Bobcat's Future

[jmc]

There was some speculation in one of these threads about what Bobcat is going to do with the loader line they purchased from Earth Force (?). In the attached article, it looks like the whole Bobcat line is going to be spun off from Ingersoll Rand. Scroll down to the subheading "An Uncertain Future for Bobcat":

Compact Equipment Cover Story

 

[davidseaquist]

Thanks for posting the article. I read the article, my understand was that the skid steer was in decline and the compact wheel loader was growing in popularity because of :

More operator comfort,

Easier to get into, out of,

Better visibility all around

More lifting height

The article suggested some skid steer applications will be done with compact wheel loaders.

I started a post on the skid steer to see what people think the future of the skid steer is. I didn't want to take over your thread with my questions David

It stated the loader backhoe was acquired from superstav in 2001.

It also stated Loader Backhoes are popular in Europe except for Germany.

I called an Ingersoll Rand dealership in San Diego and the service manager told me the TLB's were discontinued before the equipment was sold to Volvo.

I started a separate thread on the skid steer to see what people thought the future of it was. David

 

[jmfox]

Skid steers are losing ground, but I think it is to the smooth riding track machines.

jmf

 

[salopez]

I believe that article is speaking about SS in Europe not the US.

 

[MessickFarmEqu]

We are close to one of the big IR offices. I talk to some of the engineers pretty often because CNH and IR people change hands pretty often. They always talk about what a harsh, cut throat company IR is. From the way they talk I would not be at all surprised to see them spin off Bobcat or chip away at their resouces as soon as the SSL market softens. BobCat is not exactly #1 in any other market.

 

[EquipmentJunkie]

Yes, it is a fact that IR's construction division (Bobcat) is for sale. There are a number of potential suitors that have been named in print: Terex, Deere, Cat, Kubota, and an Italian automaker, to name a few. Reuter's and the Financial Times have reported on this sale. Diesel Progress is my favorite source for solid, industry news.

Skid Steer loaders will not disappear any time soon. For example, backhoe loaders haven't gone the way of the buggy whip. The production numbers of wheeled skid steer loaders will decline but you can't erase a market with annual sales over 50,000 units overnight.

 

[MessickFarmEqu]

You don't typicaly see Kubota making acquisitions, but I wonder if they would do it to protect their engine sales. CAT and Deere could do it, they have the money, they are not particualy strong in the segments where BobCat is, but I don't know if their companies would be a good fit for each other.

Interesting....

 

[EquipmentJunkie]

The way I see it...

Kubota doesn't acquire, they slowly grow markets on their own. While this marriage makes the most sense, Kubota is too proud to do it.

Cat & Deere would both have major government-mandated divestment to tackle. Divestment requires another buyer for existing skid steer lines...that's really messy.

Terex would need a bargin and Bobcat won't come cheap.

CNH would need both a bargin and the messy divestment. Not a good fit.

Doosan, Komatsu, or another Korean or Japanese manufacturer would be possible...but doubtful.

Volvo has the cash and the ambition. My money would be on Volvo.

It is interesting that latest issue of Diesel Progress hit my mailbox today. The editor's column validates some of my thoughts.

Neil, I think that Cat's skid steer line has come on very strong in the last few years. You will see them #1 or a very close #2 in a few more years. It took them a little while in the backhoe market (10 years) but they did it. I look for a repeat in the skid steer market.

I agree with you that Cat and Bobcat would not be a good fit...Deere on the other hand would work pretty well. However, I see distribution being the next big hurdle after divestment for Deere.

 

[Toiyabe]

Seems to me that the most valuable thing that IR is selling is the name 'Bobcat'. I don't mean to denigrate the equipment they make, just point out that Bobcat is almost a generic term for skid-steer.

I'd think that companies like CAT, Deere, Volvo etc. who already have valuable names don't need Bobcat and might not even want it. They probably want to keep the same name across all product lines.

 

[EquipmentJunkie]

Yes, those companies all have strong names. For instance, a dozer is almost always called a "Cat". The John Deere name is a very recogizable brand to your average suburban or even urban citizen. But manufacturers look at things differently than most of us...

Market share and the "Bobcat" brand name are the valuable assets. Why? Let's talk about market share, first. Since such a high percentage of a skid steer loader is purchased (I think around 80%), the true benefits come when unit volume increases. Greater unit volume = lower component prices = greater profitability. The prices of engines, pumps, tires, lights, seats, switches, and hydraulic hoses will go down as unit volume increases.

In addition, all of the companies currently are building skid steer loaders themselves and have incurred and will continue to incur the design cost in order to stay in the skid steer market. Those companies would prefer to spread that fixed design cost over 50% market share instead of 25% or only 10% market share. Deere started into the market by purchasing somebody else's machine (Mustang, later New Holland) and then built their own. Volvo purchased Scat Trak. Neither company has realized their market share expectations, however.

If any of those companies were to buy Bobcat, you would continue to see "Bobcat"-brand skid steer loaders with white and black paint with red wheels. That brand-name and image means a lot to the buyer. When Ingersoll-Rand bought Bobcat a few years ago, there were quite a few people who felt that the I-R logo and name was too prominent. The decals did indeed shrink a bit over time.

Also, buying the market share leader will increase total sales of the company and provide instant bragging rights. Wall Street loves both of these.