Dealers Get in the Mining Game

When Caterpillar acquired mining equipment company Bucyrus in 2011, there was a need to align their distribution capabilities within Caterpillar's dealer-oriented distribution model. Through a series of divestitures, Caterpillar is engaging dealers in the product distribution and product support aspects of the business.

"The primary focus of the divestitures is to improve service to end-users by leveraging the proven distribution capabilities we have with our dealers," explained Dave Hoffman, chief financial officer for Resource Industries with responsibility for leading the divestiture team. By the end of 2012, Caterpillar had successfully completed 13 sale transactions to dealerships accounting for a significant portion of the Bucyrus distribution business. This is in line with Caterpillar's plan to engage dealers in Bucyrus opportunities as quickly as possible.

"Our dealers have a long history of exceptional service to mining customers around the world, and they know what is needed in local markets and individual mines. As service to our customers improves, our dealers will be rewarded and ultimately Caterpillar will be rewarded with higher customer satisfaction and sales," said Hoffman.

Each transition is unique and requires professional handling with a sharp focus on quality. In addition, the territories do not directly overlap with Cat^® dealers, so the divestiture process ensures a smooth transition and uninterrupted service to customers.

"From a 20,000-foot perspective, it looks pretty simple to insert the dealers into the value chain, but it's all the details that make it challenging," said Hoffman. "We are focused on doing it right the first time and have a dedicated team in place to ensure a smooth transition."

To date, the transitions have been successful with limited disruption to Caterpillar customers. Clive Thomson, chief executive officer of Barloworld, Cat dealer in South Africa and Botswana, said, "This acquisition is perfectly aligned with the group's growth strategy. It builds on our existing strengths and will enhance our leading position in the mining industry by significantly expanding the range of equipment solutions we are able to provide to customers operating across southern Africa."