PEORIA, Ill. (Feb. 11, 2000) — Caterpillar Inc., manufacturer of construction and mining equipment, has supplanted Ford Motor Co. as "America´s newest tire store."
In a program that began in January, some Caterpillar sales and service dealers have started selling Caterpillar-brand tires as aftermarket replacements for skid-steer loaders.
Caterpillar began shipping replacement tires to more than 20 of its 72 North American dealers in December, said Michael Scott, manager for parts and service marketing at Caterpillar.
The Peoria-based firm introduced six models of skid-steer loaders about a year ago, and all its North American dealers will be carrying them by the end of this year, Mr. Scott said.
Caterpillar-brand skid-steer tires are produced by Titan International Inc., which also provides original equipment tires for the skid-steer loaders manufactured at Caterpillar´s plant in Sanford, N.C.
Skid-steers, with load capacities of 1,350 to 2,000 pounds, are a smaller, different type of product than Caterpillar typically has produced.
Caterpillar had to "figure out a way to support the dealer organization," Mr. Scott said, "and with a product we felt was going to be differentiated."
The company saw Titan´s LSW (low-sidewall) skid-steer tires as new and different enough from other companies´ products to make Caterpillar a front-runner.
Tab Buckley, president of Buckley Management Inc. in Oakville, Ontario, has been a consultant to Caterpillar on its entry into the tire business.
"They felt that a tire program was a very good, strategic leading-edge product for them to examine in the skid-steer industry—and for possible expansion into other areas," he said.
"Caterpillar´s feeling was that OEM (original equipment manufacturer) installation of a Caterpillar-branded product was the cornerstone of the launch of this aftermarket initiative," Mr. Buckley added, "and that backed (Titan) into the OEM opportunity."
Dealers are being added to the tire program in phases, Mr. Scott said. About 20 dealers started selling tires on Jan. 7 and another 20 to 30 are being prepared. "In fact, we´ve been selling truckloads (of tires) to some dealers to get them on board quickly," he said.
Caterpillar started with skid-steer tires, Mr. Scott said, because industry research showed that skid-steer loaders typically wear out a set of tires in about a year. The company will add other types of tires to its Caterpillar-brand roster in the future, Mr. Scott said, as it builds more smaller machines for sale or rental.
"I think we´re going to look at the smaller construction products and the rental products our dealers have more closely," he said.
In addition to Caterpillar sales/service dealers, Mr. Scott said another 300 dealers rent out Caterpillar equipment, and the company expects to offer these dealers the opportunity to sell Caterpillar-brand tires to their rental customers.
"They may all be fair game for us to think about how we do this in the future."
Mr. Buckley agreed that equipment rental will be a major factor in this market. When the equipment rental dealer determines what tire goes on the machine, he said, "that´s the launch pad for the aftermarket program."
Mr. Scott said once Caterpillar dealers stock skid-steer and other types of smaller implement tires, they may get to see customers who own other brands of equipment, "because customers of other brands will have to use tires, also."
Caterpillar dealers could then develop relationships with new types of customers, Mr. Scott said, such as small landscaping companies that haven´t bought a Caterpillar machine before.
Caterpillar provides dealers with two options to handle tire sales. Dealers can choose to provide full tire service or they can be "exchange option" dealers who receive shipments of new Caterpillar-brand tires already mounted on wheels, and ship the old tires and wheels back to Caterpillar on the same truck.
Mr. Scott declined to reveal sales expectations for Caterpillar-brand tires, which he said will be a small portion of dealers´ sales. But, he added, tires will be important for dealers to make some money and support the company´s skid-steer product.
"Our plan is to grow the (replacement tire) business significantly and to be a major player in the business," he said. Caterpillar is beginning to ship skid-steer loaders to Central and South America, and Mr. Scott expects to set up replacement tire programs there as well.
"This will be a worldwide program when it is finished," he said.