Caterpillar Growing in the US Market
"Caterpillar is headquartered at the US and its business is growing in American region. Three new facilities have been added in the US. The capital expenditure as planned for the year 2011 is $3 billion with more than half of which is planned for the US market. As the economic environment is improving, the demand for the products will also increase. So to take proactive actions and meet the forecasted demand, company has taken measures to add on to its current manufacturing capacities.
Out of the total 21, 723 units addition in workforce worldwide 2,715 units have been acquired and 7, 533 units have been employed only for US market. Rest 11, 475 units were employed for the Non-US market collectively. The sales have been increased to $3.426 billion in North American region alone which is a 49% increase as compared to that of last year (2009). The augmented demand for the industry products is made possible due to the recovering economic conditions in US and Canada. Low interest rates are another major factor in boosting the growth.
Orders for US construction have increased by 1% and investment spending has been increased by 14%. The increasing demand from developed countries in-turn has increased the price of metal which helped increase the production and investment operations of mining companies. As a result, U.S. production increased by 10% and that of Canadian increased by 2%.
US economy is projected for a growth of 3.5 % which is the best number since 2004. This is a very promising factor responsible for the advanced sales revenue of the company in US market. The entire US construction machinery market was recorded at $16.4 billion in 2010 at a growth of 28%. The countries who were the leading purchasers of the construction machinery made in US were:
- Canada - $5.1 billion, up 39%
- Australia - $1.5 billion, up 62%
- Mexico - $1.2 billion, up 25%
- Chile - $920 million, up 21%
The expansion strategy of Caterpillar consists of leveraging its strong distribution system and Supply Chain. The company will strengthen its Supply Chain system further to consolidate its US operations.
The US market is growing and recovering from the economic losses of recession.
Though, there still remain a threat of increase in the interest rates, lesser investment in construction and denial of credit loans to customers for Real estate purchase which will negatively affect the growth of Caterpillar Inc. Will the company be able to offset such changes, if happen in future? What will be the possible pre-emptive measures to manage such a situation in future?
[...] ? Place: Caterpillar Inc has strong distribution network in domestic marketspace i.e. United States (Annual Report, 2011). United States accounted for 21% of total distribution network base in 2011. On the other hand, the company has specialized 19 distributors for its marine power system brand ?MAK? across 130 countries worldwide. Finally, it operates 168 distributor network for its electric power generation system subsidiary ?FG Wilson Engineering? across 179 countries worldwide. Thus, overall Caterpillar Inc's unique customized distribution network for independent business activities along with value for money pricing with low fluctuations is enhancing long-term competitive advantage for the enterprise in domestic i.e. [...]
[...] approximately 0.5% of group revenues in 2011 (Annual Report, 2011). ? Society: Majority of companies post scientific management has reduced emphasis on in-house and outside human capital as machines (Smith, 2003). The knowledge era emphasized the human capital importance for improving cutting edge technologies to enhance competitive advantage (Smith, 2003). Caterpillar Foundation has raised and donated approximately US$500 million to diverse not for profit organizations worldwide in past 60-65 years (1952-2012). In 2011, it offered long- term grant of US$12.5 million to World Resources Institute to enhance smart cities in India, China and Brazil (Sustainability Report, 2011). [...]