Dive Brief:
- After a 40-year career with construction equipment giant Caterpillar, Chairman and CEO Doug Oberhelman has opted for an early retirement and will step down as CEO at the end of this year, according to The Wall Street Journal. Oberhelman will stay on as chairman until March.
- Long-time Caterpillar executive Jim Umpleby will take over as CEO, and outsider Dave Calhoun — formerly with Nielsen Holdings, General Electric and Blackstone Group — will assume the chairman's position next year.
- The company also announced that it would no longer allow one person to occupy both the chairman and CEO positions at the same time as part of a new checks and balance system on executive powers within the organization. According to The Journal, investors have long been in favor of such a move.
Dive Insight:
Oberhelman's retirement comes at a time of falling sales at the 91-year-old company, reportedly due to the plunge in global prices for mined commodities and an economic slowdown in China.
Oberhelman, according to The Journal, led Caterpillar to record revenues and profits after taking the helm in 2010, largely due to huge investments and expansion in developing countries. He also bucked company tradition by executing massive acquisitions, such as the $8.8 billion Bucyrus deal, which left caterpillar with its own line of mining equipment.
The ups and downs of large equipment manufacturers like Caterpillar are considered bellwethers of future economic activity for the country's economy as a whole. Caterpillar has seen its sales slide for the last few years, and the construction equipment giant said its drop in 2016 revenue represented the first time the company had ever experienced four straight years of revenue loss.
After the global shift in demand, Caterpillar instituted a $1.5 billion savings initiative last year, which included a 10,000-person layoff plan — through plant closings and consolidations — due to be completed by 2018. The company has also put construction of a new headquarters in Peoria, IL, on a shelf for now. In addition to those cutbacks, the company announced in September that plans to terminate thousands of international workers were on the table. That news came at the same time as Caterpillar said it would be closing a Mossville, IL, facility and laying off another 300 workers.
