Caterpillar CEO to Step Down Next Year

PEORIA, Ill. —  Caterpillar Inc. Chairman and Chief Executive Donald Fites, who battled union workers and developed new product lines at the world’s largest maker of construction equipment, will retire early next year, the company said Wednesday.

No immediate replacement was named for Fites, 64, who joined Caterpillar in 1956. The company, which has a policy of mandatory retirement at age 65, elected Group President Glen Barton vice chairman effective Nov. 1 and made other management changes.

Under Fites, who became chairman and CEO in 1990, Caterpillar spent more than $1.8 billion to modernize its factories. It expanded its line of industrial and heavy-duty truck engines, which now account for about 30% of sales, and was viewed as the victor in a 6 1/2-year contract dispute settled with the United Auto Workers in March.

“This has definitely been his decade,” said Lisa Shalett, an analyst with Sanford C. Bernstein. The departure of Fites, named one of the top 25 managers by BusinessWeek last year, could result “in a little bit of a horse race” between possible successors, Shalett said.

She said the candidates include James Owens, group president overseeing administration; Donald Western, vice president for large engine products; and Gerald Sheehan, who will replace Barton next month as head of design and production of forest, mining and construction equipment.

Caterpillar shares fell $1.25 to close at $46 on the New York Stock Exchange.