Jump to navigation

America's Small Business Summit 2007 - Remarks by Gerald S. Shaheen - Chairman, U.S. Chamber Board of Directors

Thursday, May 24, 2007 - 8:00pm


Remarks by Gerald S. Shaheen
Chairman, U.S. Chamber Board of Directors
Group President, Caterpillar Inc.


Renaissance Hotel, Washington, DC - May 25, 2007

It's a great pleasure to be here. I'd like to take this opportunity to tell you about my experience with small businesses and their importance to Caterpillar, to our economy, and to the U.S. Chamber of Commerce.

Although I've spent my entire career working for a large multi-national corporation, I can relate to the challenges and opportunities facing small business owners because I work with them and come from a family of them.

My grandfather was a peddler who emigrated to the United States from Lebanon in the 1880s.
He saved enough money to eventually buy a farm in Elmwood, Illinois, and he raised nine kids on it. He also bought a grocery store. He saved a lot on labor costs by putting all of his kids, including my father, to work in the store.


After my father married, he and my mother opened a grocery store of their own. As children, my twin brother and I stocked shelves, greeted customers and swept the floor. When our school day was over, our work was just beginning. It was during this time I learned the value of hard work, sacrifice, independence and the notion that nothing in life comes free.

This philosophy has guided my career and has helped me to think like an entrepreneur when making important business decisions for Caterpillar. I feel fortunate to work for a successful global company. At a time when many critics have all but announced the death of U.S.-based manufacturing companies, Caterpillar is competing-and winning-in the global economy.

We have more than 90,000 employees worldwide-more than half of them in the United States. We operate more than 100 production facilities in 40 countries. The company achieved record sales, revenues, and profits in the first quarter of this year, and just last month we raised our outlook for full year sales and revenues and profit per share. Caterpillar would not be where it is today without its network of small business dealers and suppliers.

When Caterpillar's founders established a first-class engineering and manufacturing operation committed to quality, innovation, and customer value more than 80 years ago, they recognized that product distribution was the key to the company's future. So they turned to the small business community-to an independent dealer network made up of aggressive entrepreneurs responsible for managing customer relationships at the local level and adding value to Cat products through service excellence.

Caterpillar knew then what it knows now-it can't possibly build relationships with local customers in the same way that smaller, local businesses can. From the beginning, the family-owned business, passed from generation to generation, has been the hallmark of the Cat dealer organization.

Today, 59 independent dealers represent Caterpillar in North America, collectively employing 52,000 people with sales ranging from just over $100 million to more than $2.5 billion. We're proud to say that because of their relationship with Caterpillar, many of these small businesses aren't so small any more. They've benefited from our growth and vice versa. Nevertheless, Cat dealers have maintained their entrepreneurial, family-owned structure. Most North American dealers are currently in their third or fourth generation of family ownership. On average, they've been in the Caterpillar family for more than 40 years.

We expect every dealership to be led by one individual who is highly involved in the business and personally accountable for developing lasting relationships with local customers. History proves the relationship functions best when there is "one set of eyes", one decision-maker, at the dealership, not several individuals with fractional ownership.


We engage with dealers in a continuity planning process for the dealer principal and other key executives. When a leadership transition is necessary, Caterpillar selects the new principal to take the relationship forward.

We work closely with the departing principal to identify the person we believe will have the most success sustaining and strengthening customer relationships through the transition and in the years ahead. It's a strategy that has worked well for us and our dealers for more than 80 years. Caterpillar has equally strong relationships with its suppliers, of which more than half - 54 percent - are small businesses. Of that 54 percent, more than 670 suppliers are diverse owned and operated. Because of their relationship with Caterpillar, many of these companies are enjoying tremendous success.


Take, for instance, American Cable Company located in Philadelphia and owned by Carlos Gonzales and his son Carlos, Jr. Working closely with Caterpillar, this U.S.-based supplier took advantage of an opportunity to source product globally-and by doing so, saves us more than $200,000 annually.


There's also Peoria Production Shop, a not-for-profit packaging company of 140 employees, 80 percent of whom are disabled. By participating in our mentor protégé program, this supplier dramatically increased its Caterpillar business-growing from $6.5 million in revenues to $13 million over a five-year period.


Let there be no doubt-small businesses are vital to Caterpillar's success, and we are firmly committed to helping them grow and take advantage of new opportunities. Four decades ago, the chairman of General Motors said, "What's good for General Motors is good for America."

Allow me to borrow from that phrase and say that what's good for Caterpillar is good for small businesses, and vice versa. To take it a step further, what's good for small business is good for America's economy. Small firms account for half of the U.S. private sector gross domestic product and create a majority of new jobs.


But statistics alone don't convey the value of small businesses to our society. Statistics cannot measure the level of innovation that comes from small businesses. They cannot measure the sheer will and desire to succeed that all small business owners must possess. And they certainly cannot gauge the ability of entrepreneurs to adapt to change and pick themselves up by the bootstraps when they fail. In numbers, talent and energy, small businesses are the most powerful constituency in this country. I know because I've been a witness to it.


One of the perks of being chairman of the U.S. Chamber board of directors is having an opportunity to speak to local business owners at chambers of commerce and other business gatherings around the country. The purpose of these trips is simple-to influence the national debate over taxes, regulations, health care, energy and education, and enlist businesspeople in the Chamber's cause. In other words, my goal as chairman is to be a strong voice for business.

To my great delight, I've found thousands of voices for business wherever I've traveled on behalf of the Chamber. From New Mexico to Florida, from Ohio to Mississippi, I encounter small business owners who recognize that one of the smartest business decisions they ever made was to stand up and voice their opinion. While everyone here understands the difficulty of meeting a payroll, paying taxes and providing health coverage, many of our elected representatives don't appreciate the constant struggle for business success. And if we don't educate them, they never will.

The U.S. Chamber is unique in that it provides small business owners with megaphone with which to make your voices heard over all the noise in Washington. The Chamber and organizations like it on the state and local levels can do for small businesses what you cannot do individually-and that's provide a vehicle with which to create real, positive change.


I strongly urge you to take advantage of all the resources available to you through the U.S. Chamber and never stop fighting for your business.

Thank you very much.