Caterpillar 2011 Annual Report Download - page 5

WHAT THE WORLD NEEDS | 2011 YEAR IN REVIEW
Chairman’s
Message
Construction
Industries
Customer &
Dealer Support
Financial Products &
Corporate Services
The Caterpillar
Foundation Leadership Performance
Resource
Industries
Energy &
Power Systems
Chairman’s Message 5
When we compare ourselves to the best in the auto industry, we just don’t stack up well when it comes to managing our inventory turns.
Inventories have grown in our own factories, with our dealers and in our product distribution centers too. We came out of the recession
with growth much stronger and faster than expected. I’m not one for passing up sales, so we really had to ramp up production quickly.
I’m pleased that we are doing better at meeting demand, but I feel we can improve inventory turns and use less cash.
Again, we know what we need to do – we need to collaborate better with our suppliers. Sounds easy enough, but it requires a change
in our culture. Caterpillar has been known to be arrogant in the past. Our customers have said it. Our dealers have said it. And our
suppliers have probably felt it more than anyone. We’re changing that. Our suppliers are the best in the business, and we are
going to leverage their expertise, communicate better and ensure we have the capacity and quality we need from our supply base.
This is something I’m really going to push in 2012. I’m going to personally visit more suppliers, and I’m encouraging the rest of the
Caterpillar team to do the same.
As I said, we are prepared to take a good, hard look at our company. It’s something we have to do in order to be successful.
We encourage our dealers and suppliers to do the same – we can all work together better that way.
Governments also need to review their policies to ensure growth. “Business as usual won’t allow us to retain our leadership position.
But extraordinary commitment – when backed by an external environment that fosters enterprise – will help Caterpillar and other
U.S. firms compete successfully in the decade ahead.“ That’s a quote from Caterpillar’s Chairman Lee Morgan and President Bob
Gilmore in our 1981 Annual Report. It’s amazing that those very words still apply today. But I imagine they will also be valid 30 years
from now. The world is constantly changing, and businesses, individuals and governments need to change with it.
The world is recovering from a global recession. Some economies have come back pretty strong, like Asia. Things are looking up
in South America, but we’ve still got an uphill climb. And Europe is really struggling.
We are all watching to see what happens around the world. But at Caterpillar, we don’t like to just watch, we feel an obligation to
get involved. That’s why wherever we do business around the world, we actively promote many pro-growth policies. In terms of
policy and governance there’s a lot we can do to be competitive. And many of the issues we are facing in the United States apply
anywhere in the world that wants to compete in the global economy. Here are some things we feel strongly about:
1. Freer trade. Time and again, free trade is a proven winner for both sides. At Caterpillar, we promote freer trade wherever we can
get it, but we also recognize that expanding global free trade agreements through the World Trade Organization is a once in a
generation opportunity to open markets and increase worldwide economic growth.
2. Better infrastructure. Being able to participate in the global economy means being able to get your products out and get supplies
and products in. That requires a robust, modern infrastructure. Many developing nations are investing heavily in infrastructure and
it’s paying dividends. And many developed countries are in need of updated infrastructure to accommodate a growing population
and changing needs. Yes, infrastructure is expensive and it’s hard to justify any spending when a country is struggling or in debt,
but sound infrastructure is an investment that – when done right – will eventually pay for itself.
(continued)
Message From Our Chairman (continued)