Caterpillar Inc. often abbreviated as CAT is an American Fortune 100 company that designs, engineers, manufactures, develops, markets, and sells machinery, financial products, engines, and insurance to its customers through a global network of distributors. It is the largest manufacturer of construction equipment in the world. In 2018, CAT was ranked 65th on the Fortune 500 and 238th on the Global Fortune 500. The stock of Caterpillar is a component of the Dow Jones Industrial Average.
Caterpillar Inc. has its origins in the merger in 1925 of Holt Manufacturing Company and C. L. Best Tractor Company, by creating a new entity named Caterpillar Tractor Company. It was based in California. In 1986, the company was reorganized as a Delaware corporation under the current name is Caterpillar Inc.
The Interesting History of Caterpillar
Steam tractors of the 1890s and early 1900s were extremely heavy. They sometimes weighed around 1,000 pounds (450kg) per horsepower. These heavy tractors sometimes sank into the soil of the farmland in the San Joaquin Valley Delt surrounding Stockton, California. Benjamin Holt attempted to solve the problem by increasing the width and size of the wheels such as to 6 feet wide and 7.5 feet high. Hence, producing a 46-feet wide tractor.
By increasing the height and width of the tractors, they were not difficult to maintain and were complex and expensive to own. Another solution considered was to place a temporary plank road in front of the steam tractor, but it was expensive, time-consuming, and interfered with earthworks. Later on, Holt considered wrapping the wheels in the planks.
He replaced the wheels of a 40 horsepower Holt No. 77 steamer with a set of wooden rails that were bolted to the chains. On November 24, 1904, on Thanksgiving Day, Holt successfully tested the improved machine by plowing the soggy lands of the Roberts Island Delta.
At the same time, Richard Hornsby and Sons in Grantham, Lincolnshire, England, developed a sheet steel tracked vehicle that was patented in 1904. The tractor was driven by differential braking on tracks and did not require the front drawbar wheel to operate and made it do so. Several tractors were built and sold for operation in the Yukon, one of which operated until 1927 and it still exists.
Hornsby found a limited market for his tractor, so the patent was sold to Holt in 1911, the same year Holt registered the trademark Caterpillar. The company photographer Charles Clements reportedly observed the tractor crawling like a caterpillar and Holt took advantage of the metaphor. Hence, the company’s name Caterpillar was decided. However, some sources attribute this name to the British soldiers who witnessed the testing of the Hornsby tractor in July 1907.
After two years, Holt sold the first steam tractor’s track for $5,500 that makes $128,000 as of today. Each side was having a rail frame measuring 30 inches high and 42 inches wide and 9 feet long. The tracks were 3 inches by 4 inches redwood slats.
Foundation of Caterpillar
The bankers and banks who had the company’s large debt forced Holt’s board of directors to accept their nominee, Thomas A. Baxter to succeed Benjamin Holt. Baxter initially removed the large tractors from the product line of the company and introduced smaller models focusing on the agricultural market. When the Federal Highway Act of 1921 funded a billion-dollar federal highway construction program.
Baxter began to reorient the business towards the building highway construction equipment. The company faced stiff competition from the Fordson Company. Between 1907 and 1918, Best and Holt spent about $1.5 million on a legal fee to fight in a series of patent, contract, and trademark infringement lawsuits.
Role of Harry H. Fair
Harry H. Fair of the bond brokerage house of Pierce, Fair & Company of San Francisco, helped to finance C. L. Best’s debt. As a result, Holt’s shareholders approached him about the financial problems of their company. To solve the problem, Fair suggested that two companies should merge. In April and May 1925, the financially stronger company C. L. Best merged with the market’s leading company Holt Caterpillar to form Caterpillar Tractor Co.
Until 1930, a new company was based in San Leandro under the terms of the merger. Later on, it was moved to Peoria. Baxter was removed from his role as CEO in early 1925. Clarence Leo Best assumed the title of CEO and remained in the role till October 1951.
The product lines were consolidated in the Caterpillar Company by offering five track-type tractors. The 2-ton, 4 ton, and 10 ton were from the old product line of Holt Manufacturing Company and Caterpillar 30 and Caterpillar 60 from the C. L. Best Tractor Co.’s product line.
The 5 and 10 models were discontinued in 1926. Two years later, the 2-ton model was also discontinued. In the first year after the merger, the sales were $13 million and then it reached $52.8 million in 1929. At this period, Caterpillar was able to grow during the Great Depression of the 1930s.
Gasoline Engines to Diesel Engines
Caterpillar replaced the gasoline engines with diesel engines. During World War II, Caterpillar products gained fame with the Seabees, US Navy Construction battalions, which built facilities and airfields in the Pacific theater of operations. Among the US companies, Caterpillar was ranked 44th for the value of wartime military production contracts.
During the postwar construction boom, CAT was able to grow at a rapid pace. As a result, the company launched its first business outside the United States in 1950. It ushered in the development of Caterpillar into a multinational company. In 2018, Caterpillar was in the process of restructuring and closed the demonstration center in Panama. Also, the engine manufacturing plant was closed in Illinois.
Interesting Facts About Caterpillar
- During 1930, Caterpillar began selling tractors and combine harvesters in Russia.
- On December 7, 1931, the trademark logo was changed from gray to yellow.
- The first diesel tractor of Caterpillar worked on a major and global project of the King Albert Canal in Belgium.
- The first diesel engine was sold in June 1932 for commercial use.
- In 1932, Caterpillar records the first financial loss of $1.6 million.
- The machines from Caterpillar started working on the Golden Gate Bridge in 1933.
- Hoover Dam was completed using the equipment of Caterpillar in 1936.
- The machines of Caterpillar help to begin the construction of the Pennsylvania Turnpike in 1938.
- In 1939, the first diesel truck engine, D468 was manufactured by Caterpillar.
- The first Genset by Caterpillar was created in 1939.
Caterpillar – Heavy Duty Machines, Engines, And Much More
Since 1925, Caterpillar has been promoting sustainable progress and helping its customer to build a better world. Caterpillar has been based on cutting-edge technology for decades. It was founded by C. L. Best as a result of the merger with another company named Holt Caterpillar and formed Caterpillar Tractor Co.
During the postwar era, the company gained fame by participating in construction projects. CAT has been constructing major and famous projects such as Golden Gate Bridge and King Albert Canal in Belgium, and many more.