A Publication of WTVP

Doug Oberhelman is a group president at Caterpillar Inc., responsible for the company’s human services, sustainable development functions and remanufacturing business. He also oversees machinery marketing operations in North America and worldwide manufacturing, marketing and support of industrial and large power systems. Since joining the Cat team in 1975, Oberhelman has held numerous positions across the globe, serving as senior finance representative for Caterpillar Americas Co. in South America, region finance manager and district manager for Cat’s North American Commercial Division, and managing director and vice general manager for strategic planning at Shin Caterpillar Mitsubishi in Tokyo.

Briefly summarize your educational background and family life.

I grew up and went to school in Woodstock, Illinois, then moved to Decatur to attend Millikin University. I’m fortunate to be surrounded by a great family—my wife, Diane, and her four children, my parents, Diane’s parents, my sister, two nieces and a brand-new grand-nephew.

Explain how your career led you to central Illinois and Caterpillar.

Not many people know this, but my dad was a salesman at a John Deere dealership. I grew up around machinery and knew at a very young age that I wanted to work for Caterpillar.

Right after graduating from Millikin, I joined the company as a credit analyst in the treasury department. I spent the first part of my career in finance-related positions and had the opportunity to work around the world. I spent three years in Uruguay, one year in South Florida and four years in Japan. And before moving to the executive office, I was Caterpillar’s Chief Financial Officer and then vice president of our engine business in Mossville for a few years.

I really enjoy the central Illinois way of life. I’ve lived in Tokyo and Miami, where commute times are calculated in hours. Here, my commute takes about 12 minutes and I might have to pass through two red lights. Plus, I like all of the opportunities Peoria has to offer.

What are your responsibilities as group president at Caterpillar? What divisions within the company do you oversee?

There are six group presidents at Caterpillar who report to our CEO. In my “portfolio” there are five business units. I manage the human services division and several businesses with key sustainability opportunities and challenges—the remanufacturing, industrial power systems and large power systems divisions. I also oversee machinery marketing and sales for our North American commercial division.

You mentioned sustainability. How has Caterpillar championed and embraced this concept?

Our core businesses—mining, infrastructure development, power generation—intersect with some of the world’s biggest sustainable development issues, so it’s a natural fit for us. It’s not just that preserving our planet is the right thing to do; it’s that these issues are fundamental to our business—to our customers’ success, and therefore, to our own success.

Our customers are being challenged to do their work more efficiently and with less impact on the environment. In a few cases, their very right to do that work is being questioned. So only by making our customers more sustainable in their respective industries will our own business prosper.

Providing reliable and efficient energy solutions, promoting responsible use of materials and developing quality infrastructure are key challenges for society today. They’re also areas where Caterpillar, our dealers and our customers have been providing solutions for decades.

Discuss some of the sustainability initiatives currently underway at Caterpillar.

We’re a big company with operations around the world, so when we talk about sustainable development, it only makes sense to start with our own operations. But we believe our biggest contribution will come through our core businesses. That’s why we’re so focused on helping our customers respond to their environmental challenges—improving jobsite safety, increasing material and energy efficiency and reducing greenhouse gas emissions.

In 2007 we established aggressive, enterprise-wide goals to address both sides of the coin—operational performance and products, services, and solutions for customers. These goals serve as the framework for a wide range of activities related to sustainable development.

A primary goal both internally and externally is safety. In our own operations, we’ve made dramatic improvements since setting a zero-injury goal a few years ago. Over the past four years, our people have reduced lost-time injuries by 76 percent, and recordable injuries have dropped by 64 percent. That’s about 1,000 more employees that returned home safely to their families in 2007 than in 2006, thanks to our focus on safe work practices.

Now that we’ve addressed some of the more obvious safety issues, we’re working on eliminating the ergonomic sprains and strains that are among the most common on-the-job injuries. We’re getting employees involved in redesigning their workstations to help eliminate these problems. When we achieve our 2010 goals, Caterpillar will be considered world-class in safety—not just in manufacturing, but in any industry.

We’re equally concerned about the safety of people in, on and around our products. One tool we’ve developed to help our customers operate more safely is—arguably the most comprehensive website for the industries we serve. It’s filled with tools and resources for customers, including virtual walk-around inspections and operating tips.

In addition to safety, we’ve set goals for reducing waste and increasing our material efficiency. Basically, we want to do more with less in our offices, warehouses and factories. We reduce, reuse, recycle and attempt to extract the maximum practical benefit from materials used in our business. Our best-in-class facilities currently recycle more than 90 percent of their waste, and that’s not even including scrap metal, which is fully recovered.

