The Comeback of Caterpillar, 1985-20002
History:
Caterpillar, the world's largest manufacturer of construction and mining equipment was formed in 1925 when the Holt Company, a combine manufacturer who created the Caterpillar tractor; merged with the Best Tractor Company and moved their headquarters to Peoria, IL.
The first company to use a diesel engine on a moving vehicle in 1931; discontinued their combine business shortly after to focus on road-building, construction, logging, and pipe laying equipment. Caterpillar supplied the U.S. Army with bulldozers during WWII, and its sales tripled in the early 1940's when they included motor graders, diesel engines, and electric generators in their product line.
After WWII, demand for Caterpillar products sprung forth and their equipment was used to build the interstate highways and airports as well as rebuild Europe and construct dams in Third World countries. The company produced high quality, reliable products with fast delivery and service when replacements were needed which set them apart from any competition. By the mid 1960's they had established foreign manufacturing subsidiaries in several countries and had a successful alliance with Mitsubishi in Japan.
Caterpillar's network of self-sustaining dealerships and distribution centers contributed to their success by developing close relationships with their customers since they were strategically located throughout the world.
Competition in the U.S. and Europe was weak and with Caterpillar's quality products they were able to charge premium prices for their products, pay production workers union scale, and provide their shareholders high return rates on their equity while enjoying profits. After recording a record year in ...