If we could have gotten Terex, we would not have (in-
vested in the new mining equipment). We had several op-
tions. The Terex route was preferred at the time, if we could
buy it at a price we felt was fair to our shareholders. That
would have filled that product line out and added more un-
Our introduction of shovels is because we feel that is
a business we want to be in. We do not want somebody
else using our dealers for their products. We’ve been in the
shovel business in the past. We still have some designs
around and all that adds up to the fact that we’re going
to do it ourselves. We want our dealers selling Caterpillar
We were actively engaged with Terex. We were in on the
conversations with Terex, like the others. We had a walk-away
price and we walked away. We would not overpay for it.
That’s the thing with all of our growth. Part of the frustration
in the early ’00s is valuations got way out of whack. Terex is
a good example of that. And whether it’s that, or EMD back
then or others, it was all built on this interest rate and debt and
leverage scenario that didn’t make sense for strategic buyers.
Today we can be back in it, because debt and leverage are
looked at much differently, so strategic buyers have an oppor-
tunity, which is what came back to us with EMD.
We couldn’t do it with Terex, but we would have. We’ve got
some other things coming up that may look good that are out
there today. It’s a different world today with the debt and lever-
age scenario than we saw even five years ago.
Cat has made a big bet on China. Are you still
committed to that? Would you like to see a broader
base in Asia?
It’s a big bet, but frankly we have to be in a leadership posi-
tion in China soon, and in my mind we have to be in that lead-
ership position everywhere.
Today we’re a long way from leadership in China, but the in-
vestments we’ve announced, with the growth we forecast, we
think by ’ 12 or ’ 13 would put us in a position in excavators and
wheel loaders to be the leader in China. Now, we’ll see.
If we don’t take on the Chinese in China, it’ll be the same as
if we didn’t take on Komatsu in Japan in 1964. Whoever was in
this office in ’ 64 was brilliant, because they took on Japan, in
Japan, and made the bet and took the risk.
It’s a very similar correlation to that today in China. If we don’t
take on the Chinese in their backyard and figure out our compe-
tition, figure out what they’re doing, they’re going to be all over
the world down the road and where are we going to be?
I think it’s a very high corollary to the Japanese model of the
early ’60s that we were so successful with.
Now India’s another China and we’re woefully behind, un-
acceptably behind, almost embarrassingly behind. The two
leaders in our primary business, in India, are two foreign
QUESTIONS WITH DOUG OBERHELMAN
“If we don’t take on the Chinese in their backyard and figure
out our competition, figure out what they’re doing, they’re
going to be all over the world down the road and where are
we going to be?”
Doug Oberhelman, CEO, Caterpillar Inc.
companies to India — JCB and Cummins. There is no rea-
son we can’t do it except we didn’t get there when they did
and so we’re fighting.
The backhoe loader in India is a JCB market. Cummins
has done a great job. In fact, I would say the Cummins joint
ventures in India and China saved their company in the
early ’00s, when the U.S. market was so beat up in 2002.
We have challenged the Asian team. As you know (Group
President) Rich Lavin is moving to Hong Kong, with a strong
focus on all of Asia but primarily China and India. My per-
sonal goal is that in five years, at the end of this strategy
period, those two look a lot different than they do today and
we’re in a leadership role in China and competing for leader-
ship in India.
Can you say anything about the status of your work
truck program with Navistar.
We’re on track. I was with some Navistar guys recently and
they’re pretty happy with where we are. Our work truck guys
are pretty happy. It’s due out next year. We’re still on schedule.
I’m thrilled with the product I’ve seen so far. Thrilled.
continued on page 22
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