Another goal relates to energy efficiency. In our own operations, we’ve made great strides in reducing greenhouse gas intensity and emissions. We’re a member of the U.S. Environmental Protection Agency’s Climate Leaders program and have already exceeded our 2010 commitment to reduce greenhouse gas intensity by 20 percent from 2002 levels. We also beat an even more aggressive internal goal of 35 percent reduction by 2010—three years early.

On the customer side, energy-related products and services account for about a quarter of our business, and we’re providing solutions that range from more energy-efficient engines, to products capable of running on renewable fuels, to generator sets that convert dangerous waste gases into clean electricity.

One of our newest offerings is the D7E electric-drive track-type tractor—the first machine of its kind. When it hits the market in 2009, it will be the most fuel-efficient and productive tractor in its size class, moving up to 25 percent more material per gallon of fuel and reducing greenhouse gas emissions by a similar amount. These are improvements that just aren’t possible with conventional drive systems—and a great example of how we are applying technology to develop solutions for environmental issues.

Climate change is the sustainability issue we hear the most about today. How can our world best deal with climate change without sacrificing economic growth?

The biggest challenge is bringing everyone together—governments around the world, businesses, civil societies and international bodies—to create comprehensive solutions that make sense. As corporations and individuals, we can find our own way to make a contribution and be part of the solution—but an issue as big as climate change requires a coordinated effort.

At Caterpillar, we’re not just sitting back and waiting for solutions. We are active in partnering with other companies, communities and governments to advocate policies that are both environmentally and economically sustainable. Governments are faced with some serious policy decisions, but ultimately it’s the business and scientific communities who will be charged with providing solutions.

One of the organizations we’re involved with is the U.S. Climate Action Partnership, or USCAP. This alliance of corporate partners and environmental organizations was formed to create a forum for development of paths to address climate change.

We embarked on this effort with our customers’ interests in mind. They play a critical role in ensuring competitive energy supplies, energy security and environmental protection. So we want to make sure the coming legislation has the intended positive effect on the environment, but doesn’t unfairly impact our customers.

The fact is, energy availability drives the global economy, and all signs point to ever-increasing demand. We all see the effects at the pump and on our power bills. Rising costs are taking a toll on competitiveness. To solve the problem, we need to encourage innovation that leads to new sources of energy—and just as important, that improves the use of existing, abundant resources.

Take coal, for example. The United States is the “Saudi Arabia of coal,” with a larger resource base of coal than the OPEC nations have of oil. Coal generates more than half the electricity consumed in the U.S.—and does so inexpensively compared to natural gas, oil, solar or wind power. But coal gets a bad rap in debates about climate change, and it’s often dismissed when talk turns to the quest for cleaner, more affordable sources of energy.

I sit on the board of Ameren Corporation, this country’s fourth largest user of coal. At Caterpillar, many of our best customers are in the coal industry. Therefore, I see the potential of coal. I believe the missing link—with coal and many other energy solutions—is technology. That’s a problem that can be solved. Instead of turning our back on coal, we must drive technology development that will allow us to use this resource in a way that reduces emissions and minimizes our reliance on foreign oil. It’s a critical piece of our energy puzzle, and we have to find a way to use it cleanly.

I’ve heard the climate change challenge compared to the space race. In 1961 President John F. Kennedy challenged a generation to develop the technology that put a man on the moon in less than a decade. We need that same energy and drive to motivate a new generation to rise to the challenges presented by growing energy needs and the threats of global warming. If we can work together on a common goal, I have every confidence in our ability to address climate change and create economic opportunity.

How have Cat employees embraced the concept of sustainable development? How are you encouraging their involvement?

Our people are amazing. Every day I see examples of employees coming up with great ideas to help our planet, and they are very passionate about it.

One idea I like comes from team members at our remanufacturing facility in Corinth, Mississippi. They found a creative way to reduce water consumption by reusing air conditioning condensation. Their creative solution resulted in a savings of more than seven million gallons of water. Ideas like this helped us decrease our water consumption by 750 million gallons in 2007.

We can all recycle our water bottles and shut down our computers at night, but it takes a different kind of thinking to make a real impact. Don’t get me wrong, small gestures can add up to big results, and we have to create a culture at Caterpillar that encourages everyone to do the small things and to look for the big ideas that will lead to remarkable change.

