Pit and Quarry

What's in a name?

Bucyrus was an old company. It predated Pit & Quarry magazine, which began publishing in 1916. And it was older than the company that recently gobbled it up – Caterpillar Inc., which was created with the 1925 merger of Holt Manufacturing and C.L. Best Tractor.

Bucyrus Foundry and Manufacturing Co. began life in Bucyrus, Ohio, in 1880. Thirteen years later the company moved its headquarters to South Milwaukee, Wis., where it produced steam shovels, and in 1904 supplied most of the shovels used to dig the Panama Canal.

The company changed its name to Bucyrus-Erie in 1927 when it merged with the Erie Steam Shovel Co., the country’s leading manufacturer of small excavators at the time. Bucyrus-Erie was under Chapter 11 bankruptcy protection for about two years in the mid-1990s, and in 1997 took the name Bucyrus International Inc.

Caterpillar purchased Bucyrus in an $8.8-billion transaction that closed July 8, and you can read more about the acquisition and what it means to the aggregates industry in the Pit & Quarry September Buyers' Guide issue.

When I first heard of the deal, I was certain Caterpillar would hang on to the long-standing Bucyrus brand name for its new mining-equipment offerings. But the Caterpillar name is the biggest in heavy equipment, so it shouldn’t have surprised me when the company announced it would brand the equipment Caterpillar.

“For the past several months, Caterpillar has evaluated the best approach for branding legacy Bucyrus products,” says Caterpillar Group President Steve Wunning. “We sought input from dealers, customers, the leadership of Bucyrus and outside industry and branding experts. The conclusion was a single brand— Caterpillar— for our mining products.”

Wunning says it became clear it would be in the best long-term interests of the company’s business to have a single brand for its mining customers. At a Caterpillar press event last month in Milwaukee, Caterpillar showed off many photos of its new mining-equipment line, already made yellow through the magic of Photoshop.
And when we visited the Bucyrus Museum, I couldn’t help but think how the Bucyrus name has gone the way of its famous Big Muskie drag line – gone but not forgotten. –Darren Constantino

(In the photo at top, Luis de Leon, previously COO for Bucyrus and now a Cat v.p. leading the new Mining Products Division, discusses the branding of legacy Bucyrus equipment.)

Done deal

Caterpillar Inc. finalized its acquisition of Bucyrus International Inc., in a deal worth $8.8 billion. And Cat isn’t stopping there. The company announced it will spend an additional $5 billion outside the acquisition – on new products and increasing manufacturing capacity.

While the deal mostly affects the mining equipment sector, it also has implications for the aggregates industry. Underground aggregate operations will now have access to a wide range of Cat-branded equipment, and some of the Bucyrus line includes surface-mining machines that overlap into the aggregates arena.

Caterpillar Group President Steve Wunning will have executive office accountability for Caterpillar’s Global Mining business, including Bucyrus.

“We are pleased to complete this acquisition and are proud to welcome Bucyrus employees to Caterpillar,” Wunning said. “We are bringing together the best people, the best products and the best facilities from both companies. This acquisition is all about growth and unprecedented opportunities.”

At a press event in Milwaukee attended by Pit & Quarry, Wunning said, “This is a long-term play for us, but we’re going to see some short-term benefits, as well.” Since first announcing the acquisition last November, Caterpillar has been busy planning to bring Bucyrus into the Cat family. A dedicated team has been working on the integration plans.

Organizational structure
As previously announced, the Caterpillar Global Mining headquarters will be in Oak Creek, Wis., and will include three mining divisions reporting to Steve Wunning:
• Caterpillar Vice President Dave Bozeman will lead the Integrated Manufacturing Operations Division, which will include the global manufacturing operations for Caterpillar mining products. The division has manufacturing operations in Asia, Australia, Europe and North America.
• Caterpillar Vice President Chris Curfman will lead the Mining Sales and Marketing Division, with global responsibility for maintaining and enhancing customer relationships, developing the global marketing strategy and ensuring future growth opportunities.
• Luis de Leon, previously chief operating officer for Bucyrus, has been elected by the Caterpillar board of directors as a corporate vice president, and will lead the new Mining Products Division. The division will be responsible for overall mining product strategy development, product design and product sourcing.
Distribution

It became clear to Caterpillar that the capabilities of the Cat dealer network with mining customers meant all products should be sold and serviced by Cat dealers. This is consistent with the company’s long-held distribution strategy of independent dealers. Since Bucyrus predominantly employed a direct model to sell and support products, Caterpillar has begun the process to transition distribution and support to Cat dealers.

