Caterpillar dealer push may drive some out, Levenick says

Thu Mar 6, 2014 1:34am EST
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By James B. Kelleher

LAS VEGAS (Reuters) - Caterpillar Inc's (CAT.N: Quote) bid to lift the financial performance of its dealer network isn't designed to thin the ranks of the 178 independent distributors that sell and service its earth-moving products around the globe, a company executive said.

But Stuart Levenick, who is charged with overseeing the financial turnaround, said an unknown number of dealers including some family-run businesses, could be casualties of the push unveiled last month.

"This is not a plan to cull our dealers or drive consolidation - although you can expect that some of that will occur," Levenick told Reuters in an interview on Wednesday.

"But we do expect results. If you are not aligned, if you're not progressing towards those results, then you can expect us to move judiciously to make changes ... They all get that."

Caterpillar used to organize its global business - including dealer relations - regionally rather than by product category or customer type. So dealers were, in Levenick's words, "measured against the guy down the street".

That changed when the company reorganized a few years ago. The far-flung dealer network was put under one executive in Peoria, Illinois, who began comparing the performance of dealers across the globe.

The disparities, Levenick says, were jaw-dropping. So, too, were the money-making possibilities - if the laggards sold machines, parts and services as efficiently as dealers in the top half of the dealer performance rankings.

That, in a nutshell, is what the company has said it now wants them to do. Caterpillar has said the plan could increase sales and service revenue at the dealer level by $9 billion to$18 billion by 2018 - and that much of that increased revenue would flow to Caterpillar itself.   Continued...

Stuart Levenick, group president of Caterpillar, speaks at the Reuters Manufacturing and Transportation Summit in New York, December 12, 2011 file photo. REUTERS/Brendan McDermid