| Written by a former international
marketing executive at Caterpillar, this book is a jewel for
anyone in the heavy equipment business who wants to know where
their industry has come from, and where it's headed. William
Haycraft leaves no stone unturned, detailing decade-by-decade
the developments among industry players big and small, and providing
extensive coverage of Caterpillar, Komatsu, Dresser, Deere,
JI Case, VME, Terex, Fiatallic, Liebherr, and JCB, as well as
the shovel specialists: Bucyrus-Erie, Marion, and Harnischferger.
Haycraft also steps back to explain the big
picture, and it is here that he really shines. He identifies
a pair of factors that contributed to the success of almost
all of the companies discussed. The first is simple concentration
-- "a concentration on machinery as the primary if not the
sole business of the enterprise." The second is somewhat unexpected:
dealers. Haycraft says the most successful firms were
those with "a deep commitment to building a strong, independent
dealer organization as the principal means of distribution."
Dealers and Parts
-- The role of the dealers, and the importance of the parts
business to them, should be especially interesting to the
casting industry professionals who use this web site. "Part
sales are critical to dealer profitability," according to
Haycraft; while amounting to only 33% of sales, they often
provide 60-80% of the dealer's gross profit! Moreover, he
says -- brandishing the kind of facts you'd expect
from a marketing executive at a leading equipment maker --
equipment customer satisfaction tends to be a direct function
of the dealer's off-the-shelf delivery ratio. Not surprisingly,
with that much at stake, aftermarket suppliers offer their
own versions of the vast majority of parts. With widespread
computer ordering and express delivery, it has become easier
for dealers to handle parts sales with scant investment in
their own inventories, but, says Haycraft, this amounts to
"taking the easy way out," and ultimately erodes the profitability
and the market position of the dealers.
(By the way, apparently Caterpillar isn't
the only one that recognizes the importance of the parts distribution
business: just this week, Deere & Co. announced the acquisition
of Vapormatic (Exeter, UK) the world's leading distributor
of replacement parts for agricultural equipment.)
Union Strife --
Haycraft also deals with the production side of the business.
Not surprisingly, he devotes a long appendix to labor problems,
principally those that occurred at Caterpillar and culminating
in the devastating 1991 - 1995 strike. He stresses that the
labor problems there were an early warning of the exigencies
of globalization. Unlike companies in the principally domestic
automotive and farm equipment sectors, Caterpillar relied
(and continues to rely) so heavily on export business that
it had no illusions about the need to be control costs: "Caterpillar
believed it was vital to rein in its pattern labor costs to
remain competitive against overseas rivals."
JVs -- Haycraft says
the coming of global strategy to the earthmoving equipment
industry wasn't just limited to cutting labor costs. He points
to a long list of strategic alliances and joint ventures:
Volvo-Michigan, Euclid-Hitachi, Deere-Hitachi, Fiat-Hitachi,
Komatsu-Dresser, Komatsu-Demag, Komatsu-Cummins, and JCB-Sumitomo,
as well as others in Russia, China, and Southeast Asia. "The
wave of joint ventures reflected the harsh realities of the
marketplace of the 1980s and 1990s, that is, the prohibitive
investments and high risks involved in going it alone . .
. ."
|
