Lets Get to Work!

pages 4-5

Celebrating 25 Years
page 7

c o n n e c t i n g o u r g l o b a l c at e r p i l l a r fa m i ly t o d ay
sepTember/ocTober 2010

The Mike Rowe Advantage

product Support, cat dealers & customers take center Stage
By Jim Angell With a passion for supporting the working men and women who are building todays infrastructure, mike rowe, the creator of the popular television show dirty Jobs, is teaming with caterpillar to highlight the secret formula between caterpillars product support solutions, the personnel at cat dealers, and the customers. Why product support? according to denny Vosberg, marketing support manager in the customer Services Support division (cSSd), selling cat equipment is very important to us, but this campaign is about the people who operate the machines and maintain them. this is about the harvest in our business model of Seed, grow, Harvest, explained Vosberg, who led the charge to sign rowe. this inevitably led us to highlighting the incomparable relationship between caterpillar, cat dealers and our customers who all work together to keep our equipment running. its not an easy business; its tough. and its time to elevate the impact we are all making.
The Idea originally, the idea for partnering with rowe came from cat dealers

back in 2008. With the economic conditions in 2009, the project was put on hold, but 2010 became the perfect time to launch. When people think about product support they sometimes think about a specific part or service, said Sarah mcdonnell, customer support multi-channel marketing consultant in cSSd. but its more than that. What were focusing on is the total value our customers receive after the sale of the equipment. its all about the people at the dealership and the solutions they provide.

There is no doubt he chooses companies he believes in. Mike wanted to be with Caterpillar as much as we wanted to be with him.
Sarah McDonnell, CSSD Marketing Consultant

mcdonnell explained that rowe was the key ingredient in bringing everyone together for this campaign. everything is right for caterpillar and dealers to unite, she said. the timing, the message and the need. its something that every dealer in north america can relate to and use to communicate to their customers. rowe also gives caterpillar and its dealers a distinct competitive edge. mike is a huge competitive advantage, said an elated mcdonnell. mike raises the bar for us. in the past, our competition could say me, too, because we were all speaking the same language, but weve taken the me, too out of their toolbox. theres only one mike rowe. the competition cant copy him. rowe also saw the difference when he first noticed caterpillar and how the relationship between he and the company is based on a mutual desire for authenticity. More about Mike Rowe on page 6

happy birthday! 100 years of the caterpillar trademark

By Nikki Thaxton, Corporate Archivist on august 2, the caterpillar trademark turned 100, making it older than the company itself. and if it wasnt for a photographer, big yellow may have ended up in the mud. the story of caterpillar dates back to the 1880s. two pioneering families in california, the Holts and the bests, were creating innovative products that offered customers the opportunity to do things better, quicker and cheaper. wheels, tread mill wheels entire winter of plowing. and paddle wheels. the next march, Holt again tested the march 29, 1905, the machine with the company diary entry reads: ben photographer, charles clements. Holt down to ranch this clements commented how the p.m. to see traction engine machine, with its crawling tracks, with mud turtle Wheels resembled a caterpillar. if that dont look like a monster work. claims they are a caterpillar! said charles clements great thing. for the next few years, the diary and in march 1905. other official Holt records contrary to alternated between the popular belief, the mud turtle, paddle wheel Holts actually and platform wheel names. referred to their newspaper and new prototype magazine articles also (and several were referring to the new others that Charles Clements, company followed) as machine as a platform photographer, March 1905 caterpillar sixty Tractor with wavy logo. 1918 wavy caterpillar trademark application. wheel machine and even a the mud turtle engine treadmill wheel machine. benjamin Holts first steam traction engine tractor or paddlewheel engine for several the name caterpillar did not appear again until the fall of 1908 when a was built in 1890. on november 24, 1904, the first years, said caterpillars corporate archivist nikki newspaper article reporting on the activities at the Holt Holt steam-powered, track-type tractor prototype thaxton. the secretary of the company kept a diary plant mentioned the new machine and its new name. was tested at the Holt manufacturing companys plant on company activities, and it shows that the tracks on in Stockton, calif. Shortly after, the prototype was these first machines had many different nicknames More on page 6 sent to the Holt familys ranch outside of town for an including: platform wheels, mud turtle wheels, railroad

If that dont look like a monster caterpillar!

a message from doug

What does accountable for results mean to me?

you have all seen our new enterprise strategy. We have shared it with the board of directors, Wall Street, our owners, employees, dealers and suppliers. im hearing positive feedback and i hope you are too. Some of the comments ive received are that its simple, straightforward and, most importantly, its manageablewe can absolutely do everything mentioned in the strategy. and the way we are going to do it is through our operating principlesthats the how part of the strategy. each and every operating principle is important, and well talk about them all. and i want to start with accountable for results. We have high ambitions as a company and we need all of us of us to feel personally accountable for delivering results. thats all understandable, but its also one of the things ive been getting the most questions about. What does it mean to be accountable? does that mean we werent accountable before? What happens if we arent accountable? im here to tell you, like the rest of our strategy, there are no hidden meanings or messages. i know that all of you walk into work every day ready to do your best. our focus on being accountable for results doesnt mean we feel like you havent been accountable. its more about focusing on the right thingsthose activities that add value to our customers and that contribute to our results. it also means being proactive. We cant wait for a problem or issue to arrive, we have to anticipate and avoid problems. We have to work together with coworkers, customers, dealers and suppliers. it also means going the extra mile and taking personal ownership of our products and services. yes, there will be certain issues outside of your control, but instead of saying, thats not my job, ask yourself, What can i do? How can i help make this project or task successful? if this were my own business, would i work any harder? Would i do things differently? us taking a good hard look in the mirror and asking ourselves how we can do better and what we can do to deliver results better. When we focus on results, our jobs become so much more than a series of tasks. you have a choice every day to proactively influence your teams, your projects and more. you have the

We cant wait for a problem or issue to arrive, we have to anticipate and avoid problems.
Doug Oberhelman, Caterpillar CEO & Vice Chairman

We operate a global business in complicated times. We will all run across seemingly impossible issues or be required to do things that weve never done beforethat shouldnt stop us. Hands down, we have the best team in the world, and if we work together, think creatively and focus on our customers, we can do anything. like the rest of the strategy, accountable for results is straightforward; its simple. but it is certainly not easy, because it takes all of

opportunity to demonstrate ownership and to be resourceful in delivering results. Just think about what we can accomplish together, if we get this right. We will have an environment that is highly motivated and innovative. and with the right tools, skills and processes, and the freedom and flexibility to go after the results, we will be unstoppable, and we will beat the competition!

The caterpillar business model: a perpetual motion machine

ask 10 caterpillar employees to describe the companys business model and youre likely to get 10 different answers. thats because, over the years, weve lost focus on it. most people think we make our money when cat dealers sell products to our customers. but the initial sale is only the beginning of how we win. We win by delivering valued, quality products, services and solutions to our customers that provide the lowest total owning and operating lifecycle costs. this value proposition, enabled by our unmatched customer support, creates the largest global field population, highest customer loyalty and attractive profitability through the business cycle. perpeTuaL moTIoN one of the fundamentals of our business is our ability to help our customers maximize the return they get from the products they buy from caterpillar dealers. unlike the competition, the initial sale of a caterpillar product is only the beginning of the product lifecycles value opportunities. seed Value-based products and services Deep customer value chain understanding Excelling at design and development Differentiated, proprietary parts groW Global leadership PINS = Field population developed markets growth markets Leveraging various paths to market new rental used (re-seeding) harVesT Accelerate parts and services growth industry-specific offerings Solving customer problems easy to do business with Unmatched Dealer Support
produced by caterpillar inc. corporate public affairs a department of Human Services division 100 ne. adams, peoria, il 61629-1425

our busINess modeL

a simple way to think about our business model is with three wordsseed, grow and harvest. first, we seed the business with great products and services and unique solutions that meet our customers needs and support their businesses. the key is designing and then building products with a focus on the customer. We must understand what our customers value and what they are willing to pay. We grow the business by setting and achieving ambitious goalslike building the largest global field population of products. this percent of industry sales (pinS) leadership helps us sell parts and services, invest in research and development, fund acquisitions and pay stock dividends. to get there, well take advantage of rental and used equipment sales opportunities as well as new machine sales. the harvest comes from supporting our customers over the long run. We seize parts and services opportunities and provide our customers with the solutions they value throughout the lifecyclewhether they are the first, second or third owner of the equipment. and we have to do it best. letting our competitors take parts and services business from us is like letting someone else harvest part of our crop. ultimately, seed, grow and harvest together should keep the caterpillar business model in perpetual motion. but it takes an unwavering focus on our customers. its important for all employees to understand the caterpillar business model, but also the fact that it begins and ends with the customer, explained group president ed rapp. We design and build products integrated with deep customer understanding. this helps us grow our field population and we then provide unmatched support to those customers throughout the product lifecycle. its really this focus on the customer that keeps the business model flywheel spinning, said rapp.

