Caterpillar 2010 Annual Report Download - page 17

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COMPETING HARD, WINNING BIG
I’m often asked why markets like China are so important. And the answer is much
simpler than you might think – the sheer size of the market makes winning in China
critical to our goal to be recognized as the leader everywhere we do business.
The Chinese economy has been growing at a rapid pace, and China has been investing
heavily in infrastructure for years. Not surprisingly, the growth of the machine industry
in China is dramatic. By the year 2012, we estimate the market to be about a half million
machines annually. We want to be the market leader in that business – we want to win
in China.
So do our competitors.
The competition in China is tough. Not only are multinational companies competing for business, but we’ve also seen
dozens of small, regional companies get into the business. They are producing low-cost machines that are popular with
many customers in China. Our competitors know China is key to being the global leader, and they are aggressively trying
to take our position – we won’t let this happen.
Fortunately, we are well positioned to take advantage of the opportunities and to beat the competition. We have been
building our Business Model to establish a competitive advantage. And while our competitors will continue to improve
their products, it’s difficult to replicate our dealer network or the individual aspects of our Business Model that include
product support, logistics, rental and used equipment, remanufacturing and financing. The total Caterpillar model is
what separates us from every competitor.
We have thousands of new customers to develop. And these aren’t just new customers to Caterpillar; they are often
completely new to the industry and new to business. We have an opportunity to lend our expertise to help new and growing
businesses in China, and to show the Caterpillar difference.
In fact, our business in China is also driving us on another one of our “Big 8” Imperatives – Achieve
profitable global machine leadership…Excavation, Earthmoving and BCP. In particular, we are focusing
on two critical actions that will enable our success in delivering profitable market leadership – to be the
low-cost producer and to build capacity leadership. Being the low-cost producer is all about eliminating
waste and providing the customer with the highest value possible – when the customer wins, we win.
Capacity leadership (by product, by region) ensures we have the complete supply chain aligned to deliver
the best product, highest quality, on time as needed by the customer.
We can win in China and in every market we serve. The competition is getting tougher, but if we stay
focused on our game plan, execute our strategy and continue to put Our Values in Action into practice,
we will come out on top.
LEADERSHIP • EXECUTIVE OFFICERS
Rich Lavin
Lavin joined Caterpillar in 1984 as an attorney in what is now the Legal Services Division; served in
numerous positions in the company’s Asian and Latin American operations and was a product
manager in Track-Type Tractors. He was director of Corporate Labor and Human Relations and director
of Compensation and Benefits. Lavin was also vice president of Caterpillar’s Human Services Division.
Before becoming a group president in 2007, he was most recently vice president of manufacturing
operations for the Asia Pacific Division, serving as chairman of Shin Caterpillar Mitsubishi Ltd. (SCM) –
now Caterpillar Japan Ltd. (CJL) – and chairman of Caterpillar (China) Investment Co., Ltd. Lavin had
responsibility for manufacturing operations in the region, including facilities in China, India and
Indonesia and for deploying the company’s emerging markets strategy.
Big 8 Imperatives
Win in China…grow to
leadership in India, ASEAN
and CIS.
Achieve profitable global
machine leadership…
Excavation, Earthmoving
and BCP.
2010 YEAR IN REVIEW