To change a corporate culture, change the location of the corporate headquarters.
In a nutshell, that seems to be the goal of James Umpleby, Caterpillar’s recently named CEO, who is leading the heavy construction and equipment maker’s headquarters relocation from its longtime home in Peoria to an undetermined place in the Chicago area.
In moving its headquarters, Cat is signaling a departure from a storied past and positioning itself to operate a leaner, global manufacturing business in new ways.
For example, expect a greater focus on incorporating more digital and internet-based technologies into its heavy equipment and construction product mix, along with a growing focus on China and emerging international sales markets.
On that score, moving closer to O’Hare International Airport will make it easier and less time-consuming for Cat leadership to zoom around the globe. Cat will rent office space, but not construct a new headquarters, and eventually bring along about 300 jobs.
Cat is the latest in a string of Illinois corporate giants, including ADM, United Airlines and McDonald’s, that Casino siteleri decided to relocate from downstate or the suburbs into the city. (McDonald’s arrives in 2018.)
Such moves are expected to make these old-line companies more attractive to an increasingly urban-based and culturally diverse workforce that’s digitally adroit and eager to do business on a worldwide scale.
No matter where its headquarters ultimately lands, Cat is hoping for the same outcome.
"The new location is also an opportunity to add to our talented team while improving the productivity of our senior leaders," Umpleby said in a statement announcing the relocation.
While Umpleby, an engineer, has worked at Cat for more than 35 years, he did not come up primarily through the mammoth company’s Peoria-based headquarters or its mainstay heavy equipment and construction track.
Instead, he spent much of his career at Solar Turbines, a San Diego subsidiary that produces industrial gas turbines. Umpleby was officially named CEO in January.
While maintaining close ties to Cat’s core business and still employing thousands in Peoria, Umpleby will add more outsiders to his executive team and the company at-large.
Emanuel on Caterpillar move to Chicago area
Chicago Mayor Rahm Emanuel talks about Caterpillar’s decision to relocate to the Chicago area from Peoria. Jan. 31, 2017 (John Byrne / Chicago Tribune)
Chicago Mayor Rahm Emanuel talks about Caterpillar’s decision to relocate to the Chicago area Efsanebahis from Peoria. Jan. 31, 2017 (John Byrne / Chicago Tribune)
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With all due respect to Peoria, it’s going to be easier to lure corporate talent to the Chicago area. Yes, the area has its problems but it is also home to many world-class cultural amenities and social attractions that help make people want to work and play here.
"Many of Caterpillar’s senior leaders have spent many years at the firm and have been rotated throughout the business," Keith Schoonmaker, Morningstar analyst, wrote in a recent report. "Increasingly, however, the company has sought to hire people from outside of the heavy equipment industry."
Schoonmaker said in an email to me today that Cat’s new headquarters won’t have a significant impact on the company’s share price.
Many institutional shareholders, however, should cheer Cat’s decision to scuttle an earlier plan to spend millions of dollars to build a new Peoria headquarters, which was supported by previous CEO Doug Oberhelman, and instead lease office space.
Caterpillar Scott Olson / Getty Images
Caterpillar spokeswoman Rachel Potts said the company hasn’t decided whether the new headquarters will be in the city of Chicago or in the suburbs.
Caterpillar spokeswoman Rachel Potts said the company hasn’t decided whether the new headquarters will be in the city of Chicago or in the suburbs.
(Scott Olson / Getty Images)
Cat stock is hovering near $95 per share and has enjoyed a runup in the past year, especially as President Donald Trump talked of boosting infrastructure spending that could spur Cat sales.
The stock is now under pressure, and last week the company reported $38.5 billion in sales for 2016, down from $47 billion the previous year.
To contain costs, Cat is in the midst of a major cost-cutting effort and has eliminated half of the 10,000 jobs it plans to cut by 2018.
Still, industry analysts suggest the company has too many workers and excess plant capacity. Unless the company’s fortunes improve, it will be forced to cut even deeper, they say.
By relocating to the Chicago area, Cat’s CEO is telling everyone that it’s time to break with tradition and make way for big changes.
roreed@chicagotribune.com
Twitter @reedtribbiz
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