oin

Please

on the occasion of Jim owens

retirement, caterpillar invites his many friends and colleagues to

celebrate his 38-year career and Jim and Katie owens dedicated service to the community.

us

friday, october 15, 2010

5:00 p.m. 8:00 p.m. civic center grand ballroom

please rSVp to debbie Schrader at schrader_debbie_L@cat.com by september 30.

editor Jim angell design director eric Johnson contributing photographers caterpillar corporate archives, caterpillar corporate photographers, earthmoving division, mike rowe

contributing Writers christine braskich, mitch colgan, rebecca dailey, Jamie fox, Sharon Harper, Sheila Hayes, mia Karlsson, erin Scherbinske, nikki thaxton, rod topel, Staci Warrens subscription services to make an address change send an e-mail to cat_folks@cat.com or call 309-675-8448.

if you have ideas for stories or submissions that youd like to see in upcoming issues, please contact Jim angell phone: 309-675-8448 or e-mail: cat_folks@cat.com Visit us on the intranet at cat @work or at www.cat.com/catfolks.

an equal opportunity employer

publiSHed for caterpillar people Since 1950.

p r i n t e d o n 1 0 0 p e r c e n t r e c y c l e d pa p e r

sepTember/ocTober 2010

cat financial Key to portugal sale of 90 machines

Storm CatCher
employee Watches Weather to protect others
By Jim Angell Starting each spring, throughout the central united States, teams of volunteer weather spotters give their time and talents to provide residents lifesaving time to take cover in case of severe weather. one of these people is caterpillar employee mark elliott coordinates peoria countys weather mark elliott. tracking from a 1960s-era emergency bunker. elliott, a product Safety & compliance consultant in the product development & global technology division, has been volunteering at the peoria county emergency operations center (eoc) since 1994. as a self-proclaimed techno geek, elliott mixes his love for electronics and computers with an intense weather fascination. my original intent was to come out here and man the radios because we had quite a few active amateurs that were available for emergencies, said elliott, who is also an amateur radio operator. as i got involved, i got more interested in radar interpretation. thanks to specialized training from the national Weather Service (nWS) in lincoln, ill., elliott plies his talents on the eocs unique three-dimensional (3d) imaging software. according to elliott, it takes the raw feed from the lincoln weather center and processes the data to show real-time storm intensity, storm velocities, and cloud tops along with several other outputs. Team efforT because of his radar training, elliott knows that radar is only one part of a combined effort county officials and 85 volunteers orchestrate each time a storm crops up. Images like this help to position What we do here is to provide ground spotters and alert communities to truth to the radar. because the radar is take cover. located in lincoln and its minimum tilt angle is half a degree, by the time the beam reaches peoria, the lowest it can look is 4,500 feet off the ground, said elliott. radar cant see tornados on the ground. thats where elliott turns to the radios to coordinate spotters to the best Three-dimensional look at the vantage points. tornado that hit elmwood, Ill. the spotters need us to tell them where the activity is, what to expect in winds, how strong a storm is and where to position themselves for an escape, said elliott. Just as important, we need them to tell us what cant be seen from radar. the process was put to the test recently when a tornado was bearing down on elmwood, ill. elliott alerted the spotters to an area of circulation indicated by the 3d radar and the spotters confirmed a funnel, then a tornado as it touched down. the teams efforts provided seven valuable minutes warning for elmwood residents to take cover. thats a ton of time, said Vicky turner, director of the peoria county emergency management agency. the stormed popped up pretty fast, but it was that confirmation that enabled elmwood residents to walk away without any injuries. rouTINe every morning before getting to work at 5:30 a.m., elliott logs onto the Storm prediction center in norman, okla., which covers all of the central united States. from this site, he gathers information from the various weather models the nWS uses to provide its daily outlooks. if conditions are favorable for bad weather or the nWS has already issued watches, elliott will monitor the site for the latest information. march through September are the peak months for severe thunderstorms and tornados, but tornados have been recorded in illinois during every month of the year. So if theres a chance for bad weather, elliott will be at his post, according to turner. When hes not catching storms, elliott also conducts the weekly radio and systems checks with the lincoln weather office, other counties in the area, and with the area storm spotters.

Staff Report Without cat financial, this deal would not have been made, said cat financials Sr. territory manager, bruno mesquita, who arranged funding for 90 machines purchased by two portugese companies. the purchases enabled the companies to meet the demands from government projects. in line with the enterprises strategic focus on competition, cat financials mediterranean region staff met the challenge to outwork Komatsu, which lost the C 7.7 million ($9.43 million uSd) opportunity with mota-engil. mota-engil is a multinational company specializing in infrastructure that purchased 45 machines for road construction in northern portugal. for a country of our dimensions, this was really huge, said mesquita. He added that the transaction was very demanding because the customer changed the financing structure from a 48-month operating lease to a new solution. they changed the entire structure so we had to recalculate everything and it was very hard, but at the end of the day, we played a substantial role, said mesquita. at the beginning, the customer was willing to do 50 percent of the deal for caterpillar and 50 percent for Komatsu. With all the changes, we provided them with an adequate solution and we were able to win the whole deal. Komatsu wasnt able to provide an adequate solution for the customer. the second 45-unit package was financed for C 7 million ($8.57 million uSd) to replace an aging fleet for Zagope, a construction company. this company is a big customer and has no problems getting financing, so we had to add very special conditions to win this deal, mesquita said. With the support of our dealer S.t.e.t., we managed to provide the whole solution. the dealer really pushed us to finance this deal for Zagope because we know the business better than a bank. the 90 machines will be used to build more infrastructure and highways in portugal now that the global economy has improved and the portuguese government has approved the funding. the machines in the packages include: articulated trucks (730, 735, 740); off-highway trucks (772); track-type tractors (d6t, d8t); excavators (323d, 336dl, 345dlme, 365clme); compactors (cS54Xt, cS56, cS76X); and motor graders (140m).

major russian project selects cat products

Staff Report a lengthy process to finance a multiple machine package to build infrastructure in eastern russia for the 2012 asia pacific economic community (apec) summit is now complete thanks to a total caterpillar team effort and cat financial moscow. dealer amur machinery supplied 12 machines and later rented 10 additional units in 2009 for the general contractor, crocus Zao. in february 2010, another 17 machines were purchased that included four 428e backhoe loaders; a d5n Xl, two d6n Xls, a d6t, a d7g and two d9rs; three cS56 single-drum soil compactors; and 320dl, 325dl and 330dl hydraulic excavators. cat financial funded the entire mix of machines, including nine repossessed units from the cat financial inventory. caterpillar won this deal in a highly competitive environment with chinese, Korean and Japanese machine manufacturers located just south of the Vladivostok and russky island area. the massive construction site includes hotels and a conference center, airport reconstruction, highway construction and reconstruction, an opera and ballet theater, sea facade including port structures and infrastructure and the eastern bosporus Straight bridge, which will link the continent to the island. this has been a very important transaction for caterpillar, amur machinery and cat financial, said commonwealth of independent States (ciS) country manager, anton chadrine. first, because caterpillar is now very well represented at this highly visible construction project in russia and the ciS. Second, because the package included nine repossessed units from cat financial russia stock. and third, because we gained useful experience on this deal having our repo machines located in several time zones, some of which were 9,300 kilometers from russky island. according to caterpillar ciS industry Sales manager robert thiel, the sales were a great reward for a team that worked for several months to secure the deal. this project is unique due to the large construction volume in the very limited timeframe, said thiel. reliable caterpillar machines together with world-class product support from amur machinery and attractive finance terms from caterpillar financial were major drivers in this deal. We are proud to be part of this major infrastructure project in russia.

