Caterpillar entered the rail industry after it acquired Progress Rail Services and Electro-Motive Diesel in and , respectively. Caterpillar has an installed base of over 2 million pieces of equipment, with over , of these connected via telematics.
Caterpillar benefits from this base as it generates high-margin recurring revenue from the sales of parts. The strength of the brand is boosted by the large amount of Caterpillar-branded clothing and boots available on mainstream online channels such as Amazon.
To a lesser extent, there is highly specific intellectual property that enhances the moat. Caterpillar stresses the lowest total cost of ownership, which we believe to be thoroughly engineered into its equipment from design through manufacture. This is one reason Caterpillar has over 20, patents. It was granted patents in alone, ranking it the 69th on the list of companies with the most patents awarded by the U. Patent and Trademark Office that year.
For mining equipment, switching costs are introduced as these machines have long lives with complex service agreements. Moreover, there is a limited talent pool that can service large pieces of equipment that are difficult to transport and for which few competitors exist.
This leads to tight relationships between Cat dealers and the owners of the equipment. Many of the industries Caterpillar serves are highly sensitive to downtime, making robust service and parts delivery critical. Cat Connect and Minestar are increasingly able to demonstrate financial benefits to its customers.
Their capabilities include functions such as remote engine diagnostics, collision avoidance, and even autonomous dozing. Over time, we believe there will be increased switching costs as Cat technology solutions become more pervasive.
We believe these advances should weaken competitive threats that are likely to increase in certain areas. One of the big strengths of Caterpillar is the breadth of its dealer network. With dealers, employing , employees at 2, branches, Caterpillar has significant coverage on every continent. Except for turbines and locomotives, Caterpillar sells its products through its dealers. These independently operated companies are often large organizations that exclusively sell Caterpillar products.
Caterpillar boasts extensive partnerships with global leaders in all its major businesses, with strategic deals that offer growth opportunities. This enhances its ability to deliver quality, reliable solutions that address various challenges facing the entire industry.
An example is the acquisition of CarbonPoint Solutions , a carbon capture technology company that will help Caterpillar further its efforts in reducing carbon emissions. Caterpillar competes in Construction industries where the Company provides earthmoving and material-handling equipment, the Resource Industries where it offers track-type tractors and utility vehicles, and Energy and Transportation where the Company manufactures diesel and natural gas engines.
Komatsu Ltd TYO: is a Japanese company that manufactures construction, mining, and on-highway engines. It also manufactures military and diesel engines alongside industrial machinery.
Komatsu competes with Caterpillar in the construction equipment industry, controlling This includes excavators, motor graders, backhoe loaders, and compactors. It also holds a significant stake in the mining industry, where it manufactures dump trucks, hydraulic shovels, and scrapers. This is a win-win strategy that promises growth and financial success for both customers and Komatsu. While Caterpillar reigns supreme worldwide, Komatsu leads in several Asian nations such as China and Japan. However, Komatsu is keen on providing tailor-made financial solutions to its customers and linking its workplaces through IoT to improve its efficiency.
XCMG is a Chinese state-owned company. It operates as both a heavy machinery manufacturer and service provider. The Company is listed on the Shanghai Stock Exchange and has a market value equity of Since its founding in , the Company continued to grow and expand, operating as a multinational corporation with offices and dealerships in more than countries, including America, Africa, and Europe.
Its extensive product line and world-class products ensure that the Company stays at the forefront of its industry. In it ranked as the third-largest Company globally in the construction equipment machinery industry with a market share of 7. The Chinese government is investing trillions in the construction sector, increasing the demand for construction machinery. The Company holds a top rank in the agricultural machinery sector with a 17 percent market share in the global agricultural tractor market.
Through its three divisions, John Deere serves customers in over countries. John Deere and Caterpillar are direct competitors in the heavy equipment sector.
It also provides multiple construction machinery such as excavators, skid loaders, trucks, and motor graders. However, it primarily focuses on the agricultural market, unlike Caterpillar.
Today the Company operates as a world-class manufacturer and supplier of complete lifecycle solutions for customers in the construction equipment sector. It has about 14, employees distributed across over offices and dealerships in over globally. Despite the global pandemic, its sales increased by 6 percent in the fourth quarter of compared to the same quarter in Volvo CE has a strong competitive advantage because of its wide range of products, high reinvestment rates, and a solid customer base in Europe, America, and Africa.
Founded in , it has a long history of quality and innovative designs. Its products are popular among private and public customers, especially in Asia, where most machines are manufactured. The company is still owned by the Bamford family and due to their status as a private company, they are able to be incredibly ambitious without investors to answer to.
When compared to Caterpillar the company is much smaller in scale and employs around 11, people around the world. Volvo CE is part of the Volvo group and competes with Caterpillar in many areas. The company is one of the industry leaders for equipment such as agricultural haulers and wheel loaders. The company has helped to pioneer compact construction equipment as well as road development and excavation equipment.
The Swedish company has its headquarters in Gothenburg, Sweden. The company has partnered with Alta Equipment Company as their exclusive dealer in Illinois. Caterpillar is the global leader for construction equipment with a strong brand identity that works in their favor. They have the advantage of a good reputation and innovative, good quality products.
One of its biggest strengths is the sheer size of its dealer network. Outlook for the company remains positive as they invest in product design and brand development. Despite the competitive nature of the industries it operates in, Caterpillar is likely to stay the industry leader.
The company has also made various acquisitions that have helped to cement its leading position. In the company acquired Bucyrus International, known for the mining equipment it produces.
Caterpillar also expanded into the rail industry when it acquired Progress Rail Services in and Electro-Motive Diesel in One of the biggest markets is China which is undergoing rapid urbanization but eventually, this will start to level off as targets are met. When this happens the demand for construction equipment is likely to diminish which could affect Caterpillar and their competitors.
The company remains in a strong position and is comfortably ahead of its biggest competitor John Deere.
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