Caterpillar, the world’s number one supplier of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, is one of America’s most long-standing companies, with origins dating back to 1925. To put Caterpillar’s dominant position into perspective, consider the “Yellow Table” rankings by KHL, a supplier of international construction information. According to the 2018 Yellow Table, Caterpillar was the leading construction equipment supplier, capturing 12.6 percent of global sales. The company has only one other close competitor, Komatsu, with 11.9 percent of sales. The next three companies—Deere, Hitachi, and Volvo—all had sales between five and six percent of the global total.
With new headquarters in Deerfield, Illinois, Caterpillar has primarily three reporting segments that we monitor and analyze in this report: Construction Industries, Resource Industries, and Energy & Transportation. These segments are grouped together in Caterpillar’s larger category of Machinery, Energy & Transportation. The company’s other large classification, Financial Products, includes the segments Caterpillar Financial Services Corporation and Caterpillar Insurance Holdings, Inc. We briefly describe Caterpillar Financial Services Corporation but generally do not cover the company’s financial branch in detail. Caterpillar has 20 other brands that supply machines, engines, components, services, and solutions. The most relevant (for the construction machinery market) brands include SEM and Hindustan, manufacturers of value-based equipment for some developing markets, and Perkins, a manufacturer of diesel and gas engines that are commonly used by many construction machinery manufacturers.
Caterpillar is often considered a reflection of the American economy, especially in reference to industrial production, manufacturing, and exporting. As a globally-connected business, it also represents trends in the larger world economy. Since Caterpillar’s products are costly, when the company’s sales increase by significant margins, it is often a reflection of confidence in the economy. The opposite is also true: When company sales fall, it is usually a reflection of a larger trend: For example, Caterpillar’s consolidated sales revenue dropped by 1.7 percent in 2019, a decline not far off the mark of the 0.3 percent decline in construction spending for 2019 in the United States. Caterpillar’s unofficial role as an exemplar of broad economic and manufacturing trends will be even more important in the days ahead, as all global economies grapple with the economic fallout of the CORVID-19 corona virus.
Over the years, Caterpillar has diversified its targeted markets by appealing to customers looking for equipment that is less costly than the typical Caterpillar, premium quality product lines. ///