sepTember/ocTober 2010

DouG oberhelmAn,

Lets

Get to Work!
WoW moment I had gotten up early, 6 a.m., as I do normally on weekends. The phone was ringing and I couldnt imagine who was calling me at six in the morning, Oberhelman said. It was Jim Owens (Caterpillar Chairman and CEO). We had a great conversation and then we talked about being CEO. When we hung up, I told my wife, I dont even know if I thanked him. That was the wow moment, no doubt about that. With the weight of responsibility sinking in, Oberhelman got to work, still keeping in mind the two things that had paid dividends even when he was tossing newspapers as a paperboy serve the customer and do it better than the competition. We all must start thinking about how to really serve customers efficiently and quickly. Ask yourself how we can do it better than anybody else and make customers happy with Cat products and services, said Oberhelman. Then we really have to get after the competition. We want to be the leader forever. They are not going to beat us. We are going to beat them. The selection of Oberhelman as the next Caterpillar CEO and chairman happened a full year ahead of Owens organization understand better, he said. The expectations Oberhelman put on the group presidents are the same expectations he is demanding of the company. Companies need high expectations and high goals, then high performance will follow, he explained. Once Caterpillar employees see where we are going and have the explanations for what we are doing, get out of their way, because theyll get it done. Weve proven that over and over again for decades. Get the competition One of the things Oberhelman wanted from the new strategy was a clear mandate for the company to go after the competition the same way the competition has been gunning for Caterpillar. Today, we are a little more than two times the field population over our nearest competitor, Komatsu. When I joined Caterpillar in 1975, I would guess we had 100-times more than them, he explained. Since then, we have allowed them to come up to within half of our field population. Thats not our business model. Our business model thrives on field population and it allows our dealers to make money in good times and bad. To make his point and reinforce his zest for beating the competition, he had posters made of all the major CEOs from all of Caterpillars major competitors. He then had them displayed looking over tables of Caterpillars upper leadership at the initial strategy rollout. The message was clear; these people are out to get Caterpillar business and our jobs. Another motive for targeting the competition was to drive home the point that the company has to focus its attention externally. Big companies go through cycles where they concentrate more on themselves than their competition. At times you just have to say, Lets go and talk to our customers and really listen to them, he said. But you have to be prepared to hear some harsh reality, according to Oberhelman. He recounted how a long-time Cat customer told him that Caterpillar had better start listening because it will go elsewhere to meet its heavy equipment needs if Caterpillar couldnt. With tens of thousands of employees and a third of its fleet Cat products, the customers warning isnt being taken lightly, according to Oberhelman. When the customer says something, we have to listen. We have to respond and execute, he said. We need to get back that sense of urgency. Since being selected as CEO, Oberhelman has made it a

Caterpillars New CEO, is injecting his zest for business to make Caterpillar the best in the world.
By Jim Angell Whether dressed to meet the media or to hike through a muddy job site to hear first hand from a customer, Oberhelman is all businessthe business of Caterpillar. And he is on a mission to make the company greater than it has ever been. Our stated goal is to be the leader in every region in which we participate, the chief executive officer said. My definition of leadership for the company includes financials, market share and, especially, customer satisfaction. So if the leader is a competitor, thats who were aiming for. Oberhelman has his ideas of how things should run, but throwing out historically proven Caterpillar business processes wasnt in the cards. Theyre what made the company what it is today and the company will continue to use them , according to Oberhelman. The Caterpillar business model is the business model for our brand and for every Cat product and service we provide. It has been the business model since the founding of the company, he said. It is basically a premium-designed product with the highest quality in the industry. It will have a premium price, but it will provide the customer with the lowest owning and operating costs through the products lifecycle. But Oberhelman knows getting the business model back to world class is the challenge and it all starts with defect-free products. Products shouldnt need a mechanics touch two or three times in the first year, he said. Defect-free products should be our goal. If we get that done like so many automotive companies are doing today, no one can touch us. An eArly stArt Oberhelmans zest for growing a business took root early in his life delivering papers and sweating the details mowing as many as 21 lawns every week each summer. Ive always been interested in business, Oberhelman said. My best friends dad was a stockbroker, and I worked with him to buy one share of a company when I was in junior high. That led to other shares of this and that. I probably had 10 shares worth about $100 total. But I thought it was a big deal when Id get the financial statements and annual reports in the mail. Id always read the Wall Street Journal, but I never thought anything like CEO would be in my future, he added. As he came to work at Caterpillar in 1975, his career goal wasnt lofty. He had a huge college loan and all he wanted to do was get to work and get out of debt. As he worked his way through the company and around the world, he never lost the sense of awe in making it to the next rung on the laddereven when it came to being named CEO in October 2009.

It was Jims design, and a brilliant plan.... As a result, we will all be beneficiaries of his plan.
planned retirement, a stage that was set by Owens for a transition of leadership unparalleled in Caterpillar history. It was a strategic move that allowed Oberhelmans business talents to be brought to bear on the development a new multi-year plan unimpeded by the day-to-day demands of a CEO for a global enterprise. The fact I could take six months and virtually concentrate on the next five-year plan, while Jim continued as CEO and chairman, really helped me concentrate my efforts with the strategic planning team, Oberhelman explained. Jim gets a lot of credit for it and our company is going to be better for it. It was Jims design, and a brilliant plan. He set us up to get it done. As a result, we will all be beneficiaries of his plan. Vision renoVAtion With Owens flying cover, Oberhelman and the16-member Strategic Planning Committee (SPC) attacked with vigor the renovation of the companys vision to meet the demands of a changing world, economy and company. Early in the process we took a hard look at Vision 2020 and the current strategy, and noted the challenges facing the company, explained Oberhelman. The world has changed completely in the last five years and the company has changed a lot as well. We knew we had to make some very definitive changes to the strategy while keeping the tremendous brand value of the pyramid, of Vision 2020, of Our Values In Action and the business basics that have served us so well.

sustainability Factor

the

When the customer says something, we have to listen. We have to respond and execute.
Besides the SPC, more than 500 people were called on throughout the company to provide their expertise and knowledge about the business via various sub teams. From this engagement, a new strategic vision was born. Something that was quite extraordinary for a company the size of Caterpillar, according to Oberhelman. The transition was only five months from start to finish, which is pretty remarkable in a big company like this, he said. This is the first time in the history of the SPC that the group presidents were charter members. That has served us well. One of Oberhelmans expectations for all leaders is to take ownership of the products they produce, and this expectation applies to all leadership, including the group presidents efforts with the new strategy. The product that came out of the SPC was outstanding and the group presidents feel they are a part of it. Its their strategy and they own it. Theyre committed to delivering it. It really helped speed up the cycle and will help the point to visit one customer per week to listen and learn. Hes only missed four weeks, but when he misses, he makes up for it. My motivation is pretty simple, I like doing it. I find putting my boots on, walking out with someone at their job site and watching them explain what they do is invigorating. They are so proud of what they do. They also tell me why they need Caterpillar to help, said Oberhelman. Recently, he met with five very unique customers in one week, but they all had one thing in commonthey had to have products they could depend on. That is the common denominator, said Oberhelman. It was refreshing to hear they wanted us, but we have to deliver for them or well lose them. Our responsibilities are huge. If we can do better than what we have done in the past and do it better than anybody else, they said we would be their supplier for a long time.

