The comeback of Caterpillar , 1985 - 2001
Caterpillar Company had to reinvent itself over a period of 15 years throughout the tenure of CEO George Schaefer (1985-1990) and CEO Donald Fites (1990-1999). A main internal factor that forced Caterpillar to renew its strategy was the costly strikes, as its efforts to reduce overall labor triggered a strike among US employees which was led by the United Auto Worker (UAW) union. On the other hand, an external factor who stemmed the crisis before the renewal was a global recession, with high-way constructions slowing down and declining oil prices to depress the worldwide market for pipe-laying equipment. Moreover, the unfavorable currency exchanges rates led to a steep rise in the value of Dollar, which made Us exports more expensive abroad and Us imports cheaper at home. CAT implemented a series of strategies during the reign of Schaefer that approached the solution of its problems and it concerned global outsourcing, broader product line and improved labor relationships. Furthermore, CAT improved product quality by changing the layout of an entire plant and by implementing the program company-wide. Fites's leadership and problem-solving style was to bring CAT's labor relations closer to the Japanese model, while he persisted on reorganization by paying more attention to customer needs and the company's distribution network (dealers).
A major source of resistant against change as long as G.Schaefer and D.Fites were CEO's was the archaic organizational structure of the company, functioning as a small company that operated just a few plants. On top of that, both of them faced labor disputes, which were tackled by either the exceptional people and social skills of the former,leading to a significant improvement of CAT's relations with the UAW, or by the decisive demands of the latter, concerning the employees contracts and the strict rules of workplace conduct. As far as CEO Barton is concerned, his...
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