BAUMA 2007 Parts Manufacturers

Over 80 parts manufacturers were present at BAUMA 2007 from many regions of the world but primarily headquartered in North American, European and Asian countries. Besides the normal major and minor replacement parts competitors there were a large number of suppliers representing the Asian countries of China, Korea and India. As usual the largest group of competitive manufacturers were the GET (Ground Engaging Tools) companies, numbering well over 25 with the other product areas (UC, ENG, DT, HYD and FIL) somewhere between 7 and 15. The major GET competitors ESCO, Hensley and Metalogenia had large exhibit booths displaying their proprietary patented bucket tooth products as well as their direct replacement components for Caterpillar and other OEM machines. Another major competitor, Black Cat Blades also had a large booth and displayed their direct replacement GET components as well. ESCO had an attractive, well laid out booth that displayed their full line of GET products. They had individual displays of their various bucket tooth systems (Super V, SV2, Max DRP, POSILOK), wear protection systems (TOPLOK, Kwik-Lok and VIDABLOCK composite materials) and Bucyrus Blades cutting edge components for dozers, scrapers, motor graders and loaders. In addition, there were two product catalogs available that covered their entire GET lines for ESCO proprietary products and Bucyrus replacement products including Cat style (side pinned) value line and Max DRP bucket tips. There were also graphic and literature materials promoting their steel quality, distribution and dealer network.

Hensley was featuring their patented XS (Extreme Service) bucket tooth system and KVX tooth system for loader, excavator and front shovel buckets plus a new tip shape for use on rippers. The somewhat conservative exhibit booth consisted of iron displays, application poster boards and sales brochures pertaining to these two products. No other GET products were displayed or promoted such as cutting edges or end bits for other type machines. Neither was there any mention of their ownership by Komatsu nor the Kmax tooth system they provide for Komatsu loaders and excavators.

Metalogenia had a large exhibit booth, in a good location but very conservative and poorly designed layout, presentation and promotion messages. The main product being displayed was their patented KingMet bucket tooth system with one small, poorly located, hard to read graphic and no visible handout promotion literature. It was mentioned that they had recently developed a new patented ripper tooth system (not on display) and would be very interested to discuss a commercial arrangement with Cat.

Black Cat Blades were displaying their Cat direct replacement GET including dozer, scraper, motor grader and loader bolt-on cutting edges, side pinned bucket tooth system options, ripper tooth system and soil compactor feet and cleaner bars. There was a lot of sales literature available in the form of individual product bulletins and a general full line sales brochure called The Edge. They claim to have GET offerings for many OEMs but only Cat products were on display. The relatively small exhibit booth was very congested and unorganized which made it very hard to view the product displays. Other major GET competitors exhibiting at BAUMA 2007 but with smaller exhibit booths hence less actual products and sales literature on display included:

1. Canavera & Audi Srl (ROCA) Torino, Italy 2. Combi Wear Parts Kristinehamn, Sweden 3. Etesa (ETE) Madrid, Spain 4. Feurst (ORCA) Feurs, France 5. Hisar Celik Dokum San. Istanbul, Turkey 6. Italricambi Undine, Italy 7. Metallurgica Valchiese Brescia, Italy 8. MTM Modena, Italy 9. Ningbo Zhedong - Ningbo, China 10. OFM Top Line Bazzano, Italy 11. SSAB (Hardox) Oxelosund, Sweden 12. Titan Europe Plc (Pyrsa) Cookley, England

Almost all of these companies (Combi does have a patented proprietary tooth system) were promoting their traditional direct replacement GET products for Cat and other OEM machines. The primary sales strategy of these companies continues to be based on price and availability in the EAME aftermarket. Also, Duferdofin from Valdarno, Italy (track shoe and cutting edge supplier to Cat and other OEMs) had an exhibit booth with product displays and sales brochures.