In his travels, Doug Oberhelman also heard a growing desire for Caterpillar to help make customers businesses greener. There is such a pull from customers, if we get it right it will overwhelm us, Oberhelman said. People innately want a company that really helps sustain the planet. Thats fundamental. At Caterpillar, were a company that can do that because we make products and services that can help. Oberhelman pointed out some of the successes Caterpillar has had including cleaning up diesel engine emissions, lessening the companys carbon footprint, and taking Remanufacturing and Progress Rail recycling mainstream. Those are great stories that prolong the life of the planet, he said. People like that. But he was quick to point out that Caterpillar needs to get going because this huge opportunity wont last forever. The company cannot let the competition seize the day. brinG sD home Oberhelman is the consummate outdoorsman and he has made it his passion to improve the environment, whether on a global scale through Caterpillars sustainable development initiative or on a smaller scale at home. We have a farm and no matter where my wife and I are on the property, were trying to create a better habitat, said Oberhelman. We have wetlands. We enjoy seeing wildlife. Its been a lot of fun. When it comes to creating a new pond or cleaning up an area for new growth, Oberhelman is a do-it-your-selfer. His favorite tools to get the job done are his D5 track-type tractor and 420E IT backhoe loader. The equipment also serves a dual functionits his quiet time. Its a place where he can relax and do some thinking. When hes not riding a tractor, he can be found riding around his property scouting out his next weekend project, doing some fishing or slipping away in the fall to a duck blind on a crisp Midwestern morning.

september/october 2010

september/october 2010

Continued from page 1

The mike rowe advantage

consumers are just too smart. they can see through the artifice of an expert, and they can see through the fakery of a spokesman, said rowe. caterpillar wanted an authentic relationship and so did i. the people who watch my show (dirty Jobs) are often times the same people that operate cat equipment, the same people who build our infrastructure and the same people who take the time to learn a skill and master a trade. The mIssIoN rowe will be the common element throughout a threetiered strategy by cSSd to build awareness for cat dealers and customers, expand the parts and service support business and build customer loyalty. every month, a new high-level message will be featured extolling the virtues of a product support solution, its practicality and the benefits and results the customer will receive. rowes magic connecting with the customer will make all the difference. from my very first conversation with mike in 2008, he has been adamant about being an advocate for our customers versus a spokesman for caterpillar, said mcdonnell. He is genuinely interested in our customers success and wants to help us shed light on how phenomenal they are. and, inevitably, how caterpillar and dealers support them with solutions to make them successful. its all integrated. The excITemeNT as excitement grew around the prospects of rowe partnering with caterpillar, mcdonnell still had to prove that rowe would score with the target audience. in rowes case,

all of mcdonnells testing kept producing top scores. When we tested mike at several dealerships, every customer lit up when we talked about him, she said. the message was loud and clear, Hes just like us. mcdonnell and the company also received additional and unsolicited assurances that rowe would be a hit when they were at a local peoria steakhouse during a visit. as we finished lunch and were walking out, we noticed that the entrance was packed with people who found out mike was there, mcdonnell recalled. there were guys who were working on the concrete sidewalk outside, construction workers from across the street and even three policemen. everywhere we went in peoria, people recognized him and wanted to talk with him. thats when i knew there was something there. caterpillar was also impressed with rowes attitude toward the company and what caterpillar is doing. there is no doubt he chooses companies he believes in, said mcdonnell. mike wanted to be with caterpillar as much as we wanted to be with him. i have no doubt that he could have easily teamed up with a competitor, but he wanted to be with us.

rowe is just as excited about the partnership as caterpillar. i see cat equipment and the hard working people operating it around the world, building and creating infrastructure, said rowe. im excited to go beyond the machine and talk with the people who are actually making it happen. for more about what rowe, caterpillar and cat dealers are doing together, go to: http://mikerowe.catdealer.com.

Continued from page 1

100 years of the caterpillar Trademark

the los angeles papers have been full of accounts of a new traction engine which has been produced by the Holt manufacturing companyand the southern california engineers have given it the name of the caterpillar, which has been accepted as the name by which it will henceforth be called. Stockton Daily Evening Record, September 25, 1908. the Holts internal sales agreements and the sales ledger finally start referring to the machine with the caterpillar name in november, said thaxton. and in January 1909, the name caterpillar makes its first appearance in the companys sales literature with the release of a bulletin on the new gasoline caterpillar engines. the first production gasolinepowered caterpillar track-type tractor model was the Holt 40 caterpillar tractor. other than the first two prototypes of this model #1001 and #1002production machines numbered from #1003 to #1054 were painted with the Holt manufacturing company name, serial number and basic patent information. the Holts would also paint the customers name or initials down the side of the radiator or across the front of the canopy frame. the name caterpillar did not physically appear on the machine until #1055, which was built in late 1909. at that point, benjamin Holt decided that they should take steps to protect their new machine and its name. in addition to filing for patents on the design of the machine itself, Holt filed for trademark protection of the caterpillar name on april 11, 1910. the u.S. patent office granted the company a registration on august 2, 1910, and it has remained the sole property of the Holt and caterpillar organizations for the past 100 years. While the caterpillar name had been used in Holt marketing material since January 1909 and was registered as a trademark on august 2, 1910, the earliest stylized version of a caterpillar logo did not appear until late 1912. this was the forerunner of the wavy caterpillar logo, which was trademarked in 1918. When a group of investors came together in april of 1925 to form the caterpillar tractor co. and purchase the assets of both the c. l. best tractor co. and the Holt manufacturing company, the rights to the caterpillar name and trademark were included. from 1925 to today, the companys trademark has had eight different looksincluding the first corporate symbol in 1967 (shown on left) and the current logos, which were introduced in february 1989.

Retirees

ThaNK you for your coNTrIbuTIoNs. eNjoy your reTIremeNT.

mark bloomfield giS 29 years

Jim burdette gf&SSd 35 years

delmar clark lpSd-map 36 years

charlie delph cat World trade 33 years

alfred fernandez cat logistics 36 years

maggie giltner giS 13 years

don graber lpSd-map 36 years

brad Harrell pd&gt 31 years

Jimmy lowry imod-ep 36 years

david newman global purchasing 43 years

bob thommen americas dist. 38 years

service Pins

coNgraTuLaTIoNs oN achIeVINg a major career mILesToNe

S.p. raj bhatia diversified products 30 years

chris brandt acSd-dSbu 25 years

Jimmy childers reman-miSS 25 years

tim durdin global purchasing 25 years

ed foley fpd 25 years

Joe grunstad global purchasing 45 years

dave Hanson pd&gt 25 years

Scott Harris fpd 25 years

nancy lamport cat logistics 30 years

milton long fpd 30 years

randall mooberry pd&gt 30 years

carla pierce HSd 35 years

michel porrovecchio giS 40 years

Jeff Wara pd&gt 30 years

charlie Whalen acSd-dSbu 35 years

John Wiebmer diversified products 30 years

Jeff Willford pd&gt 20 years

Josh Zulu global purchasing 30 years

sepTember/ocTober 2010

Celebrating 25 Years
inception to production of the bHl product line
By Jim Angell

the economy was tanking. caterpillar was cutting back. but caterpillar wanted to participate in a segment of the construction machinery business that it was not in. against tough odds, a small, diverse group of employees in temporary quarters answered the call and took an idea from inception to first production that has led to todaythe 25th anniversary of caterpillar backhoe loaders (bHl).
according to Jim bockhaus, the project manager for what was called project 600 in 1979, an initial five-member team was formed to answer the challenge from then Vice president don fites to get caterpillar into the bHl market with a cost-effective, competitive product line. the project 600 team was comprised of talent from product design/development, manufacturing/operations, purchasing, marketing and accounting. the team grew to 35 and occupied one large room in caterpillars pioneer park facility that was also the emergency relocation point for the corporations main computers. the group persevered, and, actually, the conditions drove collaboration and cooperation. typically, products were designed and worked on in each functional area, said engineering manager dean rohweder. We were all in the same room with the same boss (bockhaus). We talked to each other every day about the project. if you had a question, you just walked across the room. bhLs one-room operation cost control was job number one, so the team obsessed over every detail. With a purely cat product too costly, they considered a joint venture with Jcb and a contract manufacturing agreement with a third party. both failed to give caterpillar what it desired assembly control. finally settling on sourcing components from suppliers, the team would engineer them together and assemble everything at a caterpillar facility. this turned out to be the first project in caterpillar history that was introduced without a caterpillar-designed engine, transmission, drive axle or even cat hydraulics, said bockhaus. cost control also meant watching the weight of the machine without sacrificing durability and dependability. We had to be very judicious where we added more material, explained bockhaus. Weight was critical to our bottom line. every pound we put into the machine increased product cost. computer-aided system analysis helped the team fine tune product functionality, and finite element analysis was used to trim weight and increase durability. rohweder credits the analyses for showing the engineers how to achieve cost-effective solutions in the critical stress areas. Selecting the something that didnt work or fit. Keil had his men pop into suppliers unannounced to monitor their production, and Keil turned away deliveries due to poor parts quality. the suppliers soon got the message and quality quickly improved. Keil also credits plant manager mike flexsenhar with being a real pusher and a good shop man who played an instrumental role in creating the esprit de corps necessary to forge a team devoted to quality. capitalizing on market demand would be a bit more difficult, but the cat dealers wanted product badly, so after taking two prototypes to selected customers for feedback on fit and function, the prototypes came back to peoria and the team applied the lessons learned to the final designan entrylevel machine for the small contractor. this machine was a premium product but rugged, simple to repair, and cost effective for an owner/operator. the intent was to make this type of customer successful so he would come back to caterpillar for another machinelike a small track-type tractor or wheel loaderand eventually purchase larger cat machines. We made sure to give the customers what they wanted out of the product, said rohweder. they needed a machine that would be lightweight to lessen damage to sensitive job sites; have familiar control patterns that would react similarly when underground cables or pipelines were encountered; and that they could road between jobs. overall, given the long hours, no budget, and all the challenges, would the team do it all again? you bet. the team was given an assignment and told to figure it out, bockhaus recalled. We didnt have a big budget, we didnt always have the expertise so we either found help or had to learn it ourselves. many cat employees never get the opportunity to help create a brand new product and business. it was a lot of hard work, but it was a rewarding project and gave caterpillar a product line which has endured, grown, and become an important part of caterpillars bcp division. the initial bHl product line of 416, 426, 428, 436 and 446 was sourced at leicester. the product line has evolved to the 416e, 420e, 430e, 432e, 434e, 442e and 450e produced in the u.K., brazil, india and the u.S.