Rob Campbell of Wheeler Machinery Co., a Caterpillar dealer, answered questions at Caterpillar’s Milwaukee press event. “Before, we could offer a mine a quarter of what they spend. Now we can offer them over 80 percent of what they spend,” he said.

The purchase of Bucyrus is an enormous strategic acquisition for Caterpillar. “This is about doubling or tripling the size of our [mining equipment] business in the next five years,” Curfman added.

The benefits will include higher sales of new equipment and aftermarket parts and support. According to the company, it will also result in lower product costs and greater reliability driven by the use of Caterpillar engines and components in Bucyrus products and improved service and lower owning and operating costs driven by Caterpillar’s global manufacturing, supply chain and purchasing capabilities.

According to Wunning, the announcement of the acquisition marks the beginning of a new era in Caterpillar’s mining business. “The joining of these two iconic companies is an incredible combination,” he said. “It positions us for long-term success in an industry with significant growth potential, and we intend to fully leverage our unique strengths to help the mining customer make money.” – Darren Constantino

Cat moving forward

One reliable sign that predicts growth for the construction and aggregates industries is the activities of Caterpillar. Based on what I see, the company is positioning itself to take advantage of the future. Cat announced plans to build a new plant in Winston-Salem, N.C., that will create 400 jobs. The company will open an engineering design center in Rapid City, S.D. The new facility, known as the Black Hills Engineering Design Center, will provide additional engineering support services for Caterpillar's U.S. operations and will complement the company's existing engineering design centers in Chennai, India, and Champaign, Ill. Caterpillar will also add more than 325 jobs over the next five years as it makes a $28 million investment at its Lee County, N.C., plant. The company said that the expansion, which will include a 270,000-sq.-ft. building addition, will provide additional capacity to meet growing global demand. Ann Duignan, an analyst at JPMorgan Chase & Co. in New York, said in a report, “We believe the market is overlooking what could turn out to be the beginning of the next multi-year construction cycle in the U.S.” Caterpillar obviously sees the same thing, and will be ready when that cycle comes full swing. – Mark S. Kuhar

A Bauma presence

Caterpillar Inc. together with Zeppelin Baumaschinen GmbH, a Caterpillar dealer for Germany, is showcasing its machines, engines and customer solutions to thousands of visitors beginning April 19 at the world’s largest construction industry trade show, Bauma 2010. Throughout the weeklong event, visitors will see Caterpillar machines and equipment on display with an increased focus on the company’s commitment to sustainable development.

“Bauma provides us a tremendous opportunity to engage our customers and showcase Caterpillar products and services in a region of the world that is important to the company’s success and future growth,” said Caterpillar Vice Chairman and CEO-elect, Doug Oberhelman. “The visitors to the Caterpillar exhibit will see updates to product lines and state-of-the-art technologies that are more environmentally and economically sustainable.”

The overarching theme of the Caterpillar exhibit – “Your Success. Our Commitment.” – promotes the company’s dedication to working with customers to achieve their goals. The central area of the 26,000-sq.-ft. show floor, “Sustainable Solutions for Your Success,” showcases Caterpillar’s approach to sustainable development. Visitors will see practical business solutions that provide sustainable benefits. Some of the main attractions include:

• Tier 4 interim/stage III B integrated emission solutions.
• Site management with eco-operator training.
• High performance protection with contamination control, equipment inspection and protection.
• Connected worksite featuring a Cat 140M motor grader, ProductLink and Accugrade.
• Built to be rebuilt, featuring a Cat certified rebuild machine, remanufactured engine and dealer consultancy services.

New products on display include the 336E and 374D L hydraulic excavators, the D7E track-type tractor, 434E and 432E backhoe loaders, TH417 telehandler, AP555E asphalt paver, DEM50 demolition excavator, updated 988H large wheel loader and several work tools. Many are on display for the first time to the European, African, Middle Eastern and Commonwealth of Independent States markets.

More than 500,000 visitors are expected at Bauma 2010. In addition to providing the best solutions and products available in the industry, Caterpillar will equip customers with everything they need, including rental and financial services and product support options. All are presented to ensure customers get the best service options through every step of the equipment lifecycle. – Posted by Brian Richesson