Highlight on New Caterpillar CEO

A little known fact about Doug Oberhelman, the new chief executive officer at Caterpillar Inc.: He used to sit behind the wheels of machines made by a Caterpillar competitor, Deere & Co.

Granted, he was just a kid hanging out with his father, at the time a salesman for Deere in Woodstock, a town of about 21,000 people near the Wisconsin border.

Still, the only thing that has changed is the color of the machines he drives. His love of big machines remains, as does a lesson learned from Ernie Oberhelman – that is, the importance of contact with the customer to build loyalty.

That today is what makes Doug Oberhelman, 57, tick and what he intends to push as CEO of the world’s largest heavy equipment manufacturer – a job he assumed July 1.

Describing a recent meeting he had with a group of customers from the Pacific Northwest, he said, “I sat there and thought, ‘this is what it’s all about. This is why we’re here, doing what we’re doing.’ Getting to know the customers, that kind of contact to find out all I can about them and what their needs are – those are my best days because I really want to focus on the customers in the dirt. We have to know what they want and need.”

That’s the kind of action, he added, that gets results. “I feed on results, so that to me is the fun stuff. What I want us to do is really get after the customers, serving their needs, building loyalty. If we do that, nobody will touch us.”

Early life lessons

The son of Ernie and Donna Oberhelman had what some might say was the obligatory job for a kid in his generation – he was a newspaper carrier in Woodstock. But from that he learned responsibility and a work ethic he retains today.

The man who led Caterpillar’s efforts to plan for the recession, which included cutting costs, learned to pinch pennies as a teenager. He worked at a bank in Woodstock doing odd jobs, including stuffing pennies into paper rolls.

Later, when home from Millikin University in Decatur, he would work at the bank as a teller or help originate loans. He even repossessed cars.

While at Millikin he worked at a Decatur bank, which was fitting since he was majoring in finance at the university and figured he would go into the banking industry after school.

Caterpillar came calling

But in 1974, late in his junior year at Millikin, during a job recruitment event, he was interviewed by an accountant from Caterpillar. After he graduated in the spring of 1975, he was offered a job in the treasury department at Caterpillar.

Paul Kaiser, the accountant who interviewed Oberhelman at Millikin and made the job offer, doesn’t recall what he saw in young Oberhelman that day.

“I had interviewed a lot of kids. In fact, I’d forgotten I interviewed him,” said Kaiser, now living in Peoria. “We ran into each other one day – here was this man wearing a Cat hat and I mentioned I was retired from there. He asked me my name and when I told him, he said, ‘You’re the reason I’m here.’ He then reminded me of the interview.

“I hired him and he took my job. I wanted to be the CEO,” Kaiser said, laughing. “I don’t remember the interview or what it was about him that made me offer him the job. But obviously, I’m glad I did.”

Oberhelman accepted the job, but still hadn’t decided what he wanted to do with his life. “It definitely wasn’t something I thought would become a career, not at that time. But I had student loans to repay. Then, one thing led to another and I stayed,” he said.

It wasn’t long before he began learning more lessons that would serve him well, starting with three years in Uruguay, where the economy was depressed and he had no computer, fax machine or anything else common in an office today.

Following that was nearly a year in western Canada helping a Caterpillar dealership recover from heavy debts.

“Those jobs really took on relevance for me just last year. They prepared me for our trough planning. Consider they were my formative years of age 28 to 35 and here I learned all about how to get out of debt in an environment where everything was upside down. It taught me we could do anything if we plan and get organized,” he said.

Message to employees

That’s the sort of message Oberhelman wants to impart to Caterpillar’s employees, with whom he plans to meet over the next six months.

“I am very proud of our employees and the way we’ve come through this recession. There will be future generations of company managers who went through this and got one big lesson. It will serve us all well in future ups and downs, and those will come,” he said.

“We asked an awful lot of our employees, and we had to make some very painful decisions. I believe we were as fair as we could possibly be with everybody. But in the end we had to emerge stronger than our competition, and we are stronger today than when we’ve come out of any previous recession. We would not be in the position we are in today, to make investments in our facilities and people, if we had come out of this in a weakened position.”

