Caterpillar 2012 Annual Report Download - page 12

Features 12
2012 Year in Review
ROCK SOLID
Caterpillar’s 85-year leadership position has been largely built
on the ability to listen and respond to customers. In recent
years, emerging markets have produced a new type of customer
with new needs.
“Over the past two decades, new customers in developing economies
have increasingly comprised a larger portion of the global industry,
especially in countries like China where a lot of newer contractors are
entering the business,” explained retired Construction Industries Group
President Rich Lavin. “These newer contractors value an entry-level
product as they come into the industry. They’re looking for a machine
that performs well, but with different features and service support.”
Emerging economies are not only producing a new type of customer,
but also developing a new type of competitor.
“These new competitors are entering the market aggressively, and clearly
targeting these new customers by providing products and services aimed
at their unique requirements,” said Lavin. “If we’re going to compete
effectively against the growing number of emerging competitors —
especially our Chinese competitors — we must have a utility product
line that meets the needs of our customers.”
Caterpillar’s utility brand, Shandong SEM Machinery Co., Ltd. (SEM),
targets this fast-growing customer base in China, as well as other parts
of the world. Although the value proposition of SEM is fundamentally
different than that of the Cat brand, SEM offers sturdy machines with
greater parts availability and support than other utility competitors.
Since purchasing SEM in 2005, Caterpillar has invested significant
resources to develop new utility models with improved product quality
and reliability. SEM has expanded its historical product line of wheel
loaders to cover a range of utility requirements from two to six tons.
It has also added three motor graders and three soil compactors to its
product line. In 2013, SEM is introducing SEM-branded track-type
tractors to further expand its product portfolio.
In addition to expanding the product line, SEM has also added capacity.
When complete in 2014, SEM™ wheel loader capacity will have nearly
tripled since becoming part of Caterpillar. SEM has expanded manufac-
turing to begin production of SEM-branded track-type tractors for China
and other growth countries, ramping up through 2013 and 2014. Beyond
product and manufacturing expansions, SEM also has expanded its sales
and service support. SEM™ dealers are now in 33 countries to provide
sales, parts and basic service support capabilities. In 2013, SEM is
adding dedicated parts distribution centers outside China.
“Our SEM™ product line serves us very well,” explained Caterpillar
Vice President Tom Bluth, who had responsibility for earthmoving in
2012. “It gives us the opportunity to position ourselves in China and
other growth markets, but more importantly, it enables us to serve
customers early in their industry experience and move them over time
toward the Cat brand value proposition, establishing a relationship
that will keep them with Caterpillar for the long term.”
Rock Solid Position
EMERGING MARKETS,
EMERGING NEEDS
A new brand targets a new kind of customer in China.