[21] The steam tractors of the 1890s and early 1900s were extremely heavy, sometimes weighing 1,000 pounds (450 kg) per horsepower, and often sank into the earth of the San Joaquin Valley Delta farmland surrounding Stockton, California.

Baker, who later became the first executive vice president of what became Caterpillar Tractor Company, wrote to Holt headquarters in Stockton and described the plant of the bankrupt Colean Manufacturing Co. of East Peoria.

Baxter initially cut the large tractors from the company's product line and introduced smaller models focused on the agricultural market.

During World War II, Caterpillar products found fame with the Seabees, construction battalions of the United States Navy, which built airfields and other facilities in the Pacific Theater of Operations.

[47] During the postwar construction boom, the company grew at a rapid pace, and launched its first venture outside the U.S. in 1950, marking the beginning of Caterpillar's development into a multinational corporation.

[50] The $125 million Caterpillar Suzhou, People's Republic of China facility, manufactures medium-wheel loaders and motor graders, primarily for the Asian market.

Medium wheel loaders are manufactured at: Aurora, Illinois; Sagamihara, Kanagawa, Japan; Piracicaba, São Paulo, Brazil;[119] India; and the People's Republic of China.

[120] As of March 2016, Caterpillar has ceased production of on-highway vocational trucks stating that “Remaining a viable competitor in this market would require significant additional investment to develop and launch a complete portfolio of trucks, and upon an updated review, we determined there was not a sufficient market opportunity to justify the investment,” said Ramin Younessi, vice president with responsibility for Caterpillar's Industrial Power Systems Division.

“We have not yet started truck production in Victoria, and this decision allows us to exit this business before the transition occurs.”[121] A portion of Caterpillar's business is in the manufacturing of diesel and natural gas engines and gas turbines which, in addition to their use in the company's own vehicles, are used as the prime movers in locomotives, semi trucks, marine vessels, and ships, as well as providing the power source for peak-load power plants and emergency generators.

[122] In 2007, as ultra-low-sulfur diesel became required in North America, Caterpillar updated the C7 to use common rail fuel injectors and improved ACERT electronics.

[131][132] In particular, the IDF Caterpillar D9 was involved in an incident in 2003, in which the American activist Rachel Corrie was killed by an Israeli soldier driving a bulldozer to demolish Gaza homes.

[136][137] In August 2024, San Francisco State University announced that, as part of a deal with student activists, it would divest from four companies that supply weapons for the Israeli army, among them Caterpillar.

A parallel program was also developing wheeled high hp tractors based on using the articulated loading shovel chassis was later merged with the crawler team.

As of October 2023[update], the board of directors was composed as follows:[151] On January 1, 2017, Jim Umpleby succeeded Douglas R. Oberhelman as CEO and Dave Calhoun became non-executive chairman.

[155] Caterpillar came close to bankruptcy in the early 1980s, at one point losing almost US$1 million per day due to a sharp downturn in product demand as competition with Japanese rival Komatsu increased.

Several news reports at the time indicated that products were piling up so high in facilities that replacement workers could barely make their way to their work stations.

It suspended research and development work, sending thousands of engineers and other non-bargained for employees into their manufacturing and assembly facilities to replace striking or locked out union members.

Rather than continuing to fight the United Auto Workers, Caterpillar chose to make itself less vulnerable to the traditional bargaining tactics of organized labor.

In 2012, the company locked out workers at a locomotive plant in London, Ontario, Canada and demanded some accept up to a 50% cut in pay, in order to become cost-competitive with comparable Caterpillar manufacturing facilities in the United States.

[167] Caterpillar was awarded the 2007 Illinois Governor's Pollution Prevention Award for three projects: The Hydraulics and Hydraulic Systems business unit in Joliet implemented a flame sprayed coating for its truck suspension system, replacing a chroming process, reducing hazardous waste by 700,000 pounds (320,000 kg) annually, and saving 14 million US gallons (53,000 m3) of water.

[173] In July 1999, Caterpillar and five other diesel engine manufacturers signed a consent decree with the Justice Department and the State of California, after governmental investigations revealed violations of the Clean Air Act.

Even so, in October 2002, Caterpillar – the only diesel engine company (of those that signed decrees) to fail to meet the new emissions standards deadline – was forced to pay $128 million in per-engine non-conformance penalties.

[177] In March 2017, when US federal agents raided Caterpillar's headquarters in Peoria Ill., it was already evident that the company engaged in aggressive measures to control tax costs.

In 1999, former Caterpillar executive Daniel Schlicksup accused the company of funneling profits made on replacement parts into Switzerland, even though it had no warehouses or factories there.

[184][185] Amnesty International released a report in May 2004 on home demolition in the occupied Palestinian territories that noted the risk of complicity for Caterpillar in human rights violations.

[186] The Office of the UN High Commissioner on Human Rights also sent a warning letter to the company the next month about its sales of bulldozers to the Israel Defense Forces and their use to destroy Palestinian farms.

[184][187] Human Rights Watch reported the same year on the systematic use of D9 bulldozers in illegal demolitions throughout the occupied territories and called on Caterpillar to suspend its sales to Israel, citing the company's own code of conduct.

In response, the pro-Israel advocacy group StandWithUs urged its members to buy Caterpillar stock and to write letters of support to the company.

[185][190] In 2017, documents emerged that showed Caterpillar had hired private investigators to spy on the family of Rachel Corrie, the American human rights activist who was killed by a D9 bulldozer in Rafah in early 2003.

A Washington D.C.–based coalition of over 400 major companies and NGOs that advocates for increased funding of American diplomatic and development efforts abroad through the International Affairs Budget.