Going it alone: Cat to split with Mitsubishi after more than 40 years

20 March 2008

Caterpillar is the only non-Japanese manufacturer that has had any significant success in Japan, thanks to its joint venture with Mitsubishi Heavy Industries, Shin Caterpillar Mitsubishi (SCM). Set up in 1963, SCM was one of the first joint ventures in Japan in any sector to include partial US ownership, and according to Caterpillar, it is no. 2 in the construction and mining equipment market there.

Given the success of this long-running partnership, the announcement earlier this year that the two parties planned to go their separate ways, with Cat taking full control of the company, was a little surprising.

Mr Beeler explained the ‘how’ and ‘why’ of the decision. “SCM is going to acquire half of Mitsubishi's shares in the joint venture. That will give Caterpillar control, and there is a plan to acquire the rest of the shares in five years.

“The real key is the strategic implication of integrating what SCM does more closely into our organisation in Asia. SCM has a tremendous amount of experience in manufacturing and product development that we wanted to integrate, and making them a part of Caterpillar makes that so much easier and more effective.

“It is very much part of our long-term Asian strategy to acquire SCM. We've had a wonderful partnership with Mitsubishi and I think it's one of the longest-running US-Japanese joint ventures in history. It's just that it made more sense for us to integrate SCM more fully, and it also made sense for Mitsubishi. It's a very amicable decision that makes sense to both of us.”

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