CHICAGO Caterpillar insider Jim Umpleby will became chief executive of the heavy equipment maker on Jan. 1, faced with the challenge of reversing a multiyear sales decline triggered by the global commodities slump. He replaces Doug Oberhleman, who retires as CEO on Dec. 31, but who stays on as executive board chairman until March 31, the company said on Monday.Caterpillar shares were down about 0.58 percent to $87.20.Under Oberhelman the company recorded its highest-ever revenue in 2012, two years after he became chief executive. However, a fall in metals and oil prices struck the company hard, and its global sales have fallen since 2013. A 35-year company veteran, Umpelby must grapple with Caterpillar's recent sober outlook.In July, the company said that it saw no upturn this year in the mining, oil and gas and transportation industries as commodity prices have apparently stabilized at a low levels.
To cut costs, the company has shed about nearly 14,000 employees since 2015 and more layoffs are planned.Oberhelman said on Monday the future is bright partly because of Caterpillar's lean and agile manufacturing capability and the company leading the industry in digital capabilities.Umpleby currently serves as group president for energy and transportation, which manufactures equipment for the oil, gas, power generation and rail industries.
"It is worth noting that much of the energy and transportation business is sold directly to end customers and not through dealers, so there will likely be a learning curve for him as he develops the critical relationships with CAT dealers," JP Morgan analyst Ann Duignan said.As a part of its global restructuring plan Caterpillar has begun to move part of its mining operations from South Milwaukee, Wisconsin to Tucson, Arizona. The company said in August it was considering options, including selling, a portion of its underground mining equipment business.
Among challenges for Umpleby is the glut of used mining machines, available for rent or lease, which has hit Caterpillar's sales of new mining equipment.Additionally, construction equipment sales suffered setbacks as weak crude prices sapped building demand in oil-rich countries.When Oberhelman retires as the board executive chairman, board member Dave Calhoun will become non-executive chairman, Caterpillar said. Umpleby will also join the board. (Reporting by Meredith Davis in Chicago; Nick Carey in Detroit and Ankit Ajmera in Bengaluru; Editing by Anil D'Silva and W Simon)
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Updated Date: Oct 18, 2016 00:30 AM