Caterpillar (CAT), Deere (DE) Face Chinese Competition on the Home Front
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Move over Caterpillar Inc. (NYSE: CAT) and Deere (NYSE: DE): China-based Guangxi Liugong Machinery is beginning to find its way into the United States excavating market.
The company was established back in 1958 and is one-third owned by the Chinese government. Guangxi Liugong Machinery is made up of 13,000 employees and has its assembly factory in India -- yes even Chinese companies outsource. Back in 2008 the company opened a 16,000 square-foot parts warehouse in Houston, Texas. The company claims it is the world’s largest supplier of wheel loaders.
Guangxi Liugong Machinery distributes equipment to a majority of the world, while dealing largely in South America and Southeast Asia. Currently the company is the leading Chinese competitor in the U.S. market and has signed contracts with a total of 17 different dealers, a majority of them being located in the northeastern states.
Caterpillar does not deny it's products may be slightly more expensive, but notes that these products are strong and reliable, and come with a solid service network. CAT claims it's products provide, “the lowest owning and operating costs over the life of a product." Equipment from Guangxi Liugong Machinery typically costs 15-20 percent less than CAT on average.
The company is taking the transition into the U.S. market nice and slow, making sure to cut back on any possible mistakes as it is extremely costly in this industry. Management at Guangxi Liugong Machinery believes the company will take around five years before it starts looking like a competitor in the U.S. excavating market.
Guangxi Liugong Machinery is not the only Chinese excavating company trying to build larger hurdles for Deere and Caterpillar, China's Sany Heavy Industry is also expanding in the U.S and has plans to open a $60 million office-and-assembly plant this month near Atlanta, Georgia.
When Liugong machines come to the U.S. and are operated just eight hours a day, "it's almost like they are going on vacation," says David Beatenbough, a Liugong vice president.
The company was established back in 1958 and is one-third owned by the Chinese government. Guangxi Liugong Machinery is made up of 13,000 employees and has its assembly factory in India -- yes even Chinese companies outsource. Back in 2008 the company opened a 16,000 square-foot parts warehouse in Houston, Texas. The company claims it is the world’s largest supplier of wheel loaders.
Guangxi Liugong Machinery distributes equipment to a majority of the world, while dealing largely in South America and Southeast Asia. Currently the company is the leading Chinese competitor in the U.S. market and has signed contracts with a total of 17 different dealers, a majority of them being located in the northeastern states.
Caterpillar does not deny it's products may be slightly more expensive, but notes that these products are strong and reliable, and come with a solid service network. CAT claims it's products provide, “the lowest owning and operating costs over the life of a product." Equipment from Guangxi Liugong Machinery typically costs 15-20 percent less than CAT on average.
The company is taking the transition into the U.S. market nice and slow, making sure to cut back on any possible mistakes as it is extremely costly in this industry. Management at Guangxi Liugong Machinery believes the company will take around five years before it starts looking like a competitor in the U.S. excavating market.
Guangxi Liugong Machinery is not the only Chinese excavating company trying to build larger hurdles for Deere and Caterpillar, China's Sany Heavy Industry is also expanding in the U.S and has plans to open a $60 million office-and-assembly plant this month near Atlanta, Georgia.
When Liugong machines come to the U.S. and are operated just eight hours a day, "it's almost like they are going on vacation," says David Beatenbough, a Liugong vice president.
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