For this week's issue of ENR, I sat down with Doug Oberhelman, the new chairman and CEO of Caterpillar Inc., who is infusing the company with a new culture. For about 40 minutes in his corner office in Peoria, Ill., we had a wide-ranging discussion about the economy, equipment, jobs, emerging markets and technology.
In preparation for the interview, I had heard that Caterpillar senior managers were told to go out and buy iPads. After playing around with the iPad himself last summer, Oberhelman last fall asked 300 Cat leaders to buy one. They are now using them at internal meetings and outside in the field.
"Our presentations are on iPads, you take notes on iPads and many people have come up to me with new Cat apps since last fall," said Oberhelman. "My idea was that we are just going to introduce this—and we've got brilliant people around this company—and they are going to figure out how to use it. We are going to be better off for it."
Following are selected excerpts from the interview, parts of which you can also watch in ENR's exclusive video.
On the Economy
"We've built in a pretty good growth rate in 2011. Brazil will be absolutely solid. I think the United States will continue to grow slowly throughout the year.
When people get back to work, we'll probably see a mini-boomlet in housing. Interest rates are the lowest in my lifetime. This country cannot survive on 600,000 to 700,000 housing starts a year. The stimulus is there for those things, but it is all about the unemployment rate.
Housing and credit were the primary contributors to the depth and duration of the recession that we went through. No question about it. Money was clearly too easy. Credit was clearly too easy. Liquidity was clearly too easy. But the great strength of this country has been homeownership and growing homeownership for many decades. So I don't think that is going to change."
"Dangerously, I like to compare the China infrastructure recovery plan, their stimulus program there, to ours. Very different countries, very different economies, very different attitudes. But their $535 billion went right into the ground, right into the dirt. It's about spent, and look what happened to the Chinese economy?
Ours was 'shovel ready,' but it was late being funded. Even today, we still hear about many projects that didn't get funded.
States are broke, cities are broke, counties are broke, the federal government's broke. We've got a real tremendously deep hold dug in this country, with debt at all levels, and we are going to have to dig out of that.
I still believe that if we are serious about recovery and creating jobs, infrastructure is a way to do that. So we have to find a way to stimulate the economy, and infrastructure can be one of those ways."
On American Jobs
"What do emerging markets mean for Caterpillar and for Americans? Big markets, big jobs. And that isn't necessarily big jobs in China and big jobs in Brazil and big jobs in India. It's big jobs in America. We added around 19,000 jobs in 2010, and about half were in the U.S.
Because we exported $13.4 billion from the U.S. last year, a good portion of those American jobs went to exports, to penetrate those markets overseas.
We hear far too much about 'just leave us alone' in this country—protectionism is a bad word. That's bad for this country.
The more of those markets that are open, the better we do in China, the better Caterpillar does in India, the more jobs we are going to have in America. It's a tough message because industries get displaced."
On Union Labor
"We locate plant sites for a variety of reasons. And labor is one piece of that. In fact, labor in a 20-ton excavator today is less than 5% of the cost of the machine.
Today, we are employing about 9,500 people in Illinois represented by unions. We have unions all over the world. We seem to do fine either with our without.
We have an aggressive program in every plant in the world on interruption. We plan for work stoppages of any kind—for example, what happens if a tornado hits?
And yes, we have done this [trained management on assembly line] as a matter of course through all union negotiations to serve our customers. First and foremost, we get production out the door to serve our customers."
On Clean Air
"Machines today have the most modern diesel engines on the planet. They are being introduced in January 2011 under EPA regulations. They are as clean as they come.
But clean air comes with a price to society, so what we try to do is simply recover our cost of making the engines in the tractors or the machines. We worked to bring in some new features, we worked hard on efficiency and productivity.
We think we have done a good job with that, and I think in fairness to our shareholders we have to try and do the best we can to recover the price of that clean air that we all will benefit from over time."
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