THE RISE OF CATERPILLAR

Heavy machinery plant and equipment manufacturers are battling weak economic growth, depressed commodity prices and China’s slowdown. However, companies such as Caterpillar, Komatsu and Hino endured similar headwinds in the past, using challenging periods as a time for innovation, diversification and improved efficiency.

As we take a glimpse into the histories of Resolute Equipment’s top selling brands, it is obvious these companies have adapted to numerous market conditions throughout the years. These brands have been able to withstand some of the most demanding economic downturns by investing in research and development to ensure their equipment is safer, more efficient and reliable than ever before.

United States-based Caterpillar is one of the most reputed heavy plant and equipment manufacturers in the world today. It was also one of Resolute Equipment’s top selling brands in 2015.

Back to the beginning

Caterpillar was created in 1925 through the merger of Holt Manufacturing Company and The C L Best Tractor Company.

The merged entity was called Caterpillar because the company’s track-type tractors tyres resembled a caterpillar’s when in motion.

At the time, Caterpillar manufactured and sold five types of tractors. In its first year of operation, Caterpillar sold US$13 million worth of its machines. However, war and a global depression soon created a different market environment for the company. Despite trying conditions, Caterpillar debuted on the New York Stock Exchange two months after Black Tuesday in 1929. Black Tuesday is often known as the most devastating market crash in United States history. Many also believed it heralded the start of the Great Depression.

The Great Depression did not deter Caterpillar, which intensified its innovation strategy to remain afloat.

Research and development paid off when, in 1931, Caterpillar launched a diesel-powered tractor and the industry’s earliest true motor grader. Also during that year, Caterpillar rebranded its equipment from grey to the yellow colour it has today and relocated its manufacturing headquarters from California to Illinois.

A decade later, Caterpillar introduced its first wheel tractor and a matching wagon line. By 1944, Caterpillar’s machines had been used to construct more than 112,654 kilometres of US highways.

Another year on and Caterpillar launched its first bulldozer blade, which heralded the company’s diversification into manufacturing its own attachments. In 1946, Caterpillar produced its original pull scraper.

The post-war construction boom in Europe and Asia opened international markets for Caterpillar and powered the company’s global growth. In 1950, Caterpillar formed Caterpillar Tractor Co Ltd in England to be based closer to its European customers. Caterpillar Tractor Co Ltd was the company’s first overseas subsidiary.

During the following decade, Caterpillar delved into the Japanese market forming a joint venture (JV) with Mitsubishi. The venture was the first time Japan had opened its doors to allow US ownership within the country.

By 1970, Caterpillar’s global expansion efforts led to it achieving more sales outside the country than within.

However another global downturn hit in the 1980s, and this retreating market dragged Caterpillar to the brink of bankruptcy. To survive, the company again turned to research and development and efficiency efforts. In 1986, Caterpillar introduced a US$1.8 billion program aimed at modernising its facilities and streamlining manufacturing processes to enhance its profitability.

Throughout the 1990s, Caterpillar restructured the company into separate business units. Each business unit was then made more accountable for its performance.

the rise of caterpillar

During the same period, Caterpillar implemented other efforts to ensure its existence well into the future. Diversification became a focus with the company analysing how it could meet the impending needs of a global society by 2050. A series of acquisitions followed to broaden Caterpillar’s products and solutions.As the world became increasingly dependent on technology, Caterpillar, too, followed that path. In 2001, the company introduced ACERT™ technology with its engines. ACERT™ was developed to reduce pollutants and waste emissions while sustaining engine performance, durability and productivity.

Caterpillar branched out further between 2006 and 2013 making several more acquisitions, including: Progress Rail, Electro-Motive Diesel, Walter Berg AB, Bucyrus, MWM and Shandong SEM Machinery Co Ltd. Also during this time, Caterpillar implemented several new advancements in its plant and equipment such as its hydraulic hybrid technology and electric drive and variable transmission systems. These developments boosted efficiency and safety, particularly, increased fuel economy.

Improved fuel economy and safety are especially important during the bottom of an economic cycle for equipment buyers who are seeking to keep costs down.

Where to now?

According to Caterpillar’s current chairman and chief executive officer Doug Oberhelman, the company faced a tough year in 2015. However, Oberhelman is steadfast in his view that Caterpillar will emerge from the current downturn stronger than before.

“Our product quality continues to improve and is as strong as I’ve ever seen it,” Oberhelman said.

He said the company has implemented its Lean manufacturing policy throughout its operations, which has involved addressing the root cause of delays, inefficiencies and defects.

“We’ve already seen an up to 95 per cent reduction in internal defects per unit and improvements in warranty, and we anticipate substantial improvements as we further deploy Lean.”

“The capital expenditures we’ve made over the last few years mean our plants are modern, and our machinery and equipment are up to date.”

“We continue to invest in new products and technologies, maintaining research and development spending throughout the downturn.”

Oberhelman added Caterpillar’s research and development spending (as a percentage of sales) was the highest it’s been in more than a decade. He said the company’s current investments, coupled with its Lean manufacturing strategy, meant it was well placed to handle increased demand when the market begins to rebound.

Resolute Equipment invests in the plant and equipment it sells. We do our research to ensure we provide our clients with the highest quality pieces. If you are searching for the best plant and equipment for your project, at the best price, call Resolute Equipment today: 1300 308 840.