Caterpillar Restructuring Assignment Example | Topics and Well Written Essays - 1500 words

Caterpillar Restructuring - Assignment ExampleThe company is having the revenue of US $ 36.339 one zillion million million in the year 2005 and is currently employing 77000 employees approximately.The company was founded in 1925 as a result of a merger with Holt Manufacturing Co. and it started struggling and established it self because of the lack of rivalry, they were the pioneers in manufacturing the complex body part equipments of that time which were also used in the world war I and II effectively, the company sooner captured the market by providing products that were useful for construction which was taking place at its maximum as that era is highly admired for the construction in US, the company kept on moving and did apportion to have contracts with leading construction companies, the company was running fine in 50s and 60s and 70s due to wars started by the US and also the world wars, but after close to period when the stagnant construction took place, it was assured t hat the products were having a fall from growth towards the maturity, thisMedvedev said in 1987, Before the war the most widely used tractor was a wheeled 15-horsepower model with iron wheels without tires(290). The company identified a number of problems in their products, and also this brought them to loss, also there were problems faced in the exports of the tools manufactured by the company.Construction equipment industry net exports were $7.2 billion at their peak in 1980 and Caterpillar was the worlds dominant manufacturer, exporting almost half of its 1981 U.S. production. This U.S. dominance was sharply gnaw by the strength of the dollar in 1982-1984 as net exports dropped steadily to $2.2 billion in 1986. Japanese construction equipment manufacturers invaded the U.S. market in this period, pricing 50% below Caterpillar, Komatsu in particular gained 18% of the U.S. market and was able to establish a significant dealer network (Wigmore, 143/44 1997). This is showing how well the competition was growing and Caterpillar failed to identify the problem prevailing in 80s, the sales was only 15% from Caterpillar and 85% from Komatsu, and also the problems appeared in the companys operations as a result of the stock problem.Caterpillars stock dropped from a high of $73 in 1981 to a low of $30 in 1984. Capital expenditures were cut from $836 million to $229 million, and capital expenditures net of depreciation were negative from 1983 on. Plants were closed in Mentor (Ohio), San Landro (California), Burlington and Davenport (Iowa), Milwaukee (Wisconsin), Dallas (Oregon), Newcastle (England), and Glasgow (Scotland). Employees dropped from 89,300 in 1979 to 54,000 in 1987. Costs were cut 22% through salary reductions, layoffs and archeozoic retirements, plant consolidations, and manufacturing efficiencies. Heavy price pressure was put on suppliers, worldwide sourcing was instituted, and 25% of production was moved abroad(Wigmore, 172 1997).The company was desper ately looking to subscribe to back its