original bhL team

Many Cat employees never get the opportunity to help create a brand new product and business. It was a lot of hard work, but it was a rewarding project....
Jim Bockhaus, Project Manager for Project 600
assembly plant was mostly decided for the team since caterpillar didnt want to acquire another factory when there was ample capacity in the leicester, england, facility. to provide continuity from design to production, several team members volunteered to move to leicester. that didnt mean there werent a few rough edges to smooth out before production
computer-aided systems analysis

came up to caterpillar standards. many of the early problems were with the quality of the supplied parts. We had five guys on the road continuously to monitor supplier quality, said don Keil, Quality control manager in leicester. We had suppliers in the u.K., italy, belgium and france. We wanted to keep costs down, but we were not going to buy

the team knew it had to produce a product that operated better and was more competitive than the competitions. the competition was strong, recalled bockhaus. case was the leader and was celebrating its 25th anniversary when we were beginning. there was also John deere, ford, massey ferguson and dynahoe in the u.S. overseas, the main competition was Jcb.

sepTember/ocTober 2010

earThmoVINg machINe busINess

Digging Down & Delivering

By Erin Scherbinske following the enterprises realignment announcement in late 2008, the new earthmoving division became one of caterpillars end-to-end machine business divisions (mbd). While new by name, the division sits at the core of caterpillars business with a legacy of an impressive prime product line up. Just this year, the divisionalong with the company celebrated the 100th anniversary of the track-type tractor; in 2009, it marked the 50th anniversary of the first wheel loader; and is on its 79th year of motor grader production. as an mbd, it has direct accountability for everything in its product offerings from concept to how and where the machines are manufactured. although it produces some of the most historic cat machines, the division also is home to some of caterpillars newest manufacturing operations. earthmoving is comprised of medium tractor products (d6, d7 and d8 track-type tractors, 953d, 963d and 973d track loaders and pl61, 572r, 583t, 587t and 587r pipelayers), medium wheel loaders (950 to 980) and the full line of motor graders. earthmoving has direct operations responsibility for the new north american motor graders facility located in north little rock, ark., and caterpillars newest prime-product facility in chinacaterpillar Suzhou. as the first prime products designed and built at caterpillar, these three product groups are facing an entirely new era of market requirements than when they were first brought into production. today, these core product lines are playing in a global, multi-tier market.

caterpillars world-class customers. its customers are asked every day to do more with less, so earthmoving must dig down and deliver products and solutions that serve the customer. a prime example of some of the incredible work by the teams in this space is none other than the d7e, the m-series motor graders and the new K-series medium wheel loader series.

products. over the last five years, we have built a significant presence in the market with cat branded products and began caterpillars coverage of the mid-tier segment of the market with Shandong Sem machinery co. ltd. (Sem) branded wheel loaders. the Sem business currently resides under earthmoving and directly reports through the cat china division. as caterpillar Lesserhas continued to d7e design team wins equipment Worlds Innovation award reguLaTed grow and learn in couNTrIes china, global other markets in product managers determined that an expanded the world, known line of mid-tier products, including motor as lesser-regulated graders and track-type tractors, were required countries (lrc) are to reach the large number of local customers still in need of many of whom are new to the chinese world-class construction industry. machines, but by serving these customers now with our midarent chasing after tier products, caterpillar will be able to generate the newest significant market share and profitability while emission building the customer relationships and loyalty to requirements. to aurora celebrated 50 years of wheel loaders in 2009. position the company to migrate them to other deliver these highcat products and services. this will reinforce the quality products with the right customer requirements, a companys world-class value proposition as customers special lrc product project was launched in earthmoving businesses grow and become more successful. in mid-2009. earthmoving is working together in conjunction with the corporate low-cost producer (lcp) group, our dealers and suppliers for one common goalto provide high-quality lrc products while looking to have competitive cost structures.

earthmoving Locations

cscL medium Wheel Loaders

Aurora, Ill. East Peoria, Ill. Decatur, Ill. North Little Rock, Ark.

Gosselies, Belgium Grenoble, France Beijing, China Qingdao, China Suzhou, China Xuzhou, China

hIghLy reguLaTed couNTrIes Highly regulated countries (Hrc)including the united States, the european union and Japanhave high emissions requirements (i.e., tier 4). time, energy and a significant amount of research and development spend is being used to meet requirements for Hrc markets. but more than just simply meeting emissions requirements, these world-class products are built for

mId TIer the size of the china machine industry represents an enormous opportunity for earthmoving

Newest Prime Product Locations

north american motor graders in little rock, under construction in 2009, is currently in the pilot stage having built 12 pilot machines. ramp up to full production is slated for october. the plant will be responsible for many motor grader models and will eventually take on tier 4 builds.
8

Piracicaba, Brazil
caTerpILLar (suzhou) co., LTd. (cscL)

NorTh amerIcaN moTor graders

Just a few years ago, the caterpillar (Suzhou) co., ltd. (cScl) team was made up of a few people in the planning process. cScl is caterpillars first production facility in china that did not begin as a joint venture. in may, cScl completed its first pilot builds. the team is now fully up and running building K-series motor graders and H-series medium wheel loaders. cScl is also the second caterpillar facility/office worldwide and the first in china to be awarded a leadership in energy and environmental design (leed) gold certification for new construction.
September/october 2010 caterpillar inc. printed in u.S.a.

World headquarters receives eNergy sTar honors

By Christine Braskich caterpillars world caterpillars world headquarters building in peoria, ill., headquarters scored an has earned the u.S. environmental protection agencys impressive 88 on the energy (epas) prestigious energy Star, the u.S.s national performance scale, going above symbol for protecting the environment through superior and beyond necessary energy efficiency. requirements for this achieving the certification makes the facility the second designation. caterpillars global building in the caterpillar family to receive this designation. facilities management group, caterpillars financial products divisions headquarters in managed by don mahannah, nashville, tenn., also earned this designation in 2010. improved the buildings energy commercial buildings that earn the energy Star use an performance by making costaverage of 35 percent less energy than typical buildings effective improvements that and release 35 resulted in a 40 percent less carbon percent reduction in more about eNergy sTar dioxide into the energy for an annual atmosphere. the savings of $800,000 in the epa introduced energy Star in 1992 epas energy energy costs. as a voluntary, market-based partnership to performance scale through a process of fix-control-optimize, reduce greenhouse gas emissions through helps organizations improvements were made to the energy systems energy efficiency. today, the energy Star assess how within the building, said engineering project label can be found on more than 60 different efficiently their manager tom gerike. the buildings energy kinds of products, new homes and buildings use energy systems were first fixed by maintaining faulty commercial and industrial buildings. products and buildings that have earned relative to similar equipment. next, controls were implemented on the energy Star prevent greenhouse gas buildings nationwide. the systems to ensure proper operation. lastly, emissions by meeting strict energy-efficiency a building that the systems were optimized for peak specifications set by the government. last scores a 75 or higher performance. year alone, americans, with the help of on epas 100-point now, continued close attention to the energy Star, saved nearly $17 billion on scale signifies that operation and maintenance of the building is the their energy bills while reducing the the building performs key to holding the line on energy use and utility greenhouse gas emissions equivalent to in the top 25 percent costs. 30 million vehicles. of commercial to earn the energy Star, global facilities for more information about energy Star buildings in the management made the following improvements: visit www.energystar.gov/buildings. nation with regard to Installed a lighting control system, for more information about global energy performance accompanied with motion sensors, which facilities management visit hsd.cat.com/gfm for energy efficiency. turn off office lights when not needed

