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Discussion Outline
Caterpillar
Caterpillar Growth
Caterpillar and Steel Global Competitiveness
Caterpillar Overview
is the worlds largest manufacturer of construction and mining equipment. makes over 300 models of machines. is the worlds 2nd largest manufacturing of locomotives. owns a rail services company. makes diesel engines from 10 hp to 21,760 hp (worlds largest medium speed producer) is the worlds largest remanufacturing. owns an industrial turbine company (Solar Turbines). provides 3rd party logistics services to many well known companies. celebrated its 100th anniversary for trade marking Caterpillar
Caterpillar Overview
Grow
Seed
Harvest
Caterpillar Performance
C-SHIP UNITS Spending unprecedented capital in 2011 and for the foreseeable future on capacity increases across all product lines
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
5-YEAR PLAN
Industry
Commodities Energy Infrastructure Transportation
Societal
Urbanization Growing Middle Class
Economic
Low Inflation Low Interest Rates Past Under-investment
7.0 6.5 6.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Food Water Energy Housing Health Care Education Communications Employment Waste Disposal Transportation Security
Investments in Growth
USA
Capacity expansion for mining trucks in Illinois New lower powertrain facility in North Carolina Expansion of Building Construction Products facility in North Carolina New engineering design center in South Dakota New excavator facility in Texas New Progress Rail facility to manufacture locomotives in Indiana New parts distribution center in Washington and California Expansion of remanufacturing facility to support mining in North Dakota Capacity expansion of work tools facility in Kansas Capacity expansion of undercarriage components and assemblies in Illinois New mini excavator and small track-type tractor facility in North America Capacity expansion for large track-type tractors in Illinois Capacity expansion for mining trucks in India Significant increase in excavator capacity in Xuzhou, China New facility for small wheel loaders and backhoe loaders in Brazil New mini excavator facility in Wujiang, China New logistics center in Suzhou, China New facility to produce 3500 series engines in Tianjin, China New parts distribution center in Dubai New remanufacturing facility in Singapore New facility for underground mining articulated trucks and loaders in Thailand New facility for medium track-type tractors in Thailand Progress Rail locomotive manufacturing and assembly operation in Brazil New facility for undercarriage components and track assemblies in Xuzhou, China New proving ground and large wheel loader facility in Tongzhou, China Expansion of Tosno, Russia facility to produce off-highway trucks New mining truck facility in Batam, Indonesia Capacity expansion for excavators in Cileungsi, Indonesia Electro-Motive Diesel Bucyrus MWM Offer to Acquire ERA Mining Machinery Ltd.
International
Acquisitions
California parts distribution center Excavator facility in Texas Work Tools expansion in Kansas Locomotive facility in Indiana
5%
95%
10
OHT in Russia
CXL 4X expansion
Suzhou 3X expansion
Underground mining and medium TTT in Thailand Reman in Singapore Excavators and mining trucks in Indonesia
20 10
20 11
20 12
20 13
20 14
20 15
11
12
13
Continuous (coal)
LW AFCs LW Continuous Shuttle Shearer Miner Cars
Caterpillar
NPI
Cat
Bucyrus
Cat
Bucyrus
Joy Global
Joy Global
Joy Global
Overlap
Caterpillar / Bucyrus
Caterpillar / Bucyrus
Liebherr
Komatsu
Sandvik
Sandvik
14
15
Bar
Plate
Rolled Sections
Engine Components Gears Shafts Undercarriage: Links, bushings, pins, rollers GET: Ripper Tips, End bits
16
D11T
Total Mass: 134,180 kg (148 tons) Steel: 119,854 kg (132 tons)
Steel, 90%
17
Discrete Plate
18
Steel Distribution
Caterpillar GP
Caterpillar GP
Steel Mill
Fabricator (STF/SDP)
Caterpillar Facility
Fabricator (STF/SDP)
Caterpillar Facility
We ask that steel mills stay engaged with us for both processes
CATERPILLAR CONFIDENTIAL: GREEN
19
20
Steel does not always travel well. Supply chain efficiency is important
CATERPILLAR CONFIDENTIAL: GREEN
21
22
23
Global Competitiveness What can we do? From a steel consumers view point?
24
Risk Mitigation
Iron Ore Scrap NA, EU, China
Variability in raw materials and steel pricing difficult for manufacturers Create a portfolio of steel supply that reduces risk Collaboration is imperative Supply Chain Technical Commercial
CATERPILLAR CONFIDENTIAL: GREEN
25
Collaboration: Steel Supply Chain Opportunities Think Beyond Steel Selling Price
CUSTOMER DEMAND Tier One Suppliers
STEEL MILL
Tier One
Suppliers
VARIOUS CUSTOMERS
Buffer
Scrap
VARIATION
MEASUREMENTS TIER 1 DEMAND VS. FORECAST STEEL MILL LEAD TIMES TRANSPORTATION LEAD TIME NUMBER OF STEEL SIZE/GRADE COMBINATIONS SUPPLY CHAIN INVENTORIES
26
Summary
Cat is positioned well for the future as it relates to global markets. In addition to growth and acquisitions, maintaining a competitive edge is key.
27
Questions
28