As it embarks on one of the largest corporate transformations in modern history, General Electric may find it helpful to use Caterpillar as a guiding light.
That's because when it comes to cost-cutting, boosting sales, making money and getting back in the good graces of Wall Street, Deerfield, Ill.-based Caterpillar's two-year-plus reorganization is firing on all cylinders.
As a result, Caterpillar is chalking up the type of results that GE hopes to achieve, provided its sweeping revamp launched this week is as successful.
GE is unloading $20 billion in assets and shrinking the unwieldy conglomerate into a more manageable and, it hopes, highly profitable industrial business.
Boston-based GE is larger and more multi-dimensional than heavy equipment maker Caterpillar, so direct comparisons aren't always apt. Nonetheless, GE's recently installed CEO John Flannery should be emboldened by Caterpillar's rebound.
Just like GE, Caterpillar understands that desperate times call for desperate measures.
Between 2010 and 2016, the maker of heavy manufacturing equipment and construction vehicles suffered a 40 percent sales and revenue decline _ an unprecedented fall for the 92-year-old Caterpillar.
The free-fall compelled the executive brass in late 2015 to initiate its mass restructuring that centered on a $1.5 billion cost-reduction plan. Caterpillar also sought to use the revamp as a means of forging a different corporate culture, one that was more growth-oriented and better poised to take advantage of the homebuilding and infrastructure revival underway overseas and throughout North America.
So far, Caterpillar's business comeback is on track.
Its workforce has declined by at least 16,000, 30 facilities have been closed or consolidated, and it may exceed $1.5 billion in cost cuts, according to the company.
In the third quarter, Caterpillar said it expects 2017 revenue of $44 billion, up from its earlier quarterly forecast of $42 billion to $44 billion.
While those who have lost their jobs are bearing the brunt of Caterpillar's changes, the results and projections are exceeding Wall Street's expectations. Caterpillar stock is trading around $134 per share, compared with $94 per share about a year ago.
Right now, GE can only dream of such a lofty improvement.
The company's stock is around $18 per share, down from just over $20 per share at the time of Flannery's Monday announcement, which included a 50 percent dividend cut. A year ago, GE was trading at $30 per share.
Wall Street wags, who have been waiting a long time for a GE turnaround, are openly wondering if Flannery is cutting enough. Some question if the company's three remaining industry segments _aviation, health care and power_can become a big moneymaking operation.
Flannery has asked investors to be patient because his plan will take a few years.
Frustrated shareholders may be too rough on Flannery, a GE veteran with ample corporate reorganization experience, who seems ready to do what's necessary to revive the company.
After all, GE is spinning off some sacred properties, including the signature lighting division that inventor Thomas Edison developed to help start the company more than 125 years ago.
Caterpillar also turned a page on its history by deciding to relocate its longtime headquarters from Peoria, Ill., to Deerfield, which will be completely operational by mid-2018.
Yes, large manufacturing revivals are difficult and tricky. But Caterpillar is showing GE that there is a way to bring good things to life.