For example, I’d like to unlock our employees’ creative juices when it comes to reducing packaging waste. Every day we ship and receive a huge amount of products and materials. Finding ways to eliminate packaging waste and efficiently package our own products is an enormous challenge, but I know our people will come up with inventive solutions.

I’d like to encourage employees to get involved in and stay informed about the environmental and social challenges that face our business and our planet. I know our people are talented and creative, and I want them to realize that their ideas can have a real and positive effect on the world around us.

What about your investors? What’s their reaction to Caterpillar’s sustainable development strategy?

Investors are concerned with performance and return, and the good news is, we can create value and make money by responding to the world’s environmental challenges. These challenges essentially represent unmet market needs, and our job in business is to develop new technologies, products and services to address them.
Our remanufacturing business is a great example. Remanufacturing minimizes waste, reduces the need for raw materials to produce new parts and consumes significantly less energy than either recycling metals or manufacturing new components. Last year, Cat Reman recycled 141 million pounds of end-of-life material—great for the environment. Since 2001, revenues from our remanufacturing business have grown 110 percent—great for our investors.

We work hard at Caterpillar to demonstrate how we’re creating shareholder value through our sustainability efforts. We’ve been selected as a member of the Dow Jones Sustainability World Index (DJSI) for seven consecutive years. The DJSI is based on a thorough analysis of corporate economic, environment and social performance, and in 2007 we received the highest overall score by a company in the industrial engineering industry.

Why is sustainable development so important to you personally?

I’ve always loved the outdoors, and my wife, Diane, and her children share that passion. My “down time” activities center on family and the outdoors. We enjoy shooting and fishing and spending time on our farms—including Diane’s horse farm—and on our recreational lakes.

Although I’ve always loved the outdoors, my interest in environmental issues really ignited in the early 1980s. I was working for Caterpillar in Uruguay, and I went on a fishing trip on the Paraguay River. As we traveled to the river, we drove through miles of thick jungle, and once we reached the river, I was amazed by the wealth of plant life and wildlife in the water and along the shoreline. The memory of that fishing trip and the beautiful environment really had an impact on me.

Several years ago, I took Diane back to the Paraguay River to share the experience. But sadly, the river was very different from my previous visit. Much of the jungle was gone and so was much of the wildlife. It was a real wake-up call for me to see such a dramatic change to the environment in a relatively short amount of time. That’s when I began to get more formally involved with organizations such as The Nature Conservancy and the Wetlands Trust, which is the foundation for Ducks Unlimited. These organizations are responsible for millions of acres of habitat preservation and restoration.

I also realized there was much we could do as a corporation. In 2005, Caterpillar helped launch The Nature Conservancy’s Great Rivers Partnership, which is an ambitious effort to protect several of the world’s largest river systems: the Mississippi here in the United States, the Paraguay-Parana in South America and the Yangtze in Asia.

I serve on the Illinois Board of Trustees, so I also see the great work The Nature Conservancy does even closer to home. You don’t have to travel to a remote area like Paraguay to find a place of environmental significance. Just take a quick trip down the river to Havana. At Emiquon Preserve, you can see The Nature Conservancy in action on one of the largest floodplain restoration projects in the United States.

Emiquon was once considered one of the most ecologically important places in the Midwest. You could find hundreds of plant and animal species there until about 1919, when the land was converted to farmland. Now the lakes and wetlands are being restored. Scientists, students, volunteers, government agencies, corporations and sponsors are coming together to restore this area to its rich history. It’s an amazing contribution to Illinois and will also serve as a model for other global wetlands projects. In a few years, it will be one of the best examples of habitat restoration in the world.

What other causes are near and dear to your heart?

Diane and I are very involved with Easter Seals. Through this organization I’ve met some incredible people. We know a young boy with cerebral palsy who has been coming to our farm for several years to ride one of our horses. When we first met him, he rode with his dad who was completely supporting him during the entire ride. He was severely hunched over, and it was difficult for him to hold on. Today, while he still needs his dad’s support, he can sit up straight and use the new muscles and nerves he’s developed. When Diane and I see that, our own problems seem small, and we can’t seem to remember any of the hassles we were thinking about earlier.

Every day, the people we’ve met through Easter Seals are faced with challenges, but they face those challenges with strength and courage. I can think of few things more rewarding than seeing those children grow up to become happy and successful adults. It’s absolutely inspiring! iBi