On July 8th, Caterpillar announced it had completed its acquisition of Bucyrus International, which was valued at US$8.8 billion. Caterpillar Group President Steve Wunning will have executive office accountability for Caterpillar’s Global Mining business, including Bucyrus. Despite previous indications that “heritage brands” would be retained, all products, including Bucyrus rope shovels, draglines and longwall systems; as well as the former Terex O&K hydraulic excavators – the entire range – is to be branded as Caterpillar. The statement said: “For the past several months, Caterpillar has evaluated the best approach for branding legacy Bucyrus products. 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. “As we examined this issue, it became clear it would be in the best long-term interests of our business to have a single brand for our mining customers, and that brand will be Caterpillar,” said President, Steve Wunning. “This decision is important to quickly bring together one team with a single face to our customers.” The decision was endorsed by the Bucyrus Board of Directors, and the company said it would begin to transition Bucyrus products to the Caterpillar brand in a quick and orderly fashion. In terms of the wider acquisition benefits, Wunning commented: “We are pleased to complete this acquisition and are proud to welcome Bucyrus employees to Caterpillar. 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. Combined with our aggressive product development and capacity expansion plans, it will position Caterpillar to offer a broad range of surface and underground mining products and solutions to our customers.”
Since the acquisition announcement last November CAT said it has been busy planning how best to bring Bucyrus into the Caterpillar family. A dedicated team has been working on the integration plans that will now be implemented. In terms of organisation structure, the Caterpillar Global Mining headquarters will be in Oak Creek, Wisconsin 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.
In addition, several other Caterpillar divisions will provide critical support to the mining business. These divisions include the Large Power Systems Division, Advanced Components & Systems Division, Remanufacturing & Components Division, Parts Distribution & Logistics Division and Global Purchasing Division. In distribution terms, it had to be decided whether an owned sales/servicing network would be used in addition to the Caterpillar dealer netowrk. However, the company said that it became clear during the integration discussion that the capabilities of the Cat dealer network with mining customers meant that “all products should be sold and serviced by Cat dealers.” The group said that this is consistent with its long-held distribution strategy of strong, entrepreneurial, independent dealers, adding: “Since Bucyrus predominantly employed a direct model to sell and support products, we’re beginning the process to transition distribution and support to Cat dealers.” This will be achieved by selling the Bucyrus distribution business to Caterpillar dealers throughout the world. These discussions with dealers are just beginning, and CAT said it estimates the value of the Bucyrus distribution business to be substantial. “Our dealers are very excited about the Bucyrus acquisition and are ready to move forward with the distribution business. Cat dealers have a proven track record in helping customers realise the highest productivity and lowest owning and operating costs, and many mining customers have told us how important the dealers are to their success,” Wunning added.
Finally in reiterating the potential synergies, Caterpillar stated: “The combination of the speed and responsiveness of Bucyrus, along with the process discipline and execution of Caterpillar, will result in a business that will deliver more benefits and value than could be accomplished by either company alone. The benefits include higher sales of new equipment and aftermarket parts and support, lower product cost 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.”
“Today’s announcement marks the beginning of a new era in Caterpillar’s mining business,” said Wunning. “The joining of these two iconic companies is an incredible combination. 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. In turn, that will benefit our employees, our stockholders, and the communities in which we live and work. We’re ready to get started.”