Specialist
Former Senior Design Engineer at Caterpillar Inc
Agenda
- Overview of Caterpillar (NYSE: CAT), largest producer of construction heavy equipment, including how much supply chain issues impact the company
- Key end market demand in mining construction and forest equipment
- Innovation in mining machinery design and the importance of in-house design and product group
- Caterpillar’s ability to pass on higher steel prices
- Electrification and autonomous machines
Questions
1.
What are your thoughts on the construction and earth-moving equipment industry, perhaps highlighting the environment, general trends, opportunities and challenges?
2.
Do the supply chain issues impact Caterpillar across the board? Could specific areas be disproportionately impacted by this? If so, would it be parts and services, new equipment production or bringing new products to market?
3.
Are there major read-throughs you would highlight from China’s construction and earth-moving equipment industry? Obviously, there are the lingering impacts of the trade disputes and tariffs.
4.
Could Cat be disproportionately impacted by the labour shortages in manufacturing pieces of equipment, not only in key end markets such as construction and the trades? Or is it advantaged in any way?
5.
What’s your take on Cat’s positioning in its respective end markets? What are its core competencies and unique strengths and characteristics?
6.
Could Cat – which is thought of as a global OEM [original equipment manufacturer] – offer product across the globe, or is it fairly concentrated in specific regions?
7.
Could you discuss Cat’s competitive positioning in the global mining market? How competitive is its product set and how is it perceived by customers?
8.
What is Cat’s positioning in the automation and electrification categories? Is it considered number one in both? Has it fallen behind in one category? It’s my understanding that autonomy and electrification are key points of differentiation for players within the mining segment. Automation came a little bit earlier, and now the discussion is starting to focus on electrification.
9.
Is there significant runway to apply autonomous solutions in construction outside of mining?
10.
You mentioned having an in-house design and product group focused on build strategies, bringing new products to market and being able to innovate in-house was crucial for Cat. How does the company use this to differentiate? What is its product innovation strategy? What does it gain by having a strong in-house design and innovation group?
11.
Could you elaborate on Cat’s operations within the design phase? What costs could be more inflationary in an environment such as this? You mentioned you were at times very focused on cost and managing cost within the design stages and throughout the process during your time with the company.
12.
It seems Cat has always commanded a premium vs a lot of other brands, but it still leads in certain areas such as autonomy and product quality. In other ways, it seems competitors are closing the gap in certain areas. Are prices from transporting finished goods or parts, steel and semiconductors easily passed off to customers by the company, especially in the inflationary cost environment we’re experiencing? Do you expect further margin expansion? Could it start to become more price competitive in certain areas given these gaps being closed in certain areas?
13.
To confirm, you wouldn’t expect much further runway in organically growing after-market parts with the 2018 initiative, given most of the low-hanging fruit from this has been taken?
14.
Is there anything worth diving deeper into or worth highlighting around the construction and earth moving equipment industry?
15.
Where is Komatsu most competitive vs Caterpillar, perhaps a particular geography or product category?
16.
What one or two strategic objectives that we most likely discussed today should Cat focus on over the next six months?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
