Caterpillar Giving Small-Equipment Business More Freedom
25 Setembro 2009 - 5:31PM
Dow Jones News
Caterpillar Inc. (CAT) is freeing its
compact-construction-equipment business from the company's
corporate confines in hopes of making its skid-steer loaders and
mini-excavators more competitive and profitable.
Managers for the Building Construction Products division will be
able to make decisions about pricing, new product development and
purchasing components without the centralized corporate structure
used for the company's larger machinery lines. The move is intended
to make the construction-products division more responsive to a
formidable set of rivals that include U.S. market leader Bobcat
Co., U.K-based JCB Ltd., Japan's Kubota Corp., Deere & Co. (DE)
and CNH Global N.V (CNH).
"A lot of the other companies around the world that compete in
this small end are just focused on those small products," said
Caterpillar spokesman Jim Dugan. "The idea is to allow Building
Construction Products to be more agile ... and focus on its
competitiveness and profitability."
During the first six months of 2009, revenue from the
construction-products division fell 68% from 2008 to $584 million.
The customer base for the business is largely made up of smaller
contractors and landscapers that have been hit hard by the collapse
of housing construction in the U.S. in the past year.
Caterpillar, based in Peoria, Ill., expects the division to
become more efficient at lowering its costs, allowing the company
and its dealers to offer lower prices on compact equipment without
sacrificing profit margins. The changes also will apply to
Caterpillar's forestry-equipment line, which is part of the
construction-products division.
Industry analysts say skid-steer loaders and small excavators
often wear out after four or five years of regular use, requiring
manufacturers and dealers to obtain the bulk of their profits from
the initial sale of the equipment.
"The Cat dealers are used to selling machinery at lower margins
and then selling parts for it forever and ever into the future,"
said Frank Manfredi, president of Manfredi & Associates, a
machinery-market consultant in Mundelein, Ill. "The small products
don't generate a lot of parts business. They don't lend themselves
to major engine rebuilding."
Caterpillar said it has no plans to exit the small-equipment
market. The changes in constructions products do not include
creating a separate holding company or subsidiary for the division.
Construction products will continue to rely on Caterpillar's back
office operations, information technology and employee
services.
Vice President Mary Bell, a veteran Caterpillar executive who
has headed construction products since 2007, will remain at the
helm. Management and manufacturing operations also remain located
in North Carolina. The transformation of the business is expected
to take several months to complete.
Caterpillar's stock on Friday ended down 1.25% at $51.20 a
share.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com