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Caterpillar raided for tax fraud.

well, if the New York Times says so, it must be true

Seems you didn't make it past the mast head. The first article clearly states a "government report" and makes several references to a 2014 report by the Senate. The NYT simply aggregated the information and reported it succinctly, like, you know, a newspaper tends to.

NYT.jpg
 
In 2014, a Senate investigation found the company had used its Swiss affiliate to take advantage of a corporate tax rate it negotiated and avoided paying at least $2.4 billion in U.S. taxes. Soon after, shareholders filed lawsuits against the company and its accounting firm, PwC, alleging breach of fiduciary duties. That matter is ongoing.

so, treat them as if they are goldman sacks or HSBC, or BoA, or etc, etc. slap them with a 1% fine.
 
ewlsey, what's going one down there in Peoria going to hurt you?

Tom

Well I suppose a falling tide sinks all boats... But, no, not directly.

Cat has been in the crapper since early 2011. So many shops have closed in my area due to low orders at Cat and the closing of the Mitsubishi auto plant in Bloomington that my Klingspor sales rep dropped my entire area from his territory. They were not getting enough sales to cover their costs.

I'm most worried about the resale value of my house when I have to move out of this area.
 
Cat used to be a great company. Back in the 70's and early 80's we did structural dynamics engineering for them (D10, engines, etc.) -- and it was strong-valued engineering types in charge -- aimed at making better products not cooking the books. Anyone know what went wrong?
 
Cat used to be a great company. Back in the 70's and early 80's we did structural dynamics engineering for them (D10, engines, etc.) -- and it was strong-valued engineering types in charge -- aimed at making better products not cooking the books. Anyone know what went wrong?


before you convict and execute, did they go wrong? Serious question, are they a mess and have poor engineering vs what they once were?
 
As far as I know it pertains to their attempt to avoid taxes on profit from part sales by filtering it through some kind of Swiss subsidiary. I believe that the conclusion from the initial allegation was that it was not technically illegal, but they didn't make any friends at the SEC/IRS/etc.

So, Cat was put on double secret probation and required to fork over a lot of info to various bureaucracies. The new allegations seem to be that they hid/destroyed/actively-programmed-some-kind-of-AI-to-vaporize-all-traces-of the info that they were required to hand over. I believe Cat referred to this as "fully cooperating with the ongoing investigation".


As far as Cat equipment is concerned, they still have a kick ass reputation. From my experience with various construction outfits, there are two kinds: those who run Cat equipement, and those who wish they could run Cat equipment. It's like mechanics and Snap-on tools.

Their parts and service are the best in the game (and the most expensive, but you probably figured that). You can still get factory OEM parts for pony motors built in the 30s. My uncle had some kind of ancient Cat machine that needed some part they could not get new. The Cat corporate parts department found a machine in Boliva that was being parted out and arranged to buy and import the parts he needed from that machine.
 

Cat is there own worst enemy market wise.

The mining, construction and agriculture equipment builders are all in the same boat. Each round of the new equipment designs results in substantially increased productivity with increased development costs.

Mining,construction and agriculture are all rather mature industries without many growth opportunities. The increased productivity of the new equipment is more than keeping up with world demand.

The end result is that the equipment manufactures have a decreasing market demand for their equipment. Improved efficiency results in them selling fewer pieces of equipment per year.

In essence they are caught in the same race to the bottom that manufacturing in general has been caught in.

As far as the tax fraud implications, not saying that Cat management wasn't playing fast and free with the accounting rules, i.e cheating, but considering there worldwide presence in manufacturing various machines and components from various countries, it would be an accounting nightmare to keep all of it straight.

Add in all of the various tax laws and various conflicting methods of accounting from each individual country of origin and the various tax rates and that the spread in various tax rates is probably equal to their profit margin, it would not surprise me if they are not found guilty, intentional or not.

I suspect that if we were to dig into most any other large corp that operates worldwide, we would find similar issues. Apple and Microsoft would also probably fit in this scenario.
 
Cat is there own worst enemy market wise.

The mining, construction and agriculture equipment builders are all in the same boat. Each round of the new equipment designs results in substantially increased productivity with increased development costs.

In essence they are caught in the same race to the bottom that manufacturing in general has been caught in.

They also have the problem other mature companies do. Back in the 1950s to say 1980, there was basically no foreign competition. Cat was the cock of the walk. The imported machine were disposable crap that no serious buyer would consider.

Today, machines from Komatsu, Hitachi, Samsung, Sany, Liebherr, etc have caught up in terms of quality and capability, but they are not dragging along all the baggage Cat has with pension costs and top heavy management and a roster of really old and inefficient facilities.
 
They also have the problem other mature companies do. Back in the 1950s to say 1980, there was basically no foreign competition. Cat was the cock of the walk. The imported machine were disposable crap that no serious buyer would consider.

Today, machines from Komatsu, Hitachi, Samsung, Sany, Liebherr, etc have caught up in terms of quality and capability, but they are not dragging along all the baggage Cat has with pension costs and top heavy management and a roster of really old and inefficient facilities.

old and inefficient?
what about the almost 30 factories they have in China, most of which are around ten years old?
Caterpillar | China

or their 36 factories in Europe and Eastern Europe?

Cat has been diversifiying overseas for decades- the US, granted, is a pretty mature market- but the rest of the world just keeps cranking out babies.
 
old and inefficient?
what about the almost 30 factories they have in China, most of which are around ten years old?
Caterpillar | China

or their 36 factories in Europe and Eastern Europe?

Cat has been diversifiying overseas for decades- the US, granted, is a pretty mature market- but the rest of the world just keeps cranking out babies.

They have been pulling back. Even in China the demand for equipment is declining.

I was working on an engine project for them a couple of years ago. Project was to machine the C35 series engine blocks for a new China plant. Did the runoff and was ready to ship to China. Ended up going into storage as the whole Chinese project was canceled.
 
All I know is that I have been in many Cat facilities here in Illinois. Most were built between 1940 and 1960. I believe building KK here in East Peoria was built during WWII or just after. It's a gloomy place full of narrow aisles and wood block floors. Pretty similar in Aurora and Decatur.

There are new facilities in Georgia and Texas, but here in the mother land the facilities are old and weary.
 
thats interesting, i worked for a CAT dealer out here. You get some good management and bad management attracted to the river of GOLD as they call it, licence to print money.

The older dealer sure was in a old ww2 aircraft hanger that had no money spent on it, some sales outlets had new facilities so a variance too out here.
Its highly political place too one cat dealer who had been a dealer for a long long time had a dealership taken off them, Lost ET, all Technical books and CD'S tried to compete in the 2nd hand market and sued CAT for damages, things turned sour fast.

New dealership was a barstard to customers and old dealer who knew what they are doing.

Wont deal with them unless i have to, i know what they are like, really its to the detriment of the CAT brand but they are only after money. Way things go. Maybe some rot got into head office too.
 








 
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