If the company had not planned for a trough, Oberhelman added, “our people would have suffered much worse. There were a lot of glum days around our building because it was painful what we had to do to so many people. But we are bringing people back and hiring again.”

He believes a company will succeed only if it maintains a proper balance. “I call it a three-legged stool – customers, employees and shareholders. If any one leg gets out of whack the stool gets rickety and out of balance. If it gets too out of whack the stool can fall over. Our management team’s goal has to be getting and keeping those three legs right and in the proper balance,” he said.

The upcoming talks

Oberhelman said he isn’t concerned about the upcoming contract negotiations with the United Auto Workers because the employees understand now more than ever the importance of being competitive on a global scale.

“The CEO has to be competitive, the management team has to be competitive and the labor force has to be competitive, whether it’s white collar or hourly. I think going into the talks everybody understands that we have to be competitive and that we are fighting competition that wants our market share and our jobs.

“We will deal with our workers in terms that are very respectful of everybody involved,” he said. “I am very optimistic about it.”

Local union leadership is optimistic, as well, said Dave Chapman, president of UAW Local 974, which represents Caterpillar’s hourly workers in the Peoria area.

“Doug is a local guy, and we believe that could be a plus for the Peoria area. Maybe it will mean more jobs for the area,” he said.

“We have a lot of respect for him and we know a lot of others do also, so we are more optimistic.”

And the analysts?

Industry analysts who follow Caterpillar believe Oberhelman will be the right man to lead Caterpillar through the next several years.

“I believe Doug will be very effective in that job,” said Eli Lustgarten of Longbow Research. “He is much more a pragmatist, and he will be very focused on improving the company’s profitability and market position. His real charge will be to finally demonstrate the kind of improved profitability Caterpillar is capable of producing.”

Mark Koznarek of Cleveland Research concurred that Oberhelman is focused on demonstrated results, and that he proved himself when he was in charge of Caterpillar’s engine division and guided it through the ever-strengthening environmental regulations.

“He is a good communicator who seems to have a degree of impatience about him. That could be a strength, though he may have to learn to rein it in if he pushes too hard,” he said.

Lustgarten said one reason Oberhelman is effective is that “he is very much realistic in his approach to meeting his objectives. At the same time he is very down to earth.”

Speaking of the earth

The earth is, of course, important to a man whose company makes equipment that moves it. But that’s only part of the story for Oberhelman.

Several years ago he purchased a farm on the outer edges of Peoria County that was a reclaimed coal mine. He rents part of it as farmland, but much of it has become his hobby – restoring the property to a wildlife habitat.

It is something he works at on weekends with his wife, Diane, herself a powerful person as chairwoman of Cullinan Properties Ltd. and one of Peoria’s leading developers.

“We’re each others’ biggest fan, and we do everything we can together. This is one of them,” he said while showing one of the lakes he has built on the farm that already is attracting wild birds and fowl.

Oberhelman owns a bulldozer and a wheel loader – both Caterpillar, of course – and uses them himself to work on the habitat restoration. He’s looking forward to a time he no longer has to work it, but enjoys it nonetheless.

He was reluctant to call the farm an escape, but said, “I’ll tell you, after about two or three hours in the cab of one of those machines you’ve solved every problem in the world, the music is playing, and you feel nothing can stop you. It’s a great feeling.”

‘He had a way about him’

The passion Oberhelman feels for Caterpillar and for his farm is no surprise to his parents, his father said.

Nor, he said, does his son’s work ethic.

“I always knew he was going to go places because even as a kid, he always put his work first. When he came home from school, the homework got finished before he did anything else. And that was his choice. He was always like that,” said Ernie Oberhelman.

He said he recognized early on that his son had “a way about him” that showed he was going to be a leader.

“He’s always had an ability to get things done without ever having to lose his cool or raise his voice. When he speaks, people listen and things get done. I think that shows leadership,” Ernie Oberhelman said.

He added Doug will be able to stand the heat that comes from being the CEO of a Fortune 50 company. “If he feels the heat he won’t show it,” he said.

The elder Oberhelman said he and his wife Donna were overwhelmed when they heard the news their son would be the CEO and eventual chairman of a company he knows “is the biggest and the best in the business. We could not be prouder than what we are.”

By Paul Gordon / Journal Star

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