Undercarriage manufacturers exhibiting at BAUMA 2007 consisted of two major full line competitors from Italy, Berco and ITM (Titan Europe Plc) with very large exhibit booths, Tractors Engineers Limited (TENGL) from India, Nord Track from Italy and a few component manufacturers such as Jinsung T.E.C. from Korea and Duferdofin (track shoes) from Italy. Two full line Korean companies were being promoted via product displays and/or sales literature by their European parts distributors: DaeChang by Linser Industrie in Germany and Korean Undercarriage Track Co. (KUT) by USCO in Italy. In addition, Chetra SPC (CHAZ) from Russia and Shantui Construction Machinery Co. from China both had an

exhibit booth with product displays and promoted a full line of undercarriage components for Cat and many other OEM tractors and excavators. Also, FARIT S.R.L. had a small booth and promoted their undercarriage products for mini excavators (1-6 Ton).

Berco once again had a very large, well positioned and professional looking exhibit booth but somewhat cluttered with a large number of individual product displays. Besides their traditional large and medium tractor and excavator track system displays there were many new product promotions for mini excavators including idlers, rollers, sprockets and shoes. They also had their D11R track system display promoting Lifetime Seal Groups and in an adjacent dealer (ERMA RTMO spa) exhibit booth a D6H XL track system display promoting Long Wear Bushings. In addition, they continue to heavily promote rubberized tracks and complete undercarriage systems for skid steer loaders. Promotion literature included their traditional product brochures and a special edition of Berco News that revealed they have opened a office as of January 1, 2007 at ThyssenKrupp Shanghai, their first presence in China. They plan to establish a logistic and assembly center in this area very soon.

Italtractor ITMs exhibit was nicely integrated into the larger Titan Europe exhibit booth and promoted as their undercarriage division along side their well-known wheel division. There were a number of signs and graphics to help explain the inclusion of ITM into their new organization structure that allows them to offer more solutions for their OEM customers and a larger presence in the aftermarket. The Intertractor I-trac logo was displayed and we were told that it still exists and is being used for large shovel and dragline systems. They had a number of undercarriage product displays for tractors and excavators, the largest of

which was a complete Cat D11R track system but, very little descriptive information and no sales nor product brochures. There was also a small GET display of Pyrsa Shark style side-pinned bucket teeth options. Based on the strong but subtle message of this exhibit it appears that Titan / ITM intends to be a viable option for track-type machine OEMs and customers and will continue to be a major undercarriage competitive threat for Cat and Cat dealers in the future.

Two major filter competitors, Cummins Filtration and Donaldson, had exhibit booths displaying some of their latest filter products and provided sales literature and product bulletins. Other competitive filter manufacturers exhibiting at the show included Mann & Hummel, Huss, Jura Filtration and FILTREC S.r.l. Notable no-shows were Baldwin, Fram, Luber-Finer and Wix. Cummins Filtration located in the larger Cummins Engine booth had a fair sized area for displays of all types of liquid and air filters including a special highlighted area with plasma screen product feature messages to promote their new User-Friendly oil and fuel filters. They also had display areas devoted to some of their other businesses such as Fuel Systems, Power Generation, Turbo Technologies and Emission Solutions where they were promoting their engine exhaust aftertreatment retrofit systems. Their new brand strategy was very evident as they used all their new business descriptors rather than the former individual brands, i.e. Fleetguard, Holset, etc. In addition, Cummins was also promoting a European Uptime Guarantee for their Stage IIIA engines (QSB through QSX) effective May 1, 2007 through April 30, 2008, which is equivalent to the program they are running this year in North America for Tier 3 engines. The total Cummins exhibit booth was well done, easy to observe the various engine and component products and portrayed both a customer oriented and quality message.

Donaldson was promoting their numerous OEM alliances as well as their aftermarket presence with large individual displays of engine, fuel and hydraulic oil filter products and air filter products. Supporting the product displays were sales and product brochures readily available for customers and other show participants. The air filter display was primarily focused on their patented PowerCore filtration technology. The exhibit booth was very conservative and basically product oriented with more OEM emphasis rather than customer support.

