Done deal
September 2, 2011 By: Pit & Quarry Staff
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
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