Man with Decatur ties set to be new Caterpillar boss

PEORIA, Oct 23, 2009 (Herald & Review - McClatchy-Tribune Information Services via COMTEX) -- CAT | Quote | Chart | News | PowerRating -- A top executive with strong Decatur connections will begin to assume control of Caterpillar Inc. on Jan. 1, the company announced Thursday.

Douglas R. Oberhelman, a graduate of Millikin University, was chosen by the Caterpillar board to fill the offices of vice chairman and chief executive officer-elect, readying him to succeed the current chairman and chief executive, James Owens, who will step down from the CEO slot July 1.

Oberhelman, 56, currently oversees Caterpillar divisions that include its engines and gas turbine businesses. He has served as chairman of the board of trustees of Millikin and is a director on the board of Ameren Corp. among many other board memberships of corporations and charitable organizations.

Oberhelman takes over at a critical time for Caterpillar, as the company grapples with what it has described as the worst recession since the 1930s. He joined the company in 1975 and worked his way steadily up the corporate ladder, holding numerous management positions at Caterpillar locations around the world.

In a statement, the company said the new chief executive will be formally elected to the post at a meeting of the board of directors in June 2010, when he will also become a member of the board.

Owens, 63, who had joined Caterpillar in 1972 as a corporate economist, will remain as chairman of the board until Oct. 31 when he "will retire in accordance with the company's longstanding mandatory retirement policy to be succeeded by Oberhelman at that time," the company said.

The board's governance committee chairman, W. Frank Blount, credited Owens with leading the company during "its most significant period of growth," as well as the global recession.

Oberhelman's new promotion puts him at the very top of Caterpillar management and those who know him describe him as a competitive but polite and thoughtful man, and a good listener. He came to Millikin from his native Woodstock, and was a competitive swimmer for the school. He graduated in 1975 with a degree in economics and finance and returned to serve on the board of trustees from 1996 to 2005, serving as chairman of the board from 2000 to 2003.

Millikin president Doug Zemke knows him well and says he has many outstanding qualities.

"There are two things you should know about Doug Oberhelman and the first is that he is one of the nicest people you would ever want to meet: polite, thoughtful, and a real good listener," Zemke said.

"And the second thing you learn about him is that he is an outstanding businessman; he is really smart, and he really knows what he is doing."

Zemke said Oberhelman has done much for Millikin and was key in supporting the launch of the school's MBA program. "And Doug has continued to come back to Decatur and speak to our MBA classes," he added. "He doesn't make a big deal out of it, but he actually comes and presents to our classes and he has done that for several years."

Oberhelman has held senior management positions with Caterpillar that have taken him across the globe, working in South America and Japan. He was elected a group president and member of Caterpillar's executive office in 2002 with responsibility for the company's Asia Pacific region as well as overseeing Caterpillar financial products and strategic support divisions.

His current job title includes control of human services and overseeing everything from the company's growing remanufacturing business to its engines and gas turbine divisions.

In a statement, Oberhelman praised Owens, his predecessor, who has held the top job since 2004. "I am truly honored to follow him as chairman and CEO, and to lead one of the most dedicated and talented groups of employees in our history," Oberhelman said.

Zemke said these may be tough times for Caterpillar, but the company had chosen a proven leader whose global knowledge of a company that depends increasingly on earning revenues overseas will prove crucial. "There just is not much he doesn't know about how Caterpillar operates," Zemke said.

Caterpillar has expanded dramatically in recent years, driven by a building boom in developing countries and soaring commodity prices, with more than half its revenue coming from overseas in 2008. Its Decatur factory builds the biggest mining trucks in the world and the biggest motor graders.

But the recession dealt the company a severe blow and, in response, Caterpillar announced plans earlier this year to cut more than 22,000 jobs -- about 19 percent of its work force -- and to reduce other costs and scale back production.

On Tuesday, the company reported a 53 percent decline in its third-quarter profit, but forecast higher sales next year. Owens said the company saw encouraging signs that a recovery may be under way. He cautioned, however, that the world economy still faces significant challenges and that 2010 will be difficult.

The choice of Oberhelman as the next leader of the company was "a pretty typical Caterpillar pick," said Jeff Windau, an analyst at Edward Jones.

"Obviously, he's been with Caterpillar a long time," he said. "Investors should probably expect more of the same from a management-style perspective."

Under Oberhelman's leadership, he said, Caterpillar likely will maintain the company's focus on expanding in emerging markets, streamlining operations and improving its services business, which includes helping customers and rebuilding worn-out machines.

And at 56, Oberhelman will have a significant amount of time -- about nine years -- before he's required to retire from the company under its retirement guidelines, providing consistency that "will be good for the company," he said.

Sterne Agee analyst Lawrence T. De Maria said it was "pretty clear" the incoming CEO will continue to expand Caterpillar's presence in developing countries, along with its services business and mining industry sales.

"He was the internal candidate that investors expected to be named," though the precise timing of the succession had been unclear, he said. Oberhelman will "continue to push ahead globally, to look for incremental growth opportunities outside of just the developed markets."

Shares of Caterpillar rose 76 cents to close at $58.74.

The Associated Press contributed to this report.

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