Many of the engine, drive train and hydraulic parts competitors present at the show focused on components and component systems rather than individual parts components. Some were very well represented by distributors who had their parts and brand names prominently displayed in their booths; i.e. Mahle, Clevite, Miba, etc. However, some others such as FP Diesel (Federal-Mogul), Ghinassi, OFM, USCO,

Carlisle, Parker Hannifin, Eaton (Aeroquip and Vickers) and Bosch Rexroth did have parts component displays and/or were promoting aftermarket parts in their own exhibit booth. FP Diesel had a moderate sized booth with engine parts displays, sales brochures and replacement parts coverage data sheets available for Cat, Cummins, Komatsu and John Deere engine models.

Ghinassi had a large exhibit booth with a large number of engine and drive train components and parts on display and promoting their European and North American distributors Cervetti and American Crane & Tractor. Both OFM and USCO had good sized booths with many smaller parts on display and promotions covering their complete replacement parts offerings for not only power train but hydraulic, maintenance, general usage and wear parts. OFM has their own brand of bucket and ripper GET components (source unknown) and currently sources their undercarriage components from ITM. Carlisle Brake Products exhibit booth was mid-size and had a number of brake components on display for Cat and other OEM machines. Their message and sales literature were primarily aimed at the OEM market, however, there was some promotion of

their aftermarket replacement parts kits. The three major competitive hydraulic component manufacturers, Eaton, Parker and Rexroth, had large exhibit booths with many product displays and general sales and product brochures available as well. While they were mostly focused on the OEM market there were areas that focused on the aftermarket such as the Rexroth remanufactured pump display for Cat applications and the Parker Hannifin emphasized promotion of their Parts Store for replacement parts service. Also, Sauer Danfoss did have a large booth at the show. And PIRTEK from Germany had a small exhibit booth with a service van and hose assembly tooling plus sales brochures for customers.

Two Italian competitive gasket manufactures, Ellegi (World Gasket) and AM.CO. (High Gaskets), with small exhibit booths at BAUMA were displaying their replacement parts products for Cat and other OEMs, handing out sales literature and promoting their distribution capabilities. AM.CO. claimed to have introduced a new series of parts for Cat, Komatsu and Cummins engines and equipment called High Parts that consists of valve train parts to engine components and gear parts to transmission bearings. They also recently introduced Cat 3500 series engine gasket kits and 300 series excavator hydraulic seal kits.

Summary: The large number of parts and component manufacturers exhibiting at BAUMA 2007 indicates that the replacement parts business continues to be very attractive for many companies from all over the world. Almost all of the major parts competitors were present with an exhibit booth at the show this year. Although the majority of these firms are still headquartered in North America and Europe, many have established their own facilities or formed joint ventures in Asian countries such as China, Korea and India. This trend of emerging low cost facilities is likely to continue as OEMs generate more suppliers in this region. A few of the most competitive parts manufacturers are now producing their latest high quality products from some of these subsidiaries; e.g. ESCO, Hensley, Cummins Filtration, Donaldson, Parker Hannifin, Eaton, Bosch Rexroth, Federal-Mogul, Mahle, etc. Also, there were a number of Asian manufacturing companies that were exhibiting their products to try and solicit interest from European or N.A. distributors or OEMs looking for potential suppliers. These were primarily foundries or forge shops producing GET, UC or engine parts and components. This is an indication that low cost parts sources are available and still growing in this region of the world and will likely play a larger role in the parts competitive landscape in the future. While there were not many new products displayed at BAUMA this year, it appears the top leading competitors have remained at the top of the class and are still the ones to watch closely; i.e. ESCO, Hensley, MTG, BERCO, Titan Europe, FP Diesel, Mahle, Parker Hannifin, Eaton, Bosch Rexroth, Cummins Filtration, Donaldson, Miba and Carlisle. Some have broadened their product offerings for additional OEMs or new market segments to increase sales growth. But most have been taking advantage of the robust construction and mining industries the last few years by trying to keep up with orders and deliveries of their current product offerings while obtaining good price realization. The majority of the rest of the manufacturers are still just promoting will fit parts that have been copied for Cat and other OEM parts, without any R & D expenditure, and lower pricing.