The recession hit Caterpillar hard. In 2009, its revenue fell 37% to $32.4 billion from $51.3 billion in 2008. But the Peoria, Ill.-based maker of distinctive yellow construction and mining equipment is now thriving, no small feat in a shrinking sector. U.S. manufacturing now represents just 11.2% of the nation’s GDP, down from 14.2% in 2000 and from its peak of 28.3% in 1953.
Caterpillar’s blueprint for success? The global nature of the company’s business and its long track record not only at selling overseas but also manufacturing there, says CFO and Group President Ed Rapp. “We’ve been playing in the emerging markets forever,” he says. “We’ve been in Brazil with a manufacturing base for more than 50 years.” The company’s 2010 revenue rose 31.4% to $42.6 billion, and its net profit surged to 6.3%, from 2.8% in 2009. And a few strategic acquisitions last year have put Caterpillar in a strong position to build on its global foundation.
As a part of its efforts, Caterpillar launched a global supply chain finance program with JP Morgan in 2009.
“It really served two purposes,” Rapp says. “It supported us in terms of our drive to improve cash flow but it also supported our suppliers in terms of getting them faster access to payables and really helped them support their growth, which facilitates ours.”