extra

Implemented a night setback feature on heating and cooling equipment, which inhibits equipment from running during unoccupied times Repaired heating and cooling equipment to ensure the equipment is operating properly Implemented an automated chiller sequencing plan to ensure only the correct amount of cooling equipment is running when needed Upgraded electronic controls and building automation to the building heating and cooling equipment to provide precise temperature control Converted the ventilation from constant volume to variable volume, so that only the required amount of air flow is delivered to the building our team is committed to demonstrating that sustainability is good business, said mahannah. by following sound operating practices and improving controls, we are delivering both significant environmental benefits and lowering our energy costs.

New excavator facility Location selected

Staff Report caterpillar inc. announced, august 12, it has selected the city of Victoria, texas, as the location for the companys new state-of-the-art hydraulic excavator manufacturing facility. ground breaking for the 600,000-square-foot (55,741-squaremeter) manufacturing operation is scheduled to take place in September 2010. the facility is expected to begin production in mid-2012. once fully operational, it will triple the current capacity of hydraulic excavators produced by the company in the united States, and would double the number of caterpillar employees in the u.S. making excavators. the decision to increase manufacturing capacity and employment in the united States is part of caterpillars long-term strategic initiative to develop the appropriate global footprint to competitively produce hydraulic excavators. based on our comprehensive review of possible locations, Victorias proximity to our supply base, access to ports and other transportation, as well as the positive business climate in texas made this the ideal site for this project, said gary Stampanato, caterpillar vice president with responsibility for excavators. caterpillar is committed to maintaining its global leadership position in the excavator industry, and this new facility in texas will play an important role in our longterm plans to provide customers in every region of the world with the products and solutions they need to help them with their businesses. currently in the u.S., caterpillar produces two excavator models at its facility in aurora, ill., where it also produces wheel loaders, soil and landfill compactors, wheel dozers and components. in addition, caterpillar produces excavators in belgium, brazil, china, france, indonesia, Japan and russia. the new facility will manufacture the two models now made in aurora, as well as several additional excavator models now produced in akashi, Japan, and exported to the united States. the expansion of excavator production in the u.S. will allow the caterpillar facility in Japan to better serve the growing demand for excavators in asia. caterpillar has also recently announced plans to quadruple excavator capacity at its manufacturing facility in Xuzhou, china, primarily in support of growing demand in the chinese market. We are making a number of these long-term investments in our global excavator business so that we are appropriately positioned to support caterpillars corporate strategy, said rich lavin, caterpillar group president with responsibility for construction industries. this will enable us to maintain our global leadership position while delivering superior products to our customers and results for stockholders.

New design center in south dakota

Staff Report caterpillar inc. will open an engineering design center in rapid city, S.d. the new facility, known as the black Hills engineering design center, will provide additional engineering support services for caterpillars u.S. operations and will complement the companys existing engineering design centers in chennai, india, and champaign, ill. the black Hills engineering design center is part of caterpillars product development and global technology divisions engineering services strategy to increase velocity and, ultimately, better serve our customers, said caterpillar Vice president and chief technology officer tana utley. for years, caterpillar has benefited from a long relationship with the South dakota School of mines and technology. caterpillar has long been one of our leading partners and recognizes our heritage in preparing leaders in engineering and science, said School of mines president robert a. Wharton, ph.d. this is a great opportunity for both of us to work together and further one anothers success as we make a difference both locally and globally. utley added, in addition, South dakota and rapid citys diverse and talented local population are an excellent fit for our highly skilled global workforce who perform engineering around the clock. the black Hills engineering design center will initially occupy 3,100 square feet of office space within the black Hills business development center in rapid city and, when fully staffed, will employ up to 100 people. construction is expected to be complete by the end of the third quarter of 2010; hiring is planned to begin at that time and ramp up over a five-year period.

sepTember/ocTober 2010

extra
Staff Report the Sales coverage analysis team within customer Services Support division recently celebrated the completion of the groups 200th coverage study and the benefits it has provided to the company over the previous eight years and for future growth for dealers business. begun in 2002, the team was given the mission to help cat dealers become more efficient by understanding the sales force coverage opportunities in their territories to meet customer needs due to the unprecedented growth in the cat equipment population. the corresponding growth required a comprehensive approach to improve and increase product support sales effectiveness to meet the growing parts and service needs of customers. the team, then, as well as now, seeks improvements in the quantity and quality of the dealers product support sales force as well as the dealers ability to deliver the best customer experience. While the group was recently downsized, the mission remains the same. product support sales coverage studies are the first step in the overall sales effectiveness process, said chris lee, a market research analyst. Sales coverage (the quantity of sales people, the quality and knowledge of sales people and the customers being covered) is at its essence, an economic choice to determine the cost to cover versus the opportunity thats gained through greater customer contact. before the downturn in the economy, the 6 Sigma-certified, firstyear growth value prop from a dealer coverage study was in excess of Dealers value the knowledge $66 million. over the last and the cooperative nature of eight years, the benefits the studies as we bring ideas from project replication from the district, the dealership and standard work and combine that with our processes used in each knowledge to arrive at case study have resulted in the hiring of more than actionable recommendations. 500 dealer product Byron Delaware, Product Support Manager support sales representatives (pSSrs) and product Support inside Sales representatives (iSr). the additional attention each representative has provided to customers has yielded $1 billion in parts revenue since the groups inception. driven by dealer requests, a study is usually conducted every two to three years or whenever there are major changes at the dealership. dealers normally have the data (dealer dbS data in most cases) but not the time or resources to perform a self-evaluation that will ask the critical and probing questions of their own operations. We bring years of experience, benchmarking and transfer of best practices between dealers and territories, said byron delaware, product Support manager for the group. dealers value the knowledge and the cooperative nature of the studies as we bring ideas from the district, the dealership and combine that with our knowledge to arrive at actionable recommendations. the successful formula behind a study is the deep engagement of dealer management with caterpillar district reps in an open discussion forum face to face with market facts and data. all involved are seeking better ways and approaches to maximize customer loyalty and retention through uncovering optimal customer contact strategies. Studies can take one to two months from initial contact to completion, including a one-week rapid improvement workshop on site with each dealer. the current team of penny Shumaker, Scott mccoy and rod topel completes between 30 to 40 studies per year. While the data may differ, every study has the same end resultto have better contact with both earthmoving and engine customers, better satisfy their needs, and to generate revenue for the dealers and caterpillar while helping dealers and customers run efficient and productive operations.

