levenick will be responsible for leading an enhanced focus on aggressively growing Caterpillar’s aftermarket parts and product support capabilities, its logistics business, remanufacturing and components, as well as its global marketing and distribution organizations, which directly support Caterpillar’s global dealer organization.
Group President Gerard Vittecoq will be responsible for Caterpillar’s growing energy and power systems business. This includes Caterpillar’s engine, turbines, gas and marine, electric power systems businesses and its wholly owned subsidiary, Progress Rail.
Group President and CFO Ed Rapp will be responsible for leading many of Caterpillar’s services divisions, which provide support and services across the entire Caterpillar enterprise.
In addition to the new corporate structure, Caterpillar is announcing that several vice presidents will retire from the company.