Caterpillar is to commit hundreds of millions of dollars to Britain to cement its place as one of the country’s largest industrial employers — and to take on the home-grown British champion JCB on its own patch.
The chief executive of the American construction vehicle giant has warned, though, that Britain will be left behind in the recovering world economy unless the coalition Government invests in retraining the British workforce.
Doug Oberhelman told The Times that Caterpillar aimed to go head-to-head with JCB in the mechanical diggers market and to invest significantly in the future of its Perkins industrial engines business.
Caterpillar is already one of Britain’s biggest industrial employers. It has 13,300 staff, with more than 9,100 in manufacturing jobs, and the UK is the company’s biggest base outside the United States.
Mr Oberhelman said that he intended to consolidate that position with the investment of $150 million (£90 million) a year during his tenure as chief executive, when the pound’s low level in currency exchange makes Britain a strong place from which to manufacture for export.
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“We plan to be very aggressive, very competitive in the UK,” Mr Oberhelman said in London on the first anniversary of his appointment as chief executive. “We are looking at plant upgrading, modernisation and some expansion.”
That includes a possibly unwelcome presence on the doorstep of JCB, the family owned British champion of the heavy construction market, whose head office is in Leicester.
“We came back to Leicester a couple of years ago from North Carolina,” Mr Oberhelman said. “Leicester makes sense because we have a common supply chain with JCB in backhoe loaders. Our aim is to get very competitive. We intend to take market share.”
Caterpillar’s plans also include significant investment in research and development at Perkins Engines, the historic British engineer that it bought in 1997 for $1.3 billion after the merger of Lucas Industries with Varity Corporation.
A quarter of Perkins’s output in Peterborough goes into Caterpillar machines, with the remaining petrol and diesel engines going into the worldwide market in off-highway heavy vehicles such as agricultural and industrial machinery.
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The group also plans to develop its FG Wilson industrial and mobile power generators in Northern Ireland and the articulated dump trucks that it makes in Peterlee in the North East.
Mr Oberhelman said that Caterpillar enjoyed good government relations in Britain, smoothed by Lord Powell of Bayswater, the former diplomat and government adviser who sits on the board of Caterpillar. He warned that he feared for the future of British competitiveness because of the future capabilities of its workforce.
“Labour flexibility is an issue here,” Mr Oberhelman said. “Labour flexibility does not necessarily mean lower salaries. It means looking at the training, retraining and education system. We have to draw a parallel with Germany, which has figured it out and come out strongly after the difficult years of 2008, 2009 and 2010.
“The question is how the UK can flex the labour market when there is more work. The countries that see the huge opportunities, who train their people first, they are the ones who will be the winners.”
A spokesman for JCB, which employs 6,000 people in Britain, said: “JCB is the global market leader in backhoe loaders by a considerable margin. Much of our competitive success is due to vertical integration, in that we make all major components internally.
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“Since launching the world’s most fuel-efficient backhoe loaders last year, we are very confident of extending our leading market position even further.”
British progress
1890 Benjamin Holt and Daniel Best experiment with steam tractors, and in 1915 their business first produces the Holt Caterpillar track-type machines, used by the Allies in the First World War
1950 Caterpillar Tractor is established in Britain and buys the Desford site near Leicester, where backhoe loaders continue to be produced
1996 Caterpillar Inc acquires DJ Brown, the Peterlee-based articulated truckmaker
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1997 Caterpillar buys Peterborough-based Perkins Engines from Lucas Varity for $1.3 billion
1999 Caterpillar takes control of FG Wilson, the Northern Ireland power generator maker
The workforce
1,658 Larne FG Wilson, generators
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3,628 Peterborough Perkins Engines
1,307 Peterlee articulated trucks
2,540 Leicester diggers and backhoe loaders
4,000 Staffordshire many of them in Finning sales, distribution and logistics operations