dealer coverage studies hit 200th milestone

CPs Master Learning Center opens in Mossville

By Sheila Hayes the caterpillar production System (cpS) is a step closer to delivering order-to-delivery excellence with the opening of the first cpS master learning center (cpS mlc) at the mossville, ill., bb facility. the purpose of the cpS mlc is to drive Standard Work in a cpS-functional, lab-based learning environment. the center supports the enterprise goal to have employees within the order-to-delivery space to be 70 percent cpS qualified and 50 percent cpS certified by the end of 2010. according to gary Henby, process manager for cpS commercialization, lab-based learning provides the skills needed by order-to-delivery employees in their day-to-day jobs. master trainers throughout the enterprise will be certified at the cpS mlc on cpS standard training processes such as but not limited to: assembly, welding, machining, safety/material handling, creativity and quality. certified master trainers will use these standard processes to train other trainers and employees. a cpS Simulated Work environment Breakdown of the various (SWe) will also be on the site. centers and locations planned: the cpS mlc provides a blended learning methodology including both e-learning as well as cps master Learning center (regionally instructor-led coaching and evaluation. it also located) provides knowledge and skills through web-based Ensures a standard training process simulation and hands-on practice. Henby pointed Houses all CPS Learning Cells out that the learner will acquire knowledge and Certifies all regional CPS Learning Centers skills for an entire function skill set and not just and cpS learning cells individual skills. the cpS mlc will address both the Trains all regional CPS master trainers technical and non-technical learner and establish a Trains trainers, and team members standard measurable level of proficiency. Pilots new lab-based training in support of the cpS master learning center is based on the cpS functional training cpS SWe, said Henby. its a real-world Maintains a regional master trainer for experience for people that they can apply and learn each learning cell in a safe environment. We needed functional training with a focus on manufacturing. it is critical cps Learning system (local business units) to adding value to our product as we go forward. Utilizes two or more Learning Cells Henby cited welding as an example. Primarily trains team members caterpillar has always had the role of a welder, cps Learning cell (local business units) but training varied for employees. Some people Utilizes only one lab based curriculum that would get two weeks of training before welding on supports one of 36 functional job roles the product; others would have eight weeks of Primarily trains team members training. thats a wide variation in producing a qualified welder, Henby said. now we will have standard curriculum and specifications people will need to understand and be able to do from our product standpoint. currently, the cpS mlc has three learning cells: assembly, machine and welding. a learning cell is also being developed for product finishing (paint). other cells to be developed include: safety, supply chain, quality, and a creativity center. centers will be deployed in the americas, eame and asia pacific. by design, these centers will ensure a standard training process for certifying all cpS lab-based training. these centers will also pilot new lab-based training in support of cpS functional training.

sepTember/ocTober 2010

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InsIde Out

extra

crowned 2010 competitive League champs

sustainability award for Kiel engine center

Staff Report caterpillar has been focused for years on developing engines and generator sets that reduce emissions levels. the work done at the Kiel engine center in Kiel, germany, manufacturing maK and cat engines up to 16,000 kW, has now been recognized through an impressive environmental protection award. caterpillar motoren, the manufacturing arm focused on the production of maK and cat engines for marine, petroleum and power generation applications, was awarded an environmental award from the economic association of SchleswigHolstein, the northern most state in germany. caterpillar was recognized for the enormous efforts on reducing energy consumption, resource reduction and elimination of green house emissions through the manufacturing process. this award truly underscores our commitment to sustainable development at the Kiel engine center specifically, and also at caterpillar more generally, explained richard case, vice president of the marine and petroleum power division, headquartered in Hamburg, germany. We have individual teams throughout our division working hard to help our customers be more sustainable in their operations and meet global regulatory requirements, and also to increase the sustainability in our own factory and office environments. We are very honored to receive this award which helps show the great progress we have made working towards our sustainability goals. Specific actions noted by the nomination team for the award include changes to many of the buildings at the Kiel engine center, such as the installation of new cooling towers and replacement of lighting systems, both of which resulted in significant energy savings. for example, because all engines manufactured in Kiel are fully tested before shipping to the customer, the cooling system on the test bed is a vital process, which requires a great deal of energy. a project was completed to automate the cooling process so that the previous manual control was replaced to individually cool the engine as necessary during different load ranges during the testing, thus aligning the cooling with actual demand. this work has already amounted to an annual co2 reduction by 525 tons or 58 percent less energy consumption of the cooling system.

shortstop steve haroldson

Staff Report for almost as long as there has been a caterpillar, there has been the tradition of employees hitting bat to ball whether as part of an industrial baseball league or in a company-only softball league. the tradition continued this year as the employee team of inside out was crowned the 2010 caterpillar mens competitive league Softball champions. inside out downed chin music, 11-6, august 5. led by the stonewall defense of shortstop Steve Haroldson and third baseman front row (L-r): Tony Kertz, bill Notbohm, brad holsapple, Jason cassidy, inside outs defense limited the men in blue to only 10 hits over the chris monroe, jason cassidy, and steve haroldson. seven-inning game, and only three runs over the last three innings when the inside second row (L-r): Nick redd, mike ash, justin krager, out bats went cold. brian stafford, Nate Lambert, dave muller. inside outs hitters accounted for most of the teams run production in the third Not pictured: shawn cullen, charlie ellenbecker, josh Keyes, pat pecchio, and ed zwilling. and fourth innings with rallies of four and five runs, respectively. the rally in the third was ignited after a fielding error committed by chin musics shortstop matt leustek. inside out took advantage of the miscue by lacing four hits, including a double and a triple, to take the lead at 6-3. the next inning, inside out continued its assault on chin musics starting pitcher trent Hopkins. Hopkins, who was gutting out a pulled hamstring, was torched for five runs, punctuated by a long homerun from cassidy. that gave inside outs stalwart pitcher, dave muller, an eight-run lead and the defense some room to breathe easier. the only shaky moment for the inside out defense came in the top of the sixth when chin music staged a one-out uprising. after a single and a walk, a double to right center plated the man on second but the runner on first was cut down at home trying to squeeze another run in. With two out, a ground out quenched the rally. chin music went down swinging on three lined shots in the seventh, which set off a celebration of inside outs fourth competitive league championship. in semi-final action, it was inside out over the Knuckles, 12-7, and chin music defeating the 2009 champs, penguins, 14-6.

caterpillar brings connected Worksite Tech to china

By Rebecca A. Dailey caterpillar is seizing the technical edge in china through its introduction of accugradetm and other connected Worksite solutions to provide a new generation of customers the competitive advantages other cat customers globally have come to rely on to grow their businesses. as with any new sales initiative, getting in front of the customer is critical, and what a better place to do that then at the trimble china dimension exhibition, held earlier this year. trimbles exhibition welcomed more than 1,600 customers to learn more about the latest worksite technology and products and how they can improve business. as one of the largest innovators of worksite technology, caterpillar was invited to the show to display to customer. to remain as the leader in the marketplace, caterpillar has to always keep up with the most advanced technology and be the bellwether of machine technology innovation, said peter Wang, the application specialist from caterpillar china large contractor group. the technology can help our customers to solve a lot of problems they encounter in their everyday job and make them more competitive, productive and cost effective. featured at the caterpillar exhibit was the complete line of cat machine control and guidance technology that included the introduction of product link-lrcdesigned specifically for the chinese market. displayed at the entrance to the event were two cat hydraulic excavators, a 305.5 and 320d, which were outfitted with a Spectra laser System and an accugrade dual gpS System. in addition to the inside exhibit, Wang along with dwight roberts, an accugrade application specialist, led a caterpillar machine control & guidance training seminar at a highway reconstruction project in the Sichuan province. the seminar highlighted the qualities of the accugrade product line during grade control work on the highway project. caterpillar and Westrac also hosted a demonstration for the dimensions show. in spite of bad weather in beijing, more than 100 attendees participated in the demonstration that included a 140H motor grader equipped with Sonic & cross Slope and a 320d with a Site reference System. this was a magnificent show as cat machine control made its big debut in china, said robert beneke, caterpillars beijing distribution manager. but we have more to do to show and prove to our customers the economic benefit of the system. prior to the exhibition, caterpillar edwards demonstrator operator ryan neal led two days of training for the Westrac certified operators and china-based caterpillar operators. they performed all the demos for the audience and will provide on-going training for customers on this technology.

sepTember/ocTober 2010

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Cat scrapers:
the same characteristics that make the scraper a super-efficient and cost-effective earthmover make it a super-efficient miner: A bentonite mine in Wyoming uses 627G push-pull pairs to remove degraded granite to expose 20-foot seams of bentonite clay. once exposed, the same 627gs are used to harvest the clay. a production study showed this system removing 8,709 bank cubic yards (6,658 bcm) of overburden per 10-hour shift. In Denmark and Australia, chalk mines and mineral sands are being harvested by elevating scrapers. In North Dakota, 657Gs are busy stripping topsoil that will be saved for future reclamation work. likewise, overburden clay and rock is removed

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earthmovers or miners? you be the Judge!

cat wheel tractor-scrapers have a reputation for major infrastructure work. Jobs like airports and dams to interstate road buildingjobs that require moving large amounts of dirt with little time. but did you also know cat wheel tractor-scrapers are hard at work clearing greenfield coal mines, removing overburden, digging partings and reclaiming mine sites? to expose seams of lignite coal. in between the seams is rocky, tightly compacted partings that the same fleet of 657gs remove to expose a second seam of coal. the versatility, sheer toughness and productivity of the 657gs allow this customer to move up to 20,000 bank cubic yards of overburden in a 21-hour day. In nearby Iowa, 637Gs are drop-cutting material to expose valuable gypsum deposits. So, earthmovers or miners? both, and a low cost-per-ton alternative to consider for customers looking for hauling solutions. to learn more about cat scrapers, go to: http://www.cat.com/open-bowl-scrapers

