Doug Oberhelman to retire from Caterpillar
Doug Oberhelman, a 41-year veteran of the company, took over in 2010 at a time when the market for his company’s products was riding high on a commodities and mining boom and seemingly endless prospects for Chinese growth. Caterpillar’s shares traded flat after the announcement of the management changes on Monday.
He will be succeeded as chief executive by Jim Umpleby, a 35-year Caterpillar veteran who leads energy and transportation for the group. Dave Calhoun, a member of the board, will become non-executive chairman.
“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,” Mr Oberhelman said, referring to sluggish economic growth and struggles in the energy sector that have pushed the industrial bellwether’s annual revenue down to $47bn last year from as high as $65.9bn in 2012.
“The future is bright,” he added.
In July, Caterpillar cut its full-year sales and profits forecast for a second straight quarter, highlighting the struggle to call a bottom to the downturn in global emerging markets and fresh risks created by the UK’s vote to leave the EU and geopolitical turmoil.
Mr Oberhelman has been criticised for investing heavily in boosting production globally and expanding the company’s mining equipment range, at just the wrong time. But Charles Yengst, of Yengst Associates, a machinery market consultancy, says “decisions to make investments are long term, they’re not just made for tomorrow … some of the decisions Caterpillar has made [in the last 40 years] have not looked very wise at the time but 15 to 20 years afterward they look like they did the right thing”. He added: “The whole board was behind him on all of this.”
During his tenure, Mr Oberhelman was also credited with slimming down the company, cutting the workforce by 20 per cent, or 30,000 jobs, in the past four years, Caterpillar said.
“We think Mr Oberhelman did a good job managing a difficult terrain over the past couple of years, sharply cutting costs in the face of a severe downturn in demand,” said Jim Corridore, of CFRA Research. Mr Corridore maintains a sell recommendation on the shares because of “our expectations of continued demand shortfalls and lack of positive catalysts on the horizon”.