Competing in the Global Marketplace
An expanding global footprint offers opportunities to become stronger and more efficient.
On February 16, 1910, the Holt Caterpillar Company of California took possession of an idle 10-acre plant in East Peoria. A dozen employees were on the payroll that day. Company representatives were sure this factory would be the beginning of one of the largest companies in the Midwest and would assure the Peoria area of an industry it would be proud of in the future.
Since that day, this area has been our home. While we’ve certainly grown from one building with 12 employees and changed our name, it’s been from central Illinois that Caterpillar Inc. has been driving positive change on every continent. And we do mean every continent—our generator sets help power research labs on Antarctica. From Peoria, we have built a global company of more than 125 manufacturing locations around the world with about 115,000 employees.
An Expanding Footprint
Caterpillar built its business in the U.S. for several decades, innovating new products that played a significant role in the industrialization of modern America. We also started exporting very early in the company’s history, in partnership with our Cat dealers. By the end of 1925, the year Caterpillar Tractor Co. was formed, the company was already exporting around the world.
Our global footprint expanded in the 1950s to Europe, Latin America and the Pacific. In the 1960s, we continued growing in these markets and added Asia and Canada. Today, we have 178 dealers and thousands of suppliers worldwide.
This global footprint truly helps us be the company we want to be. We want our customers to be more successful working with us than with any of our competitors. To do that well, we have to know our customers better than anyone else. What are their needs, challenges, drivers, working conditions, environments? Our dealers provide a critical role in serving our customers wherever they do business, but Caterpillar also needs to be near our customers.
Working Around the World
A great example is our product development process. Our research and development—and really, many of our operations—are made up of truly global teams, all bringing unique expertise and experience that we believe truly makes our products, processes and solutions better. Our global footprint means we can be close to our customers, leverage ideas and best practices from around the world, and literally work around the clock. We have thousands of employees on five continents integrating research and development centers, proving grounds, suppliers, IT, manufacturing facilities, customers and external resources. When one part of the world is asleep, the other part of the world is working.
This gives us a competitive edge. We simply can’t be competitive making all of our products in the U.S. and shipping them to foreign markets. It’s not a sustainable business model, and our competition would win in those overseas markets. That’s something we can’t let happen. If Caterpillar isn’t in those markets, our tough competitors will be there. You have to keep the business close to the customers and with balanced currency exposure. Ten to 20 years ago, we had a handful of “developed” world competitors. Today, it’s a different story. The center of gravity has shifted, and Caterpillar has hundreds of competitors around the world.
Reflecting a Global Business
But it isn’t all about competition—it’s about opportunities. As we’ve grown our global footprint, we’ve also increased our business inside the U.S. Even with locations worldwide, Caterpillar is one of the United States’ leading net exporters, with more than $16 billion in U.S. product exports last year. Many of our more than 50,000 U.S. jobs are dependent on trade and our export business.
Nine out of 10 of the largest mining trucks leaving our Decatur, Illinois facility are shipped outside the U.S. More than half of the large track-type tractors leaving our East Peoria facility are shipped globally. Our factories across the United States depend on trade. They depend on globalization. Big infrastructure projects around the world are going to need big equipment. And when they need big bulldozers, there’s only one place in the world to get them from Caterpillar, and that’s in East Peoria.
At the same time, Caterpillar has also become a major manufacturer and exporter in the United Kingdom, Brazil and China—just to name a few of the 40 countries in which Caterpillar operates production facilities today.
It’s important for all aspects of the company to reflect our global business, and that includes the Caterpillar Foundation, which reflects the philanthropic efforts of Caterpillar Inc. Since 1952, the Caterpillar Foundation has been dedicated to transforming lives in the communities where we live and work around the world, and today, its strategy of alleviating poverty is more global than ever. In 2008, the Foundation invested 20 percent of its budget overseas; since then, it’s grown to 52 percent. This focus on corporate social innovation helps put people on the path to prosperity. Just this August, the Foundation announced $11 million in investments for Africa’s future, funding programs around water, energy and women.
Globalization is not an either/or for Caterpillar. It’s both. We must look at globalization and international competition as an opportunity to make ourselves stronger and more efficient. We’ve come a long way from that one factory and 12 employees in East Peoria. It’s proof American manufacturers can compete and win in the global marketplace, and we’re doing it proudly and successfully. iBi
Henry C. Vicary is community relations manager for Caterpillar Inc.