Korean ambassador Visits caterpillar, promotes free Trade agreement

By Christine Braskich republic of Korea ambassador Han duk-soo was in peoria, august 16, to promote the advantages of the u.S. - Korea free trade agreement (KoruS-fta) currently awaiting approval by the u.S. government. Hans visit to caterpillar was one of 50 stops hes making across the country as a part of a growing Jobs across america tour, coordinated by the u.S. chamber of commerce to build support for the agreement and to alleviate concerns that the agreement would reduce u.S. manufacturing jobs. ambassador Han was welcomed to caterpillar World Headquarters with at a luncheon hosted by ceo doug oberhelman, group president rich lavin, governmental affairs, machinery manufactured in the u.S. currently faces a 4 to 8 percent tariff when it arrives in Korea. the approval of the $10 billion annually in increased u.S. exports to Korea and tens of thousands of new u.S. jobs. for caterpillar, increased exports directly support job growth. in 2009, caterpillar exports from the u.S. accounted for $10.3 billion in sales, and the aurora, decatur and east peoria facilities export well over half of the products manufactured in those locations. and of course, employees play an important role in that success. caterpillar governmental affairs manager bill lane is leading Washington, d.c., lobbying efforts to secure ftas with Korea, columbia and panama a higher priority. these free trade agreements will open the markets to american companies and give us preferential market access. if other countries enter into similar agreements that we are not part of, then we are at a disadvantage, said lane. today, asia embraces trade liberalization. its an exciting, dynamic market thats beating the united States at its own game attracting capital. for example on how ftas help, caterpillar exports to australia and chile doubled and tripled, respectively, after ftas were enacted with those countries. for that reason, in 2010, the company is strengthening its commitment toward expanding global markets and will continue to promote policies that reduce or eliminate trade and investment barriers so caterpillar can better provide for its worldwide customer needs.

executive office members and the caterpillar Korea affinity group. the Korean delegation also toured east peoria, ill., building SS, where the ambassador had an opportunity to operate a d11t track-type tractor.

trade agreement would eliminate the tariff within three years, which would create an estimated

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cat engines repowering Iconic Vessel
By Mitch Colgan for the first time in 63 seasons of scenic cruises on lake Winnipesaukee, n.H., the m/S mount Washington will rely on clean diesel power from a pair of newly installed cat c32 acerttm marine engines. through the help of funds from the u.S. governments american recovery and reinvestment act (arra), mount Washington cruises received an environmental protection agency (epa) grant to replace older diesel engines with new greener technology. the m/S mount Washington was one of nine projects funded in the northeast and the only project funded in new Hampshire. rIch hIsTory originally fitted with steam engines before World War ii, the S.S. mount Washington ii had her engines taken by the government for war service in 1941 and replaced with enterprise dmg18 diesel engines in 1946. at that time, all steam equipment was removed and changed to electrical power, including the steering plant. the installation of the eight-cylinder 615 hp engines was a mighty feat, entailing the use of 25-ton chain falls to lower the huge blocks into place. Since then, the 230-foot (70-meter) mount Washington has offered scenic daytime and evening cruises to thousands of tourists and local residents in new Hampshire, visiting five ports on lake Winnipesaukee. the vessel has a maximum capacity of 1,250 passengers, making it the perfect size for private parties and special occasions on its four decks. repoWerINg WITh reLIabLe caT poWer in June 2009, mount Washington cruises was awarded grant money through the northeast State for coordinated air use management (neScaum), a non-profit organization that pursues new opportunities to demonstrate cleaner technologies in a variety of marine vessel operations. Work was begun with naval architects to determine plans to remove the old enterprise engines and determine which engine manufacturer would provide the new engines for the excursion ship. the major stipulation for all proposals was that the engines must be epa-certified tier ii emissions compliant. the new cat c32 engines are manufactured at caterpillars state-of-the-art marine center of excellence facility in greenville, S.c.. marine professionals at milton cat, the local cat dealer for the northeast united States, provided technical details and sales support for the V-type, 12-cylinder, fourstroke engines, which includes the latest mechanically actuated electronically controlled unit injection (meui) fuel system, adem a4 electronic control unit (ecu) and responsive twin turbo-charging and aftercooling. the result is a decline in fuel consumption, particularly at part load and reduction in smoke and emissions while delivering reliable maximum power output. producing 750 bhp (559 bkw) at 1,800 rpm, the cat engines feature optimized turbo charging and aftercooling to provide reliable maximum power output with the minimum environmental impact. for more information about the cat c32 acert marine engine, visit marINe.caT.com/cat-c32acerT. for more information about the m/S mount Washington, visit www.cruiseNh.com.

mLs facilities use cps to Impact bottom Line results

By Debbie Salazar When the cat production System (cpS) journey began nearly four years ago, its primary focus was on manufacturing facilities. but as cpS continues to improve efficiencies in its production facilities, many of caterpillars non-production facilities want to realize the same benefits donny Willis of the griffin manufacturing Logistics services facility using the cpS recipe and conducts a random audit to ensure the facility maintains its 99.8 percent location record accuracy. caterpillars manufacturing logistics Services (mlS) is our goals, theyre not meeting theirs, he said. no exception. mlS facilities worldwide warehouse parts according to mlS manager ed oneil, from both internal and external suppliers and when cpS was first introduced, mlS was distribute them to manufacturing facilities eager to embrace it. cpS gave us a common many times to point of use. more than one platform to become more integrated with our third of its facilities also perform subclient, said oneil. it provided us with a assembly work, for its caterpillar common language, a set of standards, manufacturing clients. metrics and tools that helped our relationship if we deliver the wrong part or the wrong with our client become seamless. quantity of parts to the client, explains mlS supports its clientcaterpillars oneil, they have to stop production, and this production facilitiesby providing world-class affects their bottom line, which in turn affects manufacturing logistic supply chain solutions. caterpillars bottom line. or, in simpler terms, mlS ensures its client oneil is quick to point out that they facilities have the right part in the right place continue to challenge mlS facilities to not at the right time. only meet corporate goals, but also oneil says it is important that they work exceed them. this year, for example, they toward the same goals as their client, raised their customer delivery because they have a major impact on their performance metric threshold to 99 clients performance. if were not meeting percent, and have exceeded expectations by achieving 100 percent at more than half of their facilities month over month. mlS has worked to embed the 15 cpS guiding principles into its processes over the last two years, and has seen a noticeable impact on bottom line results since the transformation began. cpS has helped us raise our game on our performance, said oneil. engagement is up, quality errors have been reduced dramatically, we have more facilities at point of use and we continue to drive efficiencies throughout our facilities. We believe the progress weve made with cpS has had a very positive impact on our engagement scores. We see a direct correlation between cpS and engagement in our mlS facilities that have committed leadership, he continued. the same mlS facilities with strong eoS scores (88 percent or higher) also have very impressive records for delivering quality to our client. mlS measures efficiency and quality goals through a number of metrics, such as errors per 10,000the number of wrong parts or wrong quantity of parts that are sent to the client. currently they are exceeding their target of 10.0 with 3.33 errors per 10,000. they are also averaging 0.006 point of use against a target of 0.005, which measures if the material is where it needs to be when needed. customer delivery performance, which measures if the client received the part on time, is averaging 97 percent against a target of 99 percent. although the 27 mlS facilities across the enterprise are at various stages on their cpS journey, they had an overall average of above 50 on the cpS assessment score in 2009. in fact, the griffin, ga., mlS facility was the highest scoring facility in the enterprise with a score of 70.30. its not about the score, explained oneil, but the results were driving. the score just solidifies that were on the right path. it is simply a byproduct of living the principles and integrating them into our culture. oneil is extremely proud of what his team has accomplished as a result of cpS and is challenged with applying cpS consistently across all of the mlS organizations. it has been a great journey for us, he explains. cpS is the framework that ties everything together. now, it is about how we raise the bar and elevate the game.

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