Caterpillar makes further tracks into the power sector

Following recent acquisitions worth more than $2 billion, Caterpillar has formally announced the setting up of a new organisation, the Power Generation group. To be headed by James Parker, the mission of the new group is to "expand the company's presence in the world's power generation market."

"Establishment of this new organisation will enable Caterpillar to build on what has been a focused, two-year effort to offer our customers every conceivable resource for generating and supplying power...," said Gerald Shaheen, vice president – engine products, Caterpillar Inc.

This two-year effort has entailed a series of strategic acquisitions, including purchase of MaK Motoren GmbH in 1996, Perkins Engine Division in 1997 and Kato Engineering in April 1998 – to expand the product line. Packaging capabilities have also been improved through a June 1996 joint venture agreement with Emerson Electric.

The company can now supply power plants in a range that extends from several kW to 100 MW, with single unit sizes ranging from 8 kW to 16.2 MW.

The added emphasis on power generation is expected to be an important factor in Caterpillar's long term growth as a corporation. The company, based in Peoria, Illinois, USA, intends to grow from $19 billion sales in 1997 to $30 billion in 2006.

Planning for a dominant share

Caterpillar estimates that in 1997 it was the second largest provider of new generation capacity (second only to GE). But back in 1995, when Caterpillar analysed its position in the power business, the company realised it "didn't have the plans in place to capture a dominant share of the market."

In response the company recognised the need to: add a reciprocating engine product below 200 kW; extend its capabilities beyond 5000 kW; grow its existing Solar Turbines business into the 13 MW range; expand its packaging options and offer an array of sophisticated financing options.

James Parker says these goals have been achieved, mainly through the acquisitions, as well as a joint venture.

Kato Engineering, a major supplier of electric generators used in prime and standby power systems, was acquired from Rockwell Automation. Perkins Engines Division, manufacturer of small to medium diesel engines (200 hp and below) was bought from LucasVarity. MaK was the Krupp AG diesel business, specialising in medium speed engines.

The joint venture with Emerson Electric covered packaging of diesel generator sets by Emerson subsidiary F.G. Wilson, based in Larne, Northern Ireland. Currently sold in Europe, Africa, Asia, Australia and Latin America, in 1999 the generator sets will be distributed in North America after a new F. G. Wilson manufacturing facility is completed in South Carolina. A specialised packaging plant is also being built in Griffin, Georgia, to support diesel units above 1 MW.

New engines launched

Meanwhile, Caterpillar has announced the release of what it calls its "all-new" CM Series family of engines with the introduction of the CM32 and CM 43, with bores of 320 mm and 430 mm respectively. Both are being manufactured in Kiel at the facilities